Retirement Plans Newsletter

December 31, 2020

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[Guidance Overview]

IRS Extends Temporary Relief from 'Physical Presence' Requirement for Certain Retirement Plan Elections

"Although the term 'participant election' is used in the regulatory guidance and the Notices, the physical presence requirement -- and the relief -- applies for any consent, election, request, agreement or similar communication from a participant, beneficiary, alternate payee, or an individual entitled to benefits under a retirement plan, employee benefit arrangement, or individual retirement plans where a physical presence is required. For example, the election to waive a qualified joint and survivor annuity benefit from a retirement plan." Icon to read more

Faegre Drinker

[Guidance Overview]

IRS' Version of Missing Participant Guidance (PDF)

"Plan sponsors, and their recordkeepers, should review their plan procedures to see if the escheatment process is used. And, only if it is, then they should update their escheatment process as necessary to reflect the standard Form 1099-R reporting and withholding rules by no later than for payments made after 2021. This has been particularly difficult for processes that escheat in-kind, as that makes it difficult to obtain the necessary withholding." Icon to read more

Groom Law Group

Exceptional Usefulness and Quality iconThe Return of Identity Theft: The Risk Fights Back

"[H]aving a properly written, well-understood, cyber insurance policy can be the difference between making it through an incident relatively unscathed or emerging at the end, significantly battered and bruised (or, frankly, perhaps not emerging at all).... This rapid evolution in coverage prompts a few questions: Is any of this covered by my current insurance? What does cyber insurance actually do for me? How do I know if my broker knows my cyber risk?" Icon to read more

Ferenczy Benefits Law Center

Exceptional Usefulness and Quality icon2021 ERISA Plan Compliance Calendar (PDF)

"A compliance calendar keeps track of your company's required filings, their due dates and related details so you can avoid incurring any fines or other penalties for late filings or missing information. [This chart] is intended to alert ... readers to some of the significant regulatory dates for 2021[.]" Icon to read more

PLANSPONSOR; free registration may be required

Mutual Fund Revenue Sharing in 401(k) Plans

"Recordkeepers in DC pension plans are often paid indirectly in the form of revenue sharing from third-party funds on the menu. [The authors] show that these arrangements affect the investment menu of 401(k) plans. Revenue-sharing funds are more likely to be added to the menu and are less likely to be deleted. Overall, revenue-sharing plans are more expensive as higher expense ratios are not offset by lower direct fees or by superior performance. Rebates increase with the market power of the recordkeeper suggesting that third-party funds may revenue share to gain access to retirement assets." Icon to read more

Veronika Krepely Pool, Clemens Sialm, Irina Stefanescu, via SSRN

Selected Discussions
on the BenefitsLink Message Boards

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Retail Association Sponsors a MEP; One Employer Has Non-Retail Employer In Its Controlled Group

"An Association MEP exists of businesses that operate stores of a certain retailer. These stores sell products. One of its participating employers is in a controlled group with a business that cleans pools as a service but is not a member of the retail association that sponsors the MEP and couldn't be a member based on the association bylaws. Would the fact that a controlled group exists and the plan document automatically pulls in related group members allow this pool cleaning business to participate in the MEP that it otherwise wouldn't be eligible to participate in? Is anything violated by allowing this?" Icon to read more

BenefitsLink Message Boards

Individual Owns TPA That Provides Services to Plan Sponsor Partly Owned by the Individual

"Individual A is a minority shareholder -- owns 1% of Company B. Individual A runs a TPA/service provider and wants to provide services to Company B's retirement plan. Does this fall under the standard service provider exception?" Icon to read more

BenefitsLink Message Boards

Tax on Reversions per Section 4980 -- Handling Unallocated Amounts Until Termination of a Replacement plan

"Does Internal Revenue Code section 4980(d)(2)(C)(iv) ('Unallocated amounts at termination' of a replacement plan into which assets have been transferred) imply that if the amount of the transfer is not allocated by the end of the 7-year period referred to in 4980(d)(2)(C)(i) that it can continue to be allocated, until the termination of the replacement plan? For example, in an owner-and-spouse-only scenario, if you need more than 7 years to allocate due to the 415(c) limitations, you could continue this for additional years as necessary as long as the plan is open and there is participant compensation to allocate it against?" Icon to read more

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David Rhett Baker, J.D., Editor and Publisher  davebaker@benefitslink.com
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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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