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[Official Guidance]

Text of DOL Final Regs: Fiduciary Duties Regarding Proxy Voting and Shareholder Rights (PDF)

146 pages. "The [DOL] is amending the 'Investment Duties' regulation to address the application of the prudence and exclusive purpose duties under [ERISA] to the exercise of shareholder rights, including proxy voting, the use of written proxy voting policies and guidelines, and the selection and monitoring of proxy advisory firms. This document also removes Interpretive Bulletin 2016-01 from the Code of Federal Regulations as it no longer represents the view of the Department regarding the proper interpretation of ERISA with respect to the exercise of shareholder rights by fiduciaries of ERISA-covered plans....

"The final rule reflects a number of modifications made by the Department in response to the public comments.... The most significant adjustment from the proposal results from changes to make the final rule a more principles-based approach in response to commenters.... The final rule carries forward from the proposal a provision that requires plan fiduciaries, when deciding whether to exercise shareholder rights and when exercising such rights, including the voting of proxies, to carry out their duties prudently and solely in the interests of the plan participants and beneficiaries and for the exclusive purpose of providing benefits to participants and beneficiaries and defraying the reasonable expenses of administering the plan. Also similar to the proposal, but with some modifications in response to public comments, the final rule includes a list of principles that fiduciaries must comply with when making decisions on exercising shareholder rights, including proxy voting, in order to meet their prudence and loyalty duties under ERISA section 404(a)(1)(A) and (B), including duties to act solely in accordance with the economic interest of the plan and its participants and beneficiaries and not subordinate the interests of the participants and beneficiaries in their retirement income or financial benefits under the plan to any non-pecuniary objective, or promote non-pecuniary benefits or goals unrelated to the financial interests of the plan's participants and beneficiaries.... Finally, the final rule includes specific language to make clear that plan fiduciaries do not have an obligation to vote all proxies, as well as a safe harbor provision, modified from the proposal, pursuant to which plan fiduciaries may adopt proxy voting policies and parameters prudently designed to serve the plan's economic interest that provide optional means for satisfying their fiduciary responsibilities regarding determining whether to vote under ERISA sections 404(a)(1)(A) and 404(a)(1)(B)." Icon to read more

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

[Official Guidance]

Text of IRS Notice 2020-87: Weighted Average Interest Rates, Yield Curves, and Segment Rates for December 2020 (PDF)

"This notice provides guidance on the corporate bond monthly yield curve, the corresponding spot segment rates used under Section 417(e)(3), and the 24-month average segment rates under Section 430(h)(2) ... In addition, this notice provides guidance as to the interest rate on 30-year Treasury securities under Section 417(e)(3)(A)(ii)(II) as in effect for plan years beginning before 2008 and the 30-year Treasury weighted average rate under Section 431(c)(6)(E)(ii)(I)." Icon to read more

Internal Revenue Service [IRS]

[Guidance Overview]

Preparing for the End of the Plan Year, Calendar Year, and Next Year

"The end of the plan year tends to be a busy time for administration, as plan sponsors and service providers work to ensure that all requirements are met before another plan year has ticked away.... 2020 has presented unbelievably unique challenges.... The [CARES Act], passed in March 2020, has provided us with some solutions to COVID-related problems, as well as several new twists to our usual operations." Icon to read more

Ferenczy Benefits Law Center

[Guidance Overview]

Final Rule for Selecting Retirement Plan Investments Leaves ESG Behind

"Due to complaints from commentators about a lack of industry consensus about what constitutes an 'ESG' investment, the DOL dropped the 'ESG' terminology from the Financial Factors Rule. Instead, the Financial Factors Rule concentrates on whether a factor involved in selecting plan investments is 'pecuniary.' " Icon to read more

McDermott Will & Emery

PBGC Statement of Regulatory and Deregulatory Priorities (PDF)

"[M]odernization modifications PBGC is considering at this time are to the interest, mortality, and expense load assumptions used to determine the present value of benefits under the asset allocation regulation (for single-employer plans) and for determining mass withdrawal liability payments (for multiemployer plans) ... PBGC expects to finalize a rule that would simplify how multiemployer plans calculate withdrawal liability where changes in contributions or benefits are, by statute, to be disregarded in that calculation ... PBGC also plans to propose a rulemaking that would add a new part 4022A to PBGC's regulations to provide guidance on determining the monthly amount of multiemployer plan benefits guaranteed by PBGC." Icon to read more

Pension Benefit Guaranty Corporation [PBGC]

Pension Plan LDI: How to Avoid Pitfalls from Long Bonds, Protect Against Low Rates, and Benefit from Rate Increases

