Retirement Plans Newsletter

November 25, 2020

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Webcasts, Conferences

Voluntary Fiduciary Correction Program
December 16, 2020 WEBCAST
Employee Benefits Security Administration [EBSA], U.S. Department of Labor

Recent Developments in ERISA Disability Benefits Litigation: Standard of Review and Discovery
January 8, 2021 WEBCAST
American Bar Association [ABA]

TPAs and PEPs: Structure and Service Options
December 13, 2021 WEBCAST
American Society of Pension Professionals & Actuaries [ASPPA]

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[Official Guidance]

Text of FRTIB Final Rule: Methods of Withdrawing Funds from the Thrift Savings Plan

10 pages. "Many separated TSP participants who are required to receive RMDs elect to receive life-expectancy-based installment payments as a way to ensure they satisfy this requirement. The existing restrictions on life-expectancy-based installment payments put these participants in an untenable situation -- they must either continue to receive payments and forego the chance to let their account balances recover, or stop their payments and forego the ability to restart life-expectancy-based payments in the future.... [E]ffective January 1, 2021 ... the FRTIB is removing the restrictions on life-expectancy-based installment payments ... [which will allow] TSP participants who are eligible for installment payments to elect to receive payments based on life expectancy whether or not they previously started and then stopped installment payments.... This new withdrawal election is subject to the spousal consent rules set forth [by statute]." Icon to read more

Federal Retirement Thrift Investment Board [FRTIB)]

[Guidance Overview]

Diving Into the Pooled Plan Provider Deep End? It’s Time to Register!

"The SECURE Act permits a PPP to begin sponsoring PEPs as soon as January 1, 2021, provided the PPP meets the SECURE Act's requirements, including registration with the DOL and IRS before commencing operations. The DOL issued proposed regulations on August 20, and in its November 16 final regulations, softened some of the requirements it had originally proposed." Icon to read more

Mayer Brown

Restatement Period Opens for Pre-Approved Plans

"Some of the new provisions in the Cycle 3 documents will include: [1] Windsor decision (new definitions of marriage and spouse); [2] Reduction of safe-harbor contributions; [3] Using forfeitures to pay for safe harbor contributions; [4] In-plan Roth conversion.... [W]ith the new Cycle 3 documents, a company that sponsors an ESOP may be able to use a pre-approved document for the first time." Icon to read more

Blue Ridge ESOP Associates

2021 Annual Plan Compliance Review (PDF)

"Annual 401(k) administration tasks generally fall into one of four categories – nondiscrimination testing, Form 5500 reporting, participant disclosure, and plan document maintenance. If you’re an employer, you can use this Annual Plan Compliance Review to help ensure these tasks are completed timely for 2021. It includes 3 sections: [1] Deadline tasks ... [2] Periodic tasks ... [3] Document retention ... Once you’ve completed this checklist, you can file it with other 2021 plan records." Icon to read more

Employee Fiduciary

Hiring ERISA 3(16) Services: Is It Practical? Is It Safe? (PDF)

"It is understandable that many retirement Plan Sponsors would like to absolve themselves of their fiduciary liability to an outsourced party.... This white paper offers insights into the principles that underlie conduct for 3(16) Plan Administrators. It also draws a line between third parties who are qualified to provide ERISA's comprehensive fiduciary 3(16) role and those that only pretend to do so." Icon to read more

Roland|Criss

U.S. Investors Stash at Least 10% Away for Retirement

"Seventy percent of U.S. investors are saving at least 10% of their annual income for retirement ... Sixty-two percent of respondents said they were aware that Social Security wouldn't be enough to live on, with 48% concerned about not having enough income in retirement. Still, more than half (51%) said they planned to retire once they qualified for Social Security[.]" Icon to read more

Pensions & Investments

Segregation of ESOP Participant Accounts

"An ESOP must have a written provision in the plan document in order to implement segregation. Based on the terms of the provision and generally on an annual basis, all or a portion of stock held in the accounts of terminated participants will be exchanged for cash from active participant accounts. At the same time, the active participants will receive the stock from terminated accounts in exchange for their cash. As a result, stock is 'reshuffled' between terminated and active accounts in the Trust.Icon to read more

Blue Ridge ESOP Associates

Updated Baseline for Actuarial Status of the OASI and DI Trust Funds, Reflecting Pandemic and Recession Effects (PDF)

"[On] November 16 the Social Security Administration released publicly what is effectively an updated actuarial valuation by the Office of the Chief Actuary in the Agency Financial Report (AFR) for Fiscal Year 2020. This update accounts for the implications of the pandemic and the recession ... We will be using this updated baseline as an interim baseline starting now and until the issuance of the 2021 Trustees Report next year.... Table 1 attached provides a comparison of the projections of the actuarial status of the combined OASI and DI Trust Funds under the intermediate assumptions of the 2020 Trustees Report and those under the updated interim assumptions. Table 2 provides a comparison of the near-term assumptions under these two baselines." Icon to read more

Chief Actuary, U.S. Social Security Administration [SSA]

Executive Compensation
and Nonqualified Plans

[Guidance Overview]

Upcoming Deadline iconDoes Your Nonqualified Plan Need to Be Amended by December 31, 2020?

"[In] the Preamble to proposed Treasury Regulations under Section 162(m) of the Code, the [IRS] announced that if a plan subject to Section 409A of the Code is amended to remove any Delay Exception language, the amendment will not result in an impermissible acceleration of payment under Section 409A of the Code ... However, the plan amendment must be made no later than December 31, 2020." Icon to read more

Jackson Lewis P.C.

Selected Discussions
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Safe Harbor Plans Joining PEPs Mid Year

"With major recordkeepers announcing their PEP products this is going to be an instant question early on. If a standalone safe harbor plan wants to join a PEP, do you see any issue with that plan converting into the PEP and keeping safe harbor status (for as long as all provisions are identical)? In the past I've heard of some payroll providers not really cooperating with these types of moves as well, requiring the plan to change providers prior to converting. Thoughts?" Icon to read more

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Press Releases

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Year-End Compliance Update for Retirement Plans
Society for Human Resource Management [SHRM]; membership may be required to view article

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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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