Retirement Plans Newsletter

December 21, 2020

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[Official Guidance]

Text of PBGC Submission for OMB Approval: Payment of Premiums

"PBGC intends to modify the 2021 premium filing to require certain plans that transferred assets to another plan (or received assets from another plan) at the beginning of the plan year to report additional information about the transfer. More specifically, such plans will be required to report whether the transfer was de minimis and, in the case of a de minimis merger, whether the transferee plan had fewer assets than the transferor plan.... PBGC also intends to update the premium rates and make conforming, clarifying, and editorial changes. One such change, to conform with the [SECURE Act], is adding the option of 'CSEC plan' (meaning cooperative and small-employer charity plan) as a response to the question of 'Plan type.' " Icon to read more

Pension Benefit Guaranty Corporation [PBGC]

[Guidance Overview]

IRS Releases Final Regs for Plan Loan Offset Rollovers

"No changes were made to the originally proposed regulations except that the terms of the final regulations are only required to be applied to QPLO amounts that are treated under the regulations as distributed on or after January 1, 2021.... The regulations specifically define a plan loan offset occurring because of severance from employment as an offset for failure to timely repay a loan that occurs by the first anniversary of the date of the employee's severance. Several helpful examples are given that illustrate the operation of the QPLO rules in a variety of distribution and repayment failure circumstances." Icon to read more

Jackson Lewis P.C.

Retirement Plan Reminders for a New Year

"Whenever the calendar turns to a new year, certain opportunities and obligations end and new ones arise. This compliance insight focuses on: [1] The end of various [CARES Act] retirement plan provisions. [2] Deadline extensions that do or do not continue into 2021. [3] Changes coming in the new year." Icon to read more

Segal

Exceptional Usefulness and Quality icon2021 Retirement Plan Compliance Calendars Now Available

"[T]hese retirement plan compliance calendars list key IRS, PBGC, and [DOL] reporting and disclosure deadlines. Two calendars are available: A DB plan calendar provides key 2021 dates for plan years starting Jan. 1. A separate DC plan calendar supplies 2021 deadlines for plan years starting Jan. 1." Icon to read more

Mercer

How Will Your Retirement Plan Fare in an Audit or Lawsuit?

"[T]he beginning of the new year is also a good time for fiduciaries to review basic plan policies and operations to see how they can be improved. The better these are, the greater the chances your plan will survive an audit with no change or prevail in a fiduciary breach lawsuit.... Reviewing your investment policy statement ... Setting up an effective plan committee ... Keeping up with compliance." Icon to read more

Cohen & Buckmann, P.C.

A Staple of 401(k) Plans Investing Is Challenged

"One way ... participants can mitigate risk and market volatility within their retirement plan is through the use of a Quality Low Volatility (QLV) portfolio.... In addition to using low volatility stocks to smooth the investment ride, ... investing in the highest quality companies -- those with strong cash flows, profitability and management efficiency -- may further mitigate market drawdowns and potentially improve performance." Icon to read more

401(k) Specialist

Bill to Expand MEP Usage Introduced in Senate

"The Improving Access to Retirement Savings Act, introduced Dec. 18 ... would allow more groups to participate in MEPs by expanding coverage to include 403(b) plans. It also clarifies that small employers that join a MEP may take the small employer pension plan startup credit for their first three years in a MEP, regardless of how long the MEP has been in existence." Icon to read more

Pensions & Investments

Exceptional Usefulness and Quality iconTracking State and City Retirement Initiatives

"This article summarizes state and city retirement initiatives for private-sector workers and rounds up relevant ... resources. This listing will be updated periodically and may not always reflect the latest developments in every state." Icon to read more

Mercer

2020 Federal Retirement Plan Participant Satisfaction Survey (PDF)

53 pages. "87% of TSP participants are satisfied (51%) or extremely satisfied (36%) with the TSP Overall.... Auto-enrolled participants are less satisfied overall with the TSP than are those who are not part of the auto-enroll program ... Participants' tenure, TSP balance and salary play a role in driving overall satisfaction with the TSP ... Seven of eight participants would be at least somewhat likely to recommend TSP." Icon to read more

Federal Retirement Thrift Investment Board [FRTIB]

Exceptional Usefulness and Quality iconDoes Your Retirement Planning Avoid the 'Survivor Trap'?

