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Retirement Plans Newsletter December 8, 2020 |
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Newly Posted |
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Discussions |
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This Newsletter:
BenefitsLink Health & Welfare Plans Newsletter:
Message Boards Digest:
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[Official Guidance]
24 pages. "This document sets forth final regulations relating to amendments made to section 402(c) of the Internal Revenue Code ... by the Tax Cuts and Jobs Act [TCJA].... [T]his Treasury decision adopts the QPLO proposed regulations with one important modification relating to the applicability date.... Under the revised applicability date, the final regulations will apply to plan loan offset amounts, including qualified plan loan offset amounts, treated as distributed on or after January 1, 2021.... The applicability date in these final regulations is also revised to provide that taxpayers (including a filer of a Form 1099-R) may apply these regulations with respect to plan loan offset amounts, including
qualified plan loan offset amounts, treated as distributed on or after August 20, 2020, which is the date of the publication of the QPLO proposed regulations.... These regulations apply to plan loan offset amounts, including qualified plan loan offset amounts, treated as distributed on or after January 1, 2021." Internal Revenue Service [IRS] |
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[Sponsored]
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[Guidance Overview]
"Keep this [glossary] as a (hopefully) handy guide when you find yourself caught in the middle of a conversation about 'Pooled Employer Plans' and need to quickly summarize the different MEP types: [1] MEP ... [2] PEP ... [3] PPP ... [4] Group of Plans ... [5] ARP ... [6] PEO MEP ... [7] Corporate MEP ... [8] Unified Plan Rule, or 'One Bad Apple Rule' ... [9] Open MEPs." Business of Benefits |
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[Guidance Overview]
"First, barring any extensions to the CARES Act or subsequent legislation, participant loan payments must restart as of January 1, 2021.... Second, the loan must be reamortized to reflect the interest which accrued during the payment delays in 2020. Third, as part of the reamortization, the loan maturity date may be extended up to one year to account for the permitted suspension of payments." DWC |
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[Guidance Overview]
"The DOL states that it will now interpret more broadly its long-standing regulation defining investment advice so that more recommendations to investors, particularly rollover distribution recommendations, will result in the provision of 'investment advice' for purposes of Section 3(21)(A)(ii) of [ERISA] and Section 4975(e)(3)(B) of the Internal Revenue Code ... [If] finalized in its current form, a fiduciary will be able to receive 'conflicted compensation' in connection with providing investment advice to retail investors pursuant to the conditions of the Exemption. The Exemption will also allow a fiduciary to provide investment advice in connection with the recommendation of certain
principal transactions despite the inherent conflicts involved in such recommendations." Groom Law Group, via The Investment Lawyer |
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"[A]nnual plan reviews need to be more comprehensive this year ... [R]etirement plan fiduciaries should follow these steps for year-end reviews: [1] Assemble the retirement plan committee.... [2] Evaluate critical plan engagement practices.... [3] Review the participant communications strategy.... [4] Consider all fees and investment performance.... [5] Benchmarking." 401kTV |
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"Despite the turbulent economic conditions thus far in 2020, and speculation that, as a result, companies would stop making contributions to retirement plans, more than 90 percent still plan to make their retirement plan contributions this year ... [T]he majority of plan participants are also continuing to make retirement plan contributions.... [M]ost responding companies still seem optimistic that the financial impact of the COVID-19 pandemic will be short-lived -- though it bears noting that the economic impact varies widely by industry and by region." Plan Sponsor Council of America [PSCA] |
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"Guidance from regulators about missing participants and uncashed checks has been piecemeal. Recently, the IRS issued two pieces of guidance related to the transfer of retirement plan accounts to state unclaimed property funds. However, no guidance has stated that transferring retirement plan assets to state unclaimed property funds is permissible in the first place." planadviser |
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"November's 5.03% investment gain tops the whopping 4.68% return of April, putting 2020 in the record books for having two of the top 10 highest return months in the same year. This improvement was countered by a 24-basis point decrease in the monthly discount rate, however, which saw pension liabilities increase by $65 billion. As a result, the funded status for the Milliman 100 PFI improved by only $12 billion, while the funded ratio climbed from 85.2% at the end of October to 86.2% as of November 30." Milliman Retirement Town Hall |
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"If permitted in the plan document, a governmental plan can apply an older, higher indexed 401(a)(17) limit that was in place back on July 1, 1993, but ONLY for any individuals who first became a participant in the plan prior to the first day of the first plan year beginning after the earlier of: [1] the last day of the plan year by which a plan amendment to reflect the 401(a)(17) limit reduction made by section 13212 of OBRA '93 was both adopted and effective; or [2] December 31, 1995." PLANSPONSOR; free registration may be required |
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31 pages. "This year's management challenges are: [1] Improve Agency disability program integrity; [2] Improve information technology security and complete system modernization; [3] Improve management of Railroad Medicare; [4] Improve payment accuracy and transparency; [5] Financial management and reporting issues; [6] Compliance concerns identified." Office of Inspector General, U.S. Railroad Retirement Board |
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"In the midst of the pandemic, 35% say they do not have enough in cash reserves, including 34% of those in their 40s, 43% of those in their 50s, and 25% of those ages 60 to 65. Four in five (78%) wish they started saving earlier. More than half (57%) say that they would panic if the value of their investments declined 30% to 50%. Indeed, many investors have shifted to lower-risk portfolios due to the pandemic, including 34% of those in their 40s, 22% of those in their 50s, and 21% of those ages 60-65." Edelman Financial Engines |
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[Opinion]
"The [Center for Retirement Research at Boston College] study investigates ESG investing in two ways: [1] by comparing the overall investment performance of pension funds that use ESG to those that do not; and [2] by comparing the investment performance of ESG mutual funds to passively managed index funds. The results show that, on average, [1] plans that use ESG criteria have lower returns than those that do not, and [2] ESG mutual funds produce lower returns than passively managed indexed funds -- in part because they charge much higher fees." Jean-Pierre Aubry in Fiduciary News; free registration required |
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[Opinion]
"Rather than raising taxes on the wealthiest to cover the pension deficit, the state will now have to look toward alternative measures, including broader tax increases across the board as well as cutting future pension earnings for new workers. One of the paths to reform would be a complete overhaul: a constitutional amendment to cut already-promised benefits. The state should also consider taking smaller measures, including considering more stable investments and using more realistic investment predictions." Institute for Pension Fund Integrity [IPFI] |
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Benefits in General |
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[Guidance Overview]
"ERISA's definition of a party in interest is broader than a related party as that term is defined by GAAP. Parties in interest include all entities and individuals that provide services to the plan; however, these entities may not necessarily be related parties. Party in interest transactions are prohibited under ERISA Section 406(a) unless specifically exempted from the prohibited transaction rules. Material transactions with Related Parties must be disclosed. Transactions with Parties in Interest must be disclosed unless they are listed as a Statutory or Administrative Exemption." Belfint Lyons Shuman |
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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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"We have a cash balance plan with NRA of 62+5 and a 401k plan with NRA of 65+5. For 401(a)(4) testing, what NRA do you use? Note that software seems to only allow one NRA assumption." BenefitsLink Message Boards |
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"Have not dealt with loans for a few years, and now a participant wants one. Loan procedure states prime rate plus 1%. Is that a reasonable rate of interest? I believe 2% is the unofficial safe harbor." BenefitsLink Message Boards |
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Press Releases |
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NTSA Names Luckinbill as New Executive Director
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Most Popular Items in the Previous Issue |
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Sixth Circuit Recognizes Benefit Plan’s Equitable Lien on Overpayment
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