Retirement Plans Newsletter

December 8, 2020 logo logo
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Telecommute / Jacksonville FL

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[Official Guidance]

Text of IRS Final Regs: Rollover Rules for Qualified Plan Loan Offset Amounts (PDF)

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." Icon to read more

Internal Revenue Service [IRS]


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[Guidance Overview]

Pooled Employer Plans Are Nearly Upon Us

"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." Icon to read more

Business of Benefits

[Guidance Overview]

Exceptional Usefulness and Quality iconUpcoming Deadline iconCARES Act Relief for Retirement Plan Loan Payments Is Ending. Now What?

"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." Icon to read more


[Guidance Overview]

DOL Takes Another Look at Investment Advice (PDF)

"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." Icon to read more

Groom Law Group, via The Investment Lawyer

Retirement Plan Fiduciaries Now Look Through a COVID Lens

"[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." Icon to read more


The Impact of COVID-19 on 401(k) Plans (PDF)

"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." Icon to read more

Plan Sponsor Council of America [PSCA]

Guidance on Missing Participants Listed on IRS Priority Guidance Plan

"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." Icon to read more


Corporate Pension Funded Status Improves Thanks to November Investment Gains

"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." Icon to read more

Milliman Retirement Town Hall

Some Governmental Plans Have Special Compensation Limit

"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." Icon to read more

PLANSPONSOR; free registration may be required

Management and Performance Challenges Facing the Railroad Retirement Board for Fiscal Year 2020 (PDF)

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." Icon to read more

Office of Inspector General, U.S. Railroad Retirement Board

Half of Americans with Incomes Over $100,000 Think They’ll Never Be Able to Retire

"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." Icon to read more

Edelman Financial Engines


Research Concludes ESG Investments Do Not Belong in Retirement Plans

"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." Icon to read more

Jean-Pierre Aubry in Fiduciary News; free registration required


Illinois Pension Funding Crisis Looming, Tax Measure Failure Hurts Prospects

"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." Icon to read more

Institute for Pension Fund Integrity [IPFI]

Benefits in General

[Guidance Overview]

'Party in Interest' Under ERISA vs. 'Related Party' Under GAAP

"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." Icon to read more

Belfint Lyons Shuman

Selected Discussions
on the BenefitsLink Message Boards

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Combo Testing for Plans with Different NRAs

"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." Icon to read more

BenefitsLink Message Boards

Minimum Interest Rate on a Participant Loan?

"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." Icon to read more

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Press Releases

NTSA Names Luckinbill as New Executive Director
National Tax-Deferred Savings Association [NTSA]

Most Popular Items in the Previous Issue

View COVID-19 News and Resources, Inc.
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Lois Baker, J.D., President
David Rhett Baker, J.D., Editor and Publisher
Holly Horton, Business Manager

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BenefitsLink Retirement Plans Newsletter, ISSN no. 1536-9587. Copyright 2020, 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, 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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