Retirement Plans Newsletter

December 14, 2020

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[Official Guidance]

Text of PBGC Interest Rate Assumptions for Valuing Benefits in Single-Employer Plans, January and First Quarter 2021

"The first quarter 2021 interest assumptions will be 1.69 percent for the first 20 years following the valuation date and 1.66 percent thereafter. In comparison with the interest assumptions in effect for the fourth quarter of 2020, these interest assumptions represent no change in the select period (the period during which the select rate (the initial rate) applies), an increase of 0.07 percent in the select rate, and an increase of 0.26 percent in the ultimate rate (the final rate)." Icon to read more

Pension Benefit Guaranty Corporation [PBGC]

[Guidance Overview]

DOL Fact Sheet: Fiduciary Duties Regarding Proxy Voting and Shareholder Rights

"The final rule allows fiduciaries to adopt optional means (safe harbors) for satisfying their fiduciary responsibilities with respect to decisions on whether to vote proxies.... The final rule provides that plan fiduciaries must periodically review proxy voting policies that are adopted under this rule. The Department added a new provision clarifying that the final rule does not apply to voting, and similar rights on shares held in defined contribution plans (including ESOPs) that are passed through to participants and beneficiaries that hold the shares in their individual accounts.... The final rule also continues to provide guidance on a number of specific issues, such as the role of plan trustees and investment managers, practices of following proxy advisory firm recommendations (robo-voting practices), and the treatment of conflicting plan policies in pooled investment vehicles." Icon to read more

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

DOL Finalizes Rule on Proxy Voting

"The [DOL] unveiled [on December 11] a more principles-based final rule on proxy voting that did away with requirements in the proposed version requiring ERISA-governed fiduciaries to cast proxy votes any time the matter being voted on would have an economic impact on the plan but also only cast votes when there is an economic impact on the retirement plan." Icon to read more

Pensions & Investments

Ford Motor Case Highlights ERISA Issues with Recovery of Overpayments

"The Sixth Circuit's recent decision ... provides a useful illustration of the key issues that arise when ERISA plans seek to recover money from participants or beneficiaries.... Whether a plan can recover in a given circumstance is often a complex and fact intensive inquiry -- here, the Ford plan committee followed a thorough process that ultimately prevailed." [Zirbel v. Ford Motor Co., No. 20-1149 (6th Cir. Nov. 16, 2020] Icon to read more

Groom Law Group

IRS Provides SECURE Act Guidance for 401(k) and 403(b) Plans

"Employers that use the 3% non-elective approach to safe harbor plan design, no longer have to issue traditional safe harbor notices. Nonetheless, the best advice is issue a notice reserving the right to reduce or suspend safe harbor non-elective contributions during the year.... [T]he due date to issue such a notice for 2021 is Jan 31, 2021." Icon to read more

RSM US

TIGTA Report: Improvements Have Been Made, but Controls Need to Be Strengthened to Detect Improper Self-Employed Retirement Deductions (PDF)

38 pages. "TIGTA made six recommendations, including adding Schedule SE to processing controls, enhancing controls to determine the reasonableness of self-employed retirement deductions, assessing the need for additional third-party data to verify deductions, and changing Form 5498 instructions for consistency. In their response, IRS management agreed with two recommendations and plans to take corrective actions. However, the IRS did not agree to enhancing controls to determine the reasonableness of self-employed retirement deductions, assessing the need for additional third-party data, and changing the Form 5498 instructions. TIGTA believes these actions would improve tax compliance and potentially increase revenue by $890 million over the next five years." Icon to read more

Treasury Inspector General for Tax Administration [TIGTA], U.S. Department of the Treasury

[Opinion]

The DOL's New Rule Is a Much-Needed Step Toward Ensuring Fiduciary Obligations

"The rule curbs the practice of automatic voting and specifies that plan fiduciaries are no longer required to vote on all proxy matters. Perhaps most prominently, the scope of proxy voting would be narrowed so that fund fiduciaries could cast proxy votes only when they would have an economic impact on the retirement plan ... These are important steps toward ensuring that fund managers must solely consider factors affecting the value of a plan's investment." Icon to read more

Institute for Pension Fund Integrity [IPFI]

[Opinion]

SPARK Letter to IRS Requesting Guidance on Electronic Delivery Standards (PDF)

"[T]he SPARK Institute urges Treasury and IRS to issue guidance indicating that a retirement plan administrator will satisfy its obligations to deliver notices ... if the administrator delivers such notices in accordance with the electronic delivery safe harbors described in Labor Regulation section 2520.104b-31. In the alternative, to the extent that Treasury and IRS believe that such guidance cannot be reconciled with the existing conditions described in Treasury Regulation section 1.401(a)-21, we request that Treasury and IRS expressly identify the circumstances under which disclosures delivered to a 'covered individual' in accordance with Labor Regulation section 2520.104b-31 will also be delivered in accordance with Treasury Regulation section 1.401(a)-21." Icon to read more

The SPARK Institute

Benefits in General

[Official Guidance]

IRS Announces Tax Relief for Hurricane Zeta Victims in Alabama

"Individuals and households who reside or have a business in Clarke, Dallas, Marengo, Mobile, Perry, Washington, and Wilcox counties qualify for tax relief.... [C]ertain deadlines falling on or after October 28, 2020, and before March 1, 2021, are postponed through March 1, 2021." Icon to read more

Internal Revenue Service [IRS]

Press Releases

Most Popular Items in the Previous Issue

Text of DOL Final Regs: Fiduciary Duties Regarding Proxy Voting and Shareholder Rights (PDF)
Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL]

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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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