"To the extent sponsors have been holding long bonds, they've generally done a very good job of protecting funded status when rates fall (which has been fairly common). If rates increase though, the benefit to a pension plan may be muted due to these investments. In a period of historically low interest rates where many are optimistic about rate increases, swaptions present an opportunity to protect against interest rate declines while still being able to benefit from interest rate increases." Icon to read more

River and Mercantile

Income Annuities Are 'Best Solution for DC Plans'

"Annuitization products where an investor converts a lump sum to a guaranteed income stream in retirement are a 'better solution for defined contribution plans,' according to a recent [publication by] Cerulli ... But 64% of respondents to Cerulli's 2020 Target-Date Manager Survey still cite lack of plan sponsor demand for guaranteed retirement solutions as an obstacle to adoption -- despite the 2019 SECURE Act's provision of regulatory protections for offering annuities." Icon to read more

Retirement Income Journal

How Many Asset Classes Are Needed? Boring Has Been Beautiful, So Far

"Callan constructed a hypothetical 'most boring glidepath' containing only the S&P 500 and Bloomberg Barclays US Aggregate Bond Indices to meet the minimum diversification standard for a QDIA. The result: Our boring glidepath performs better historically compared to peers, as well as to a glidepath containing the market average underlying exposure to 24 distinct asset classes. [This article shows] results for an age 45 allocation using both our boring glidepath and the 24 asset class glidepath." Icon to read more


Employee Options for Keeping Old Retirement Accounts

"Generally you cannot keep contributing to an employer-sponsored plan, such as a 401(k) or 403(b), if you have left that employer, but you do have several options when it comes to managing those savings going forward ... Determining which is right for you requires a thorough review of your financial picture and long term goals." Icon to read more


Older Americans' Spending Profiles: One Size Does Not Fit All

"Typical Spenders had no large variation in spending relative to the overall sample average.... Home Spenders are households allocating 60 percent or more of their total spending to housing expenses.... Health Spenders are households allocating 20 percent or more of their total spending to out-of-pocket health expenses.... Discretionary Spenders are households allocating 25 percent or more of their total spending on the entertainment, gifts, and contributions categories.... The research also examined how spenders transition over time." Icon to read more

Employee Benefit Research Institute [EBRI]

Benefits in General

[Official Guidance]

Text of Draft IRS Publication 15-A: Employer's Supplemental Tax Guide, for Use in 2021 (PDF)

28 pages, Dec. 10, 2020. Topics include: [1] Who are employees? [2] Employee or independent contractor? [3] Employees of exempt organizations. [4] Religious exemptions and special rules for ministers. [5] Wages and other compensation. [6] Sick pay reporting. [7] Pensions and annuities. Icon to read more

Internal Revenue Service [IRS]

Congressional Pushback to Recent IRS Guidance on Deductibility of Expenses Related to PPP Loans

"Given existing Internal Revenue Code provisions and regulations, as well as federal case law, regarding the tax deductibility of reimbursable expenses, it might be challenging for the Treasury Department and IRS to now stake out a rationale that directly opposes the position it has taken in Notice 2020-32, Revenue Ruling 2020-27, and Revenue Procedure 2020-51. However, the joint statement by Senators Grassley and Wyden indicates that there is bipartisan support for a potential legislative solution[.]" Icon to read more

Groom Law Group

Executive Compensation
and Nonqualified Plans

Trends in Nonqualified Deferred Compensation Plans

"What employers had to say: Likely to make positive or no changes to benefits or staffing due to the pandemic.... Helping employees save for retirement is key. Providing competitive benefits is even more important. Still unlikely to make plan changes.... What key employees [said]: Pandemic impacts make them more likely to stay with their current employer.... Retirement remains a top priority.... The income bridge strategy is a popular approach in retirement. Employer match and affordability impact participation." Icon to read more

Principal Financial Group

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.

Switching to More Restrictive Vesting Schedule

"Client is wanting to change their vesting schedule from 100% immediate to 4-year graded (25/80/75/100). My understanding is that vesting is a protected benefit which cannot be reduced or eliminated, such that the more restrictive schedule must be applied to all future contributions received on or after the effective date of the change, unless you make all current participants 100% immediately vested in all future contributions as well and apply the more restrictive schedule to new participants. Is this how more restrictive vesting should be applied?" Icon to read more

BenefitsLink Message Boards

Excise Tax on Unpaid Minimum -- What Happens in Year 2?

"Suppose a 5500 shows an unpaid minimum for one year (2018). If the unpaid minimum is not corrected by the time the of the next 5500 filing (2019) and thus is reflected on the schedule SB line 40 and on the 5500-SF line 11a, will the 10% excise tax be experienced again on the yet unpaid amount?" Icon to read more

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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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