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January 19, 2021 logo logo
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[Official Guidance]

Text of IRS Notice 2021-09: Weighted Average Interest Rates, Yield Curves, and Segment Rates for January 2021 (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]


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[Guidance Overview]

DOL Provides Guidance on Missing Pension Plan Participants

"The first step towards establishing good procedures is for plan fiduciaries to identify problems with their plans. The Best Practices guidance identifies [a list of] 'red flags' indicating that a plan may have a missing participant problem ... [T]he DOL has compiled lists of best practices for recordkeeping, communication strategies, and missing participant searches." Icon to read more

Verrill Dana LLP

[Guidance Overview]

PBGC Simplifies Calculation of Liability for Withdrawal from Multiemployer Pension Plans

"The PBGC expects the final rule will benefit multiemployer pension plans that adopt the simplified methodology by reducing the cost associated with the withdrawal liability calculation. Notably, however, it does not appear that the final rule will result in any significant changes to the amounts of withdrawal liability assessed on employers that withdraw from multiemployer pension plans. The rule only simplifies the way that those amounts are calculated." Icon to read more


Motion Picture Industry ERISA Plan Under the Bright, Hot Lights

"At first glance, this looks like many other ERISA fiduciary breach lawsuits. The plaintiffs have the daunting task of working backwards from disappointing investment results to show that fiduciaries breached fundamental ERISA legal duties.... [This case] pushes the argument one step farther, claiming that the plan's basic design amounted to a breach of duty.... If bad design can be a violation of ERISA, the potential for fiduciary liability increases exponentially." [Klawonn v. Board of Directors for the Motion Picture Industry Pension Plans, No. 20-9194 (C.D. Cal. complaint filed Oct. 7, 2021)] Icon to read more

BlackRock 401(k) Plan Class Action Headed for Trial

"A class action alleging that BlackRock entities favored their own proprietary funds when selecting investment options for BlackRock's 401(k) Plan is headed for trial after [the District Court judge] denied both parties' motions for summary judgment[.]" [Baird v. BlackRock Inst'l. Trust Co., No. 17-1892 (N.D. Cal. Jan. 12, 2021)] Icon to read more

Jackson Lewis P.C.

When Can 401(k) Fiduciaries Get Excessive Fee Suits Dismissed?

"[T]he number of [ERISA fee litigation] lawsuits filed in 2020 was double the number filed in 2018. While some of the fiduciaries who were sued didn't take their fiduciary responsibilities seriously, many others who tried to do a good job were caught in the sights of aggressive class action attorneys.... [Two recent] decisions may provide a template for further dismissals of cases filed based on conclusory allegations and speculation rather than the actual conduct of the defendants." Icon to read more

Cohen & Buckmann, P.C.

Ethics, Earnings, and ERISA: Ethical-Factor Investing of Savings and Retirement Benefits

"Two fiduciary and tax-qualification questions arise in the retirement/savings plan realm with respect to ethical factor investing. Fiduciaries of non-ERISA plans, such as many government plans, often must satisfy tax-qualification rules similar to fiduciary rules governing ERISA plans. To what extent may fiduciaries make available ethical-factor investment options to participants and beneficiaries, who self-direct their investments, such as those for 401(k) plans or 403(b) plans? To what extent may plan fiduciaries, make ethical-factor investments on behalf of participants and beneficiaries, such as those for defined benefit plans?" Icon to read more

Law Offices of Albert Feuer, via SSRN

What If the Participant Already Spent an Overpayment from the Plan?

"Employers who issue overpayments greater than $100 should ask the participants to 'Give It Back!' and if/when they say they already spent the money, after responding 'Ok, Keep It!' employers must reiterate that the amount representing the overpayment can not benefit from favorable tax treatment and must be removed from any tax deferred accounts that accepted a rollover, if applicable. When appropriate, the employer or another party can put the amount of the overpayment in an unallocated amount to be offset against future employer contributions, or they can reimburse defined benefit or balance-forward plans to make them whole." Icon to read more

Belfint Lyons Shuman

Exceptional Usefulness and Quality iconWorking Paper on State and Local Pensions:The Case for Fundamental Reforms (PDF)

99 pages; Jan. 15, 2021."This Report has several goals. It summarizes the finances and operations of the nation's state and local pension plans today and the challenges they face. It describes the pressures, the regulatory frameworks, and the choices which have produced these current burdens and challenges. It draws some lessons from the varied institutional structures and economic outcomes of public-sector pensions and private-sector retirement programs. Finally, it suggests some routes to reform in order to promote sound pension administration and enhanced retirement security. This Report's central aim is to illuminate the pension problems faced by state and local governments, policymakers, and taxpayers -- and to encourage states and localities to address these problems." Icon to read more

Office of the Assistant Secretary for Policy, U.S. Department of Labor [DOL]

The National Retirement Risk Index: An Update from the 2019 Survey of Consumer Finances

"From 2016 to 2019, the National Retirement Risk Index (NRRI) fell slightly from 50 percent to 49 percent. This improvement reflected gains in stock and, particularly, house prices, which were partly offset by lower interest rates and Social Security replacement rates. In 2020, the economy was hit by COVID and the ensuing recession. Higher unemployment in 2020, offset somewhat by the continued rise in stock and house prices, increased the NRRI to 51 percent. In any case, half of today's workers remain unprepared for retirement, underscoring the need for universal access to employer-based savings plans." Icon to read more

Center for Retirement Research at Boston College


With 401(k) Plans, What You Don't Know Can Hurt You

"401(k) investors who use plans that have revenue-sharing agreements subsidize investors who do not. That is illogical. Why should one firm's employees have a weaker retirement plan because that organization's benefits department failed to understand the implications of revenue-sharing arrangements? Surely it would be better to require recordkeepers to bid for exactly what they will receive. No undercover payments, no surprises." Icon to read more

John Rekenthaler, via Morningstar


401(k) Firm Merger Mania Will Continue

"If you look at the multiples right now, they are at an all-time peak and have gone up from the end-of-year-deals last year.... [It's] still a seller's market because, by simple definition, you have more firms chasing fewer sellers. That will change at some point. Advisors aren't getting any younger.... Whatever the reasons, [Dick Darian, of Wise Rhino Group,] says it will continue, with 2021 much like 2020. Icon to read more

401(k) Specialist

Benefits in General

Top Employee Benefits Trends for 2021 (PDF)

"[1] Workplace giving and volunteer programs to help employees support their community and the causes important to them.... [2] Increased help with student debt for women, employees of color.... [3] Resources to help employees create an emergency savings fund.... [4] More self-directed brokerage windows in 401(k) and 403(b) plans.... [5] Broader support for employee total well-being with an increased focus on employee caregiving roles.... [6] Emotional/mental health support for employees in a 'virtual' work environment." Icon to read more

Fidelity Investments

DOL Appoints New Members to the 2021 ERISA Advisory Council

"The appointees and the expertise they represent are: [1] Employers: Megan Broderick is Senior Director for Global Retirement and Financial Wellbeing at PepsiCo.... [2] Corporate Trust: Dave Gray is Head of Workplace Retirement Offerings and Platforms at Fidelity Investments.... [3] General Public: Mercedes D. Ikard is Director of Retirement Planning for Atrium Health.... [4] Employee Organizations: Anthony Marc Perrone is the International President of the United Food and Commercial Workers International Union (UFCW).... [5] Investment Management: Edward A. Schwartz is President of Schwartz & Co., a registered investment advisor and broker-dealer.... Current member Glenn Butash will serve as the chair of the 2021 Council. Butash is Managing Counsel, U.S. Compensation and Benefits, at Nokia.... Current member James Haubrock will serve as the vice chair of the council. Haubrock is a shareholder with Clark Schaefer Hackett." Icon to read more

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

Executive Compensation
and Nonqualified Plans

Reporting Deferred Compensation on Form 990

"Tax-exempt organizations often provide deferred compensation to their officers, key employees, and most highly compensated employees. Like current compensation payable to such employees, deferred compensation must be reported annually on Form 990, Schedule J.... This blog post describes the rules and gives an illustrative example." Icon to read more

Verrill Dana LLP

Selected Discussions
on the BenefitsLink Message Boards

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Who's the Beneficiary in This Scenario? First Spouse Predeceases Participant

"Participant enrolls in a 401k plan in 2016 and names his wife as beneficiary and son as contingent beneficiary. Lump Sum-only distribution, no J&S. The wife passes away, then the participant passes away in 2020. The participant had remarried (not sure when) before he passed away in 2020. A new beneficiary form was not completed. Is the son still the beneficiary because he was named as the contingent beneficiary on the beneficiary form that is on file? Or is it the new spouse, even though there is no beneficiary form stating her as the beneficiary?" Icon to read more

BenefitsLink Message Boards

Extension of Special Rule for Auto Enrollment Plans

"That special rule for missed deferral opportunity in an auto enrollment plan was set to expire 12/31/2020. Does anyone know if the IRS extended it somewhere along the way?" Icon to read more

BenefitsLink Message Boards

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Press Releases

McGivney, Kluger, Clark & Intoccia, P.C. Welcomes Jose M. Jara
McGivney, Kluger, Clark & Intoccia, P.C.

OneDigital Acquires Area Financial Services
OneDigital Health and Benefits

OneDigital Acquires Vertical Financial Group
OneDigital Health and Benefits

Most Popular Items in the Previous Issue

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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, 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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