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[Guidance Overview]

U.S. and Puerto Rico Issue Rules on Non-COVID-19 Disaster Relief for Retirement Plans

"Last year, in response to the COVID-19 pandemic, the United States Congress and the Puerto Rico Department of Treasury (Hacienda) granted favorable tax treatment to coronavirus-related distributions (CRDs) and participant loans from U.S.-qualified plans and Puerto Rico-qualified plans, respectively. Recently, both jurisdictions extended similar tax treatment to certain distributions, hardship withdrawals, and plan loans related to non-COVID-19 disasters." Icon to read more

Ogletree Deakins

[Guidance Overview]

DOL, PBGC Announce Retirement Plan Civil Penalties for 2021

"[A chart] shows DOL's maximum penalties relevant to single-employer defined benefit (DB) and defined contribution (DC) plans for 2021 and 2020. The increases apply to penalties assessed after Jan. 15, 2021, for violations occurring after Nov. 2, 2015.... PBGC's 2021 maximum penalty under ERISA Section 4071 for single-employer DB plans is $2,259 a day (up from $2,233 in 2020) for each day a filing, notice or other information is overdue. The higher rate applies to penalties assessed after Jan. 13.... The $2,259 per day maximum penalty potentially could apply to virtually any late PBGC information or premium filing for a single-employer plan[.]" Icon to read more


[Guidance Overview]

