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Retirement Plans Newsletter November 11, 2020 |
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Newly Posted Fall Employee Benefits Briefing
Voluntary Fiduciary Correction Program
Abandoned Plan Program
The Insiders: A Legal and Legislative Update!
Voluntary Fiduciary Correction Program
Inclusive Benefit Distribution for a Changing Workforce
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Discussions |
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This Newsletter:
BenefitsLink Health & Welfare Plans Newsletter:
Message Boards Digest:
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[Guidance Overview]
"The final rule presents five distinct issues worth considering [1] pecuniary factors; [2] comparing investment alternatives; [3] duty of loyalty; [4] special circumstances/non-pecuniary factors/tie-breakers, and [5] QDIAs." Stradley Ronon |
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[Sponsored]
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[Guidance Overview]
"The Rule preamble largely dismisses the materiality of ESG factors in investment decisions, and adopts the controversial idea that consideration of ESG factors are somehow at odds with financial factors and fiduciary responsibilities of plan sponsors. But rather than mandate a heightened standard of care for non-pecuniary factors in investment decisions, the DOL chose to prohibit them outright, providing that plan fiduciaries must select investments and investment courses of action based solely on financial considerations relevant to the risk-adjusted economic value of a particular investment or investment course of action." Latham & Watkins |
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[Guidance Overview]
"The IRS had previously issued proposed regulations in November of 2019, pursuant to which the updated life expectancy tables and uniform lifetime table would have been applicable to distribution calendar years beginning on or after January 1, 2021. However, under the final regulations, the updated life expectancy tables and uniform lifetime table will apply for distribution calendar years beginning on or after January 1, 2022." Ice Miller LLP |
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[Guidance Overview]
"Although the DOL has cleared a path for ERISA fiduciaries to consider 'ESG' factors when making investment decisions and to offer 'ESG' funds in a 401(k)- or 403(b)-type plan, the path remains relatively narrow as the final rule still requires that selection of the investment option be based solely on pecuniary factors (outside of the 'tie-breaker' context).... [D]ecisions with respect to 'ESG' require careful deliberation, balancing of risks, and documentation." Proskauer |
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[Guidance Overview]
"Revenue Ruling 2020-23, issued ... under the SECURE Act, confirms that a plan administrator or custodian of a 403(b) plan may distribute individual custodial accounts in kind to participants as part of the termination process. This is the case even if the individual custodial account originated as part of a group contract. When combined with Revenue Ruling 2011-7, which blessed the distribution of individual annuity contracts as part of a termination process, this new guidance fills the final gap in the rules governing 403(b) plan
terminations." Verrill Dana LLP |
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"The shift in the RMD age from 70½ to 72 will not change the audit procedures performed, but the RMD holiday gives us an opportunity to revisit a plan sponsor's administrative responsibilities and see whether the processes in place for 2021 RMDs are designed to prevent operational failures. In many cases, changes in the law lead to mistakes when systems and processes are not updated timely. In those cases, correction programs are available to make things right." Belfint Lyons Shuman |
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"Participation and deferral rates remained largely unchanged year-to-date through September when compared with the same period in 2019.... 12% of participants increased their payroll deferral percentage, vs. 14% last year. 7% of participants decreased their payroll deferral percentage, vs. 6% in 2019. 3% of participants stopped contributing, the same as last year. 24% of participants saw deferral rates rise because of automatic increases, compared with 23% in 2019." 401(k) Specialist |
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"The legal complexities that emerge when a single employer operates a retirement plan for its own staff are already immense; the same will certainly be true when it comes to building pooled employer plans.... [D]iverse PEP delivery models are already emerging ... [T]he risks associated with each model are different, and they apply in different ways to different parties." PLANSPONSOR; free registration may be required |
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"[O]ver the long haul, any tax-free growth on Roth IRA (after tax) contributions might have the potential to outperform tax-deferred growth on pre-tax 401K contributions.... [T]his might be the case especially for millennials who have decades of earnings potential ahead. Because their income will likely rise throughout their career, their tax bill today is also likely to be lower than it will be in retirement." MassMutual |
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"Global stock markets started the month strong, but took a turn for the worse in the last week of the month and ended the month down 2-3%. Pension discount rates were up about 0.10%-0.15% from the previous month, but are still down noticeably for the year. For most pension plans, the equity losses for the month will have outweighed the liability gains due to the increase in the discount rate, leading to an overall decline in funded status." River and Mercantile Solutions |
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[Opinion]
"401(k) plans should offer objective value for participants and straightforward fiduciary responsibilities for business owners. Too often, they deliver neither.... [C]ommon sense 401(k) transparency reform can help turn that around ... [1] Define a 'qualified' 401(k) investment menu ... [2] Ban 'hidden' 401(k) administration fees ... [3] Standardize 408b-2 Fee Disclosures ... [4] Reform the Form 5500." Employee Fiduciary |
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Benefits in General |
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"The [DOL] estimates that your employer-sponsored benefits are worth roughly 30 percent of your salary.... Even if you think you're maxing out your benefits, you owe it to yourself to look at your employer's most recent benefits package. Thirty-four percent of companies increased offerings from mid-2017 into 2018[.]" MassMutual |
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Executive Compensation |
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"According to [IRS's Tax Exempt & Government Entities Division (TE/GE)], ongoing review of filing data shows that a high volume of tax-exempt organizations paid compensation in excess of $1 million to at least one covered employee, but the organization did not report the section 4960 excise tax on the designated IRS Form 4720. TE/GE's fiscal year 2021 strategy for compliance with section 4960 will include compliance checks and examinations of Forms 4720." Faegre Drinker |
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Selected Discussions |
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► It's easy to sign up and participate in discussions! Post answers, ask questions, create custom feeds and views. Join your peers (and potential referral sources or customers)—there is no charge. |
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"Our firm is interested in strategizing on best practices for pursuing robotic process automation into our TPA practice. Do any of your firms currently utilize bos and if so, how did you get started? Do you have internal staff who were able to write/program basic bots or did you utilize the services of a different firm/contractor to learn your processes and write these for you?" BenefitsLink Message Boards |
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"I'm struggling a bit with the proper use of the VCP submission forms. The 14568-B doesn't seem to quite 'fit' a 403(b) plan that had a written plan document, yet failed to restate by the extended deadline this summer. Has anyone else submitted one of these yet, and if so, with any results?" BenefitsLink Message Boards |
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► Subscribe to the BenefitsLink Message Boards Digest -- a free daily email of all new discussions (not just the selected few shown above). View a sample issue. |
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Press Releases |
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IRI Announces 2020 State Champion of Retirement Security
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Most Popular Items in the Previous Issue |
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IRS Issues 403(b) Plan Guidance Under the SECURE Act
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David Rhett Baker, J.D., Editor and Publisher davebaker@benefitslink.com
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BenefitsLink Retirement Plans Newsletter, ISSN no. 1536-9587. Copyright 2020 BenefitsLink.com, Inc. All materials contained in this newsletter are protected by United States copyright law and may not be reproduced, distributed, transmitted, displayed, published or broadcast without the prior written permission of BenefitsLink.com, Inc., or in the case of third party materials, the owner of those materials. You may not alter or remove any trademark, copyright or other notices from copies of the content.
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