Retirement Plans Newsletter

November 12, 2020

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[Official Guidance]

Text of DOL Final Regs: Registration Requirements for Pooled Plan Providers (PDF)

"This final regulation establishes the requirements for registering with the [DOL] as a 'pooled plan provider' for 'pooled employer plans' under [ERISA]. The [SECURE Act] provides that newly permitted pooled plan providers can begin offering pooled employer plans on January 1, 2021, but requires such persons to register with the Secretary of Labor before beginning operations. This final regulation also establishes a new form -- EBSA Form PR (Pooled Plan Provider Registration) -- as the required filing format for pooled plan provider registrations. The Form PR must be filed electronically with the [DOL]. Filing the Form PR with the [DOL] also satisfies the SECURE Act requirement to register with the Department of the Treasury.... This final regulation is effective on [the date of its publication in the Federal Register]." Icon to read more

Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL]

[Official Guidance]

Text of PBGC Interest Rate Assumptions for Benefits Payable in Terminated Single-Employer Plans, December 2020

"The December 2020 lump sum interest assumptions will be 0.00 percent for the period during which a benefit is (or is assumed to be) in pay status and 4.00 percent during any years preceding the benefit’s placement in pay status. In comparison with the interest assumptions in effect for November 2020, these assumptions represent no change in the immediate rate and are otherwise unchanged." Icon to read more

Pension Benefit Guaranty Corporation [PBGC]

[Guidance Overview]

DOL Announces Registration Requirements for Pooled Plan Providers

"The final rule establishes a straightforward electronic registration process for businesses that want to offer pooled employer plans. With the exception of Nov. 25, 2020 to Jan. 31, 2021, the process requires pooled plan providers to register at least 30 days before beginning operations. Plans must also submit supplemental filings regarding specific reportable events and a final filing after the provider's last pooled employer plan has been terminated and ceased operations. For the period of Nov. 25, 2020 to Jan. 31, 2021, the requirement to register at least 30 days prior to operating a pooled employer plan is waived, provided registration occurs no later than the start of the plan." Icon to read more

Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL]

[Guidance Overview]

No, You Cannot Invest Your Retirement Plan to Save the Planet!

"The regulations would make it difficult or impossible for plan fiduciaries to consider non-pecuniary factors when selecting investment options under an ERISA participant-directed defined contribution plan. A potential solution could be offering a brokerage window, which can provide access to individuals who wish to invest their accounts according to non-pecuniary factors such as religious tenets.... [A] fiduciary's duties and responsibilities with respect to a brokerage window are not settled." Icon to read more

Seyfarth

[Guidance Overview]

The DOL’s ESG-Less Final ESG Rule

"The Final Rule continues to express skepticism towards ESG ratings systems and indexes ... The preamble to the Final Rule provides that prior to relying on any ESG ratings system, a plan fiduciary must determine the methodology, weighting, data source and assumptions used in such a system.... Plan fiduciaries should also be wary of funds that contain disclosures that the fund may forego investment opportunities and accept different investment risks in order to pursue ESG objectives." Icon to read more

Mayer Brown

[Guidance Overview]

Colorado Employers: Add Secure Savings Program to Your 2021 To-Do List

"Covered employers likely will need to either sponsor their own retirement plan, such as a 401(k), or facilitate employee participation in the recently enacted Colorado Secure Savings Program.... Employer contributions are not required, and the administrative burdens and costs to employers will be minimal.... [E]mployers are not fiduciaries of the program ... [and] are not liable for employee investment decisions." Icon to read more

Fisher Phillips

Amicus Curiae Brief of American Benefits Council in Support of Plan Arbitration Provisions

31 pages. "Here, where the plan at issue undisputedly contains an arbitration provision and the dispute fits squarely within its scope, ... the District Court erroneously invalidated the arbitration provision ... In so holding, the District Court failed to harmonize and give effect to the FAA and ERISA, contrary to both statutes' language and Supreme Court precedent. The consequence of this failure is the handcuffing of plan sponsors' ability to resolve plan-related claims efficiently and cost-effectively in arbitration, creating a powerful disincentive for plan sponsors to establish and maintain plans in the first place." [Smith v. Board of Directors of Triad MA, No. 20-2350 (N.D. Ill. Aug. 21, 2020; on appeal to 7th Cir., No. 20-2708)] Icon to read more

Groom Law Group

DOL Issues Final Rule on Selecting Plan Investments

"There are aspects of this final rule's preamble, which provides a review and response to comments received and insight on the DOL's thinking, and the rule itself that apply differently to defined contribution plans, defined benefit plans, multi-employer plans, and plans sponsored by religious organizations subject to ERISA.... Specific to DC plans, the DOL delineates between selecting investment options for a plan lineup versus selecting the qualified default investment alternative (QDIA)." Icon to read more

Callan

The Final ESG Rule: What's New or Changed

"Among other changes, the final rule eliminated a particularly controversial provision in the proposed rule that would have specifically prohibited the use of an ESG fund as a Qualified Default Investment Alternative (QDIA). However, the DOL still prohibits the use of an investment as a QDIA if its objectives, goals or principal investment strategies include, consider, or indicate the use of one or more non-pecuniary (non-financial) factors.... Given the watering down of the rule, it is probably more likely to become effective as written than was the case with the Fiduciary Rule." Icon to read more

Cammack Retirement Group

SECURE 2.0: The Proposed 'Securing a Strong Retirement' Act

"Highlights of the new proposal include: [1] A new auto-enrollment/escalation mandate for 401(k) plans. [2] A solution to some of the technical problems presented by programs providing for 401(k) matching contributions for student loan repayments. [3] A relaxation of the required minimum distribution (RMD) rules ... [4] Establishment of a Retirement Savings Lost and Found agency to assist participants in finding missing benefits and instructing DOL/IRS/PBGC to (finally) provide a definition of when a participant may be treated as 'missing' for purposes of ERISA and the Internal Revenue Code." Icon to read more

October Three Consulting

Trends and Insights of Those Saving for Retirement Across America, Third Quarter 2020 (PDF)

21 pages. "90% of employees who are auto enrolled don't opt out.... 9.4% of participants contributing to their 401(k) plan have decreased their deferrals during Q3 2020, up from 8.2% the year before.... [T]hose who have been saving over the long-term (15 years) have saved an average of $433,100. Millennials who have continuously invested in their DC plan for 15 years have an average balance of $219,700 in Q3 2020." Icon to read more

Fidelity Investments

How Much Taxes Will Retirees Owe on Their Retirement Income?

"Taxes are meaningful for the top quintile, who are mostly married couples with average combined Social Security benefits of $50,900, 401(k)/IRA balances of $325,400 and financial wealth of $441,400. If these retirement and financial assets were fully annuitized, the amount a household would receive is equivalent to about $3,000 a month, and these households face tax liabilities of about 11 percent." Icon to read more

Center for Retirement Research at Boston College

Executive Compensation
and Nonqualified Plans

Key Executive Compensation Trends and Issues for 2021

"[1] Revisiting clawbacks and 'cause' definitions ... [2] Change in control and severance agreements ... [3] Temporary salary reductions ... [4] 2020 performance awards ... [5] 2021 incentive compensation." Icon to read more

Ogletree Deakins

Selected Discussions
on the BenefitsLink Message Boards

► 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.

Severance Pay for Terminated Executive -- OK to Continue Roth Deferrals?

"We have an ex-executive who started severance payments in February 2020 for net 3 years (before my time). She's having Roth 401k deductions taken out of her ongoing severance pay. Is that OK? It's my understanding our system is set up to stop 401k deferrals on severance pay and it seems to be for other employees. But perhaps OK because Roth is after-tax?" Icon to read more

BenefitsLink Message Boards

Compensation Limit for SIMPLE IRA Participants

"Is there a compensation limit on a SIMPLE Plan for calculation purposes? Is it the same as a 401k plan?" Icon to read more

BenefitsLink Message Boards

Need to Fix a Defective 409A Plan Document Even After Commencement of Benefit?

"An old agreement was never updated and has some definitions that do not comply with 409A (CIC, separation from service). Executive has separated from service and is receiving installment payments (in year 4 of 5). I assume the arrangement still needs to be corrected under the plan document correction procedures? Is that correct? What about a scenario where the benefits are entirely paid out when the failure is discovered?" Icon to read more

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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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