"[W]hen a spouse passes, the smaller of the couple's two Social Security checks automatically goes away.... if the replacement income comes from tax-deferred investments, that could lead to another problem -- a bigger tax bill.... [H]igher-income retirees also could end up paying more taxes on Social Security, a surcharge on Medicare, and, possibly, a surtax on net investment income that they wouldn't have been subject to prior to their spouse's death, because the thresholds for these taxes are lower for single filers." Icon to read more

Kiplinger

[Opinion]

Exceptional Usefulness and Quality iconRetirement and Divorce: New Report Highlights What We Don’t Know

"Perhaps the most important finding [of a recent GAO report] is that very few people obtain QDROs relative to the number of people who go through divorce. This is a huge problem, because this means that a lot of people who are dependent on a spouse for retirement income are not getting a fair share of that retirement income if they divorce, even though they are entitled to a share under state law." Icon to read more

Pension Rights Center

[Opinion]

The 'Terror' of 401(k) Litigation

"When the dust 'settles' in these cases ... most still produce nothing but a monetary 'arrangement' -- the amount nearly always significantly less than the damages alleged, and the per participant recovery relatively small.... Those suits that do go to trial generally seem to turn out in favor of the plan fiduciary(ies), either because the substance behind the plaintiffs' claims is found to be insufficient, or the actions of the plan fiduciaries are determined to clear the admittedly high bar of ERISA's prudence." Icon to read more

Data 'Points'

[Opinion]

How an ERISA Fiduciary May Try to Save the World

"The Investment Duties Regulation, like prior DOL regulations, correctly permits ERISA fiduciaries to consider ethical factors ... to make investment decisions ... as long as those considerations do not reduce an investment's expected economic performance.... The Regulation, unlike the earlier DOL regulations, however, prohibits the managers of a Qualified Default Investment Alternative (QDIA) for a self-directed plan, such as many 401(k) plans, from being too overt in pursuing ethical factor investing. In particular, it appears an S&P Index fund may not be a permissible component of a QDIA because such a fund must exclude any new corporation with multiple class share structure, such as Zoom." Icon to read more

Law Offices of Albert Feuer, via SSRN

Executive Compensation
and Nonqualified Plans

[Official Guidance]

Text of IRS Final Regs: Certain Employee Remuneration in Excess of $1,000,000 Under Internal Revenue Code Section 162(m) (PDF)

109 pages. "This document sets forth final regulations under section 162(m) of the Internal Revenue Code, which for federal income tax purposes limits the deduction for certain employee remuneration in excess of $1,000,000.... These final regulations retain the basic approach and structure of the proposed regulations, with certain revisions (including revised examples)." Icon to read more

Internal Revenue Service [IRS]

[Guidance Overview]

Hot Off the Presses! Final Regs Under Revised Section 162(m)

"The final regulations provide that a corporation that was not a publicly held corporation and then becomes a publicly held corporation on or before December 20, 2019, may rely on the transition relief provided in Section 1.162-27(f)(1) until the earliest of the events provided in Section 1.162-27(f)(2)." Icon to read more

Winston & Strawn LLP

Press Releases

DOL Files Complaint to Protect Participants and Beneficiaries of Failing Medova MEWA Operating in 38 States
Employee Benefits Security Administration [EBSA], U.S. Department of Labor

Most Popular Items in the Previous Issue

IRS Regulatory Agenda, Fall 2020 (Employee Benefit Items)
Internal Revenue Service [IRS], U.S. Department of the Treasury

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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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