Retirement Plans Newsletter

December 3, 2020

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View job as Manager, Defined Contributions Administration for Definiti Manager, Defined Contributions Administration

Definiti
Telecommute / The Woodlands TX / University Place WA / Dallas TX / Erie PA / Canonsburg PA / West Palm Beach FL

View job as DC Plan Administrator for Southern California TPA Firm DC Plan Administrator

Southern California TPA Firm
Telecommute / Chino CA

View job as Employee Benefits Senior Assoicate for Allen, Gibbs & Houlik, L.C. Employee Benefits Senior Assoicate

Allen, Gibbs & Houlik, L.C.
Wichita KS

View job as Securities Attorney for Transamerica Securities Attorney

Transamerica
Telecommute / Saint Paul MN / Minneapolis MN

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[Guidance Overview]

IRS Issues Final Life Expectancy Regs

"These new tables reflect an increase in life expectancies since the last tables were issued nearly 20 years ago. Although the updated tables do not apply until distribution years beginning in 2022, financial professionals should learn how the new life expectancy figures may affect their clients and should assess how their administrative systems will accommodate the changes." Icon to read more

Ascensus

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[Guidance Overview]

DOL Final Rule for Financial Factors in Selecting Plan Investments

"[T]he Rule clarifies that plan fiduciaries must base their investment decisions solely on pecuniary factors -- those that have a material effect on an investment's risk and return based on appropriate time horizons consistent with the plan's investment objectives and funding policy." Icon to read more

Thompson Hine

Securing a Strong Retirement Act of 2020, H.R. 8696

38 presentation slides. Summary of Act introduced on October 27 by Ways and Means Committee Chairman Neal and Ranking Member Brady. Icon to read more

Davis & Harman LLP, via American Benefits Council

What Is CalSavers? What Employers Should Know About the Program and Its Alternatives

"Beginning in 2020 and running through 2022, small businesses with more than 5 employees are required to offer a retirement savings option to their employees. Employers can either sponsor their own plan, e.g. a 401(k) plan, or register for CalSavers. It is important to take action as noncompliance can result in fines ranging from $250 to $500 per employee. What if you already offer your employees an employer sponsored plan? ... You will need to notify the state by certifying your plan exemption online[.]" Icon to read more

ABD Insurance & Financial Services

Pandemic Heightens Focus on Financial Preparedness

"Workers have been focusing on building up their emergency funds and cutting household expenses during the coronavirus pandemic. Retirement saving is still a priority. Savings rates remain steady in workplace plans. Saving outside of employer plans has also gained momentum. At the same time, furloughed workers are experiencing more financial stress and expect to withdraw money from retirement accounts within the next 12 months." Icon to read more

T. Rowe Price

Financially Preparing for Retirement

"Only Baby Boomers are counting on Social Security as a meaningful contribution to their retirement income. All three generations believe their participation in a 401(k) or similar plan will provide a significant portion of their retirement income, but ... no generation is currently participating in their defined contribution plans at a level that supports [their] income expectations[.]" Icon to read more

Newport Group

Third Quarter U.S. Single-Premium Pension Buy-Out Sales Double Second Quarter Results

"U.S. single premium buy-out sales totaled $4.6 billion in the third quarter, down 41% from third quarter 2019 but double the $2.3 billion sold in the second quarter ... Year-to-date buy-out sales totaled $11.3 billion, a drop of 32%, compared with the $16.7 billion sold in the first nine months of 2019." Icon to read more

LIMRA

Impact of COVID-19 and Economic Conditions on 403(b) Plans (PDF)

"Three-fourths of plans indicated they have not noted an increase in plan loan activity since the beginning of COVID-19.... 35.0 percent of hospitals and healthcare organizations noted an increase as did nearly 30 percent of higher education institutions.... More than 80 percent of organizations (83.6 percent) are not planning on any changes to plan contributions this year. However, nearly thirty percent of higher education institutions either have, or will by year-end, reduce or suspend contributions to their 403(b) plans." Icon to read more

Plan Sponsor Council of America [PSCA]

Fixing Social Security for the Long Term

"Two competing Congressional proposals illustrate opposing strategies for eliminating [Social Security's] long-term financing gap. A plan from Representative John Larson (D-CT) achieves solvency by raising revenue; former representative Sam Johnson (R-TX) gets there by cutting costs. How would these proposals affect workers, beneficiaries, and the program's finances? To find out, we use DYNASIM4, the Urban Institute's dynamic microsimulation model, to project the effects of both plans over the next seven decades." Icon to read more

Urban Institute

[Opinion]

Exposing Excessive Fee Litigation Against America’s Defined Contribution Plans (PDF)

24 pages. "The copy-cat lawsuits -- now nearly 200 in number with over 90 filed in 2020 alone -- attack retirement plan investment options that are commonplace and longstanding.... Fiduciary liability insurance companies have paid an estimated $1B+ in settlements and well over $250 million in attorney fees to a growing network of plaintiff firms chasing these outsized fee awards.... Systemic reforms are necessary before American employers decide the cost and risk of offering voluntary defined contribution plans is too high." Icon to read more

Euclid Specialty Managers

Executive Compensation
and Nonqualified Plans

[Guidance Overview]

Upcoming Deadline iconSection 409A Meets 162(m): Some Deferred Compensation Plans and Agreements May Need Amendments by December 31

"The proposed regulations provide that if a plan or agreement is amended to remove the provision requiring the company to delay a payment if the company reasonably anticipates at the time of the scheduled payment that the deduction would not be permitted under Section 162(m), then the amendment will not [1] result in an impermissible acceleration of payment under Section 409A, or [2] be considered a material modification for purposes of the grandfather rule under the amended Section 162(m).... The plan amendment must be made no later than December 31, 2020." Icon to read more

Winston & Strawn LLP

Divorce and the Nonqualified Deferred Compensation Plan

"In the same way a NQDC plan is exempt from most requirements of ERISA, requirements are also different regarding the QDRO and an NQDC plan compared to a qualified plan. Although a plan sponsor must comply with a QDRO regarding a qualified plan, in the case of most NQDC plans, the plan sponsor may actually be prohibited from complying with the court order." Icon to read more

Fulcrum Partners LLC

Selected Discussions
on the BenefitsLink Message Boards

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February 29 Year-End Plan Didn't Get Extension

"I am with a small TPA firm and have found that the only February year-end plan that we have was not placed on extension for the PYE 2/29/20. The explanation from our tech (who is our employee) who developed our tracking system was that the plan was 'disregarded' by the system due to its failure to accept the extra day of the leap year (this was the first leap year since the system was implemented). It would appear that using the DFVCP would be in order, but first I wanted to see if there were any other options that should be considered." Icon to read more

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Press Releases

Most Popular Items in the Previous Issue

Agencies Releases Advance Copies of Form 5500 Series Annual Return/Report for 2020 (PDF)
Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL]; Internal Revenue Service [IRS]; and Pension Benefit Guaranty Corporation [PBGC]

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