Retirement Plans Newsletter

January 15, 2021

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[Official Guidance]

Text of 2020 Instructions for IRS Form 8955-SSA: Annual Registration Statement Identifying Separated Participants with Deferred Vested Benefits (PDF)

"What's New: ... [1] The instructions under Purpose of Form have been revised to clarify how the Form 8955-SSA is to be used to report information about deferred vested participants using the correct Entry Codes.... [2] The Caution under How To File has been revised to clarify that no attachments are allowed with Form 8955-SSA.... [3] The instructions under Transfer of a Participant's Benefit to the Plan of a New Employer have been revised to clarify that the new plan administrator must complete a Form 8955-SSA using Entry Code C, except in the rare situation where the previous plan number and employer identification number (EIN) are not available; then, Entry Code A would be used." Icon to read more

Internal Revenue Service [IRS]

[Guidance Overview]

DOL Issues Missing Participant Guidance for Retirement Plans

"[The DOL] summary identifies a number of red flags for missing participant issues, including when there are a significant number of terminated vested participants who have attained normal retirement age without commencing their benefits or when there [is] a lack of policies and procedures for handling returned mail. In the DOL's view, a sound fiduciary process requires ongoing efforts to keep contact information in census files up to date rather than waiting to rely on participant searches when participants are determined to be missing or nonresponsive." Icon to read more

Kilpatrick Townsend

[Guidance Overview]

DOL Issues Guidance on Searching for Missing Participants

"The guidance provides DOL's views on what is 'best practices' in searching for missing participants and a glimpse into DOL's enforcement process under its missing participant initiative. However, the guidance does not establish the type of clear, bright-line rules many plan sponsors and services providers were asking for." Icon to read more

Groom Law Group

[Guidance Overview]

Retirement Plan Relief in Consolidated Appropriations Act, 2021

"The retirement plan relief provisions in the CAA are divided between [1] qualified disaster relief (including actions Congress has historically taken to relax normal retirement plan distribution and withdrawal rules in light of a natural disaster) and [2] separate COVID-19 relief (including new rules for retirement plans in light of the ongoing COVID-19 pandemic). These retirement plan provisions are permissive, meaning that a plan sponsor is not required to adopt the provision." Icon to read more

Trucker Huss

401(k) Plan Audit Tips -- from an Auditor's Perspective

"Audit request lists will soon be going out to Plan Sponsors to confirm audit dates and information request dates. While the receipt of these request lists can cause blood pressure to rise at the Plan Sponsor, there are some simple tasks the Plan Sponsor can perform to prepare for the annual audit of their 401k plan, and make the audit process smoother." Icon to read more

Bradley J. Bartells, CPA, via LinkedIn

Taking Stock: LDI-Focused Corporate Pension Plans Win in 2020

"Liability driven investment-focused pension plans that hedge interest-rate risk with long-duration bonds fared better in 2020 than longer-duration total-return plans with allocations more focused on equities." Icon to read more

NEPC

Plaintiffs in DST Systems 401(k) Suit Awarded $79 Million

"The original complaint, filed in September 2017, accused the defendants of pursuing 'an exceptionally imprudent investment strategy with respect to a significant portion of the plan's assets.' The complaint said the defendants 'failed to adequately monitor the investments of the plan and the fiduciaries,' causing participants to lose 'well in excess of $100 million.' According to the proposed settlement, DST Systems will pay $27 million; the investment advisory firm Ruane, Cunniff & Goldberg will pay $21.5 million; and Robert D. Goldberg, the former president and CEO of the firm, will pay $30.5 million." Icon to read more

Pensions & Investments

When Roth Conversions Are the Right Move -- and When They Aren't

"Among those who should consider converting to a Roth are: Anyone who feels that when they retire they will have income that puts them in a higher tax bracket than their current bracket.... Anyone between the ages of 60 to 72 who is retired and on a limited income of Social Security.... Investors like the couple I am working with who want to leave a tax-free legacy behind for their heirs." Icon to read more

Kiplinger

Selected Discussions
on the BenefitsLink Message Boards

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Family Attribution for 2% S Corp Shareholders Expands Use of Form 5500-EZ as a 'One-Participant Plan'

"The instructions to Form 5500-EZ make it pretty clear that IRS considers a plan wherein the husband AND wife together own 100%. What about attribution -- wouldn't the spouse of the owner be counted as an owner? Or the daughter of an owner if she is a stockholder?" Icon to read more

BenefitsLink Message Boards

Can the Reallocation of DB Surplus Transferred Into a DC Plan Be Over and Above the 25% Deduction Limitation?

"In a defined contribution plan, can the transferred defined benefit plan surplus assets (from a termination of the DB plan) being released for the 2020 plan year be allocated in addition to the employer's contribution (equal to the 25% of eligible pay) or does it count toward that 25% deduction limitation?" Icon to read more

BenefitsLink Message Boards

Allocation Condition -- 1,000 Hours Unless 'Retires' During the Plan Year

"For an allocation of the year's profit sharing contribution, a plan has an allocation condition of 1,000 hours and employment on last day of the plan year, unless 'Participant retires during the plan year'. What does 'retires' mean?" Icon to read more

BenefitsLink Message Boards

Due Date of Form 945 for 2020

"Participant received a distribution in December. Client has until the 15th day of the following month to pay the withholding. Accountant paid the withholding electronically on January 8, 2021. For which year would the Form 945 be due? I'm attempting to think ahead of a possible problem with IRS." Icon to read more

BenefitsLink Message Boards

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Press Releases

Most Popular Items in the Previous Issue

Best Practices for ERISA Plan Fiduciary Governance (PDF)
Winston & Strawn LLP, via Defined Contribution Insights

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David Rhett Baker, J.D., Editor and Publisher
Holly Horton, Business Manager

BenefitsLink Retirement Plans Newsletter, ISSN no. 1536-9587. Copyright 2021 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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