"A recently filed lawsuit against a trust company serving as a 401(k) plan trustee, the second of its kind in the last few months, highlights the need for plan sponsor diligence in protecting participant data and accounts in an increasingly electronic world.... [T]he plan sponsor has a fiduciary obligation ... to engage and retain service providers who take cybersecurity seriously, who have systems in place to protect data (for example, dual authentication processes) and who periodically test those systems to check for vulnerabilities and ways to improve."
Faegre Drinker
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"It's crucial for plan sponsors to have and follow a good investment policy statement and to carefully document the reasons for all their decisions."
PLANSPONSOR; free registration may be required
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"House Ways and Means Committee Chairman Richard Neal has introduced HR 409, the Emergency Pension Plan Relief Act of 2021 (EPPRA). Part of that bill would make significant changes to minimum funding requirements for sponsors of single employer defined benefit plans for plan years after December 31, 2019.... [T]he two significant changes are modification of the segment rates used to determine funding requirements (but not PBGC premiums), and a change in amortization of funding shortfalls from 7 years to 15 years."
Cowden Associates, Inc.
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"Only 13% of retirement plans offer alternative investment options as part of their target-date funds (TDFs). Just 5% of plan sponsors say they currently offer or are considering offering hedge funds to their participants via their TDF, while 7% currently offer or are considering offering private equity. Real estate private equity has the support of 11% of plan sponsors."
PLANSPONSOR; free registration may be required
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"Many people who retire early use the rule of 55 to avoid the 401(k) early withdrawal penalty.... You must leave your job the year you turn 55 -- or later.... You can only withdraw from your current 401(k).... You can still withdraw early, even if you get another job.... Other ways to avoid the 401(k) withdrawal penalty ... Should you use the rule of 55?"
Forbes
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[Opinion]
"[R]etrofitting 401(k) profit-sharing plans into vehicles for retirement income tests the Second Law of Thermodynamics. DC atomizes the collective pools of DB savings into individual accounts. To reverse that evaporation process will take a lot of work, imagination, and possibly new types of bonds from the US Treasury."
Retirement Income Journal
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Benefits in General
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"Although the rescinded rule was intended to ensure that DOL guidance was appropriate, transparent, and accessible to the public, it created potential confusion -- in particular regarding whether items available on the DOL website but not found through the single search portal required by the rule were still in effect."
Thomson Reuters / EBIA
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"35% of employed individuals report not fully understanding any of the employee benefits they enrolled in during their most recent open enrollment period.... [M]ore than half (54%) of millennials [report] they don't understand their benefit selections.... Two-thirds of employees (66%) indicated they want their employer to help them better understand their employee benefits throughout the year -- not just at open enrollment.... 78% of millennials [report] they would like more communications about their workplace benefits throughout 2021.... [M]ore than 7-in-10 of employees (73%) are interested in support and guidance tools that help them understand how much money to put aside for retirement, emergency savings and health-care expenses."
VOYA Financial
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Executive Compensation and Nonqualified Plans
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"On January 26, 2021, Glass Lewis issued guidance addressing how it plans to apply its approach to evaluating executive compensation proposals during the COVID-19 pandemic. Glass Lewis emphasizes that the guidance is illustrative and does not change its existing approach. Glass Lewis will continue to support proposals that effectively align executive pay and performance, while also considering: Overall pay quantum. The quality of a company's disclosure. The company's responsiveness to shareholder concerns."
Thomson Reuters Practical Law
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Selected Discussions on the BenefitsLink Message Boards
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"My father died with a pension that had been in pay status for 30 years, which will continue to pay my mom the same monthly amount. When we notified the plan administrator of his death, they questioned my mother's date of birth because their system indicates 1948 -- but her actual DOB is 1938. Could this incorrect date have affected the monthly pension my father received for 30 years and the amount my mother will get?"
BenefitsLink Message Boards
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"I own 100% of an S-Corp. My adult son is my employee and participant. The 2020 Form 5500-EZ instructions for who can file EZ: '[2] Covers only one or more partners (or partners and their spouses) in a business partnership (treating 2% shareholder of an S corporation, as defined in IRC 1372(b), as a partner).' Can I file an EZ when my son owns my stock by attribution?"
BenefitsLink Message Boards
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"We have a new 401k/PSP plan with an effective date of 1/1/2020, but a special effective date of 11/1/2020 for 401k deferrals and safe harbor (3% non-elective) contribs (it was adopted late in the year), so the 401k and SH provisions were just effective for the last two months of the year (from adoption date forward). Note -- the plan will be top-heavy. If the only contribs for the year are the two months of deferrals and the SH 3%, will the plan be deemed to satisfy top-heavy minimum? Or will the employer need to top off all employees at 3% of comp for the entire year?"
BenefitsLink Message Boards
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"I know there is no distribution hierarchy for withdrawals from Designated Roth 401(k) plans, unlike for Roth IRAs (contributions, rollovers, then gains). But on a withdrawal from a Designated Roth 401(k), if the Roth is comprised of, say, $10,000 salary deferral, $10,000 gains and $10,000 IRR (Internal Roth Rollover), and then a client does a distribution of $3,000, would the distribution source be required to be $1,000 from the salary deferral, $1,000 from gains, and $1,000 from the IRR even though the IRR has not satisfied the 5-year rule? Or could the distribution source be $1,500 from salary deferral and $1,500 from gain?"
BenefitsLink Message Boards
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"I am a small business owner (sole proprietorship/Schedule C) interested in opening a SEP plan for my 2 employees. I understand that I have to contribute a similar percentage of their salaries, but I would prefer not to make contributions for myself as the owner/employer. Would that prevent me from helping my two employees equally with their SEP?"
BenefitsLink Message Boards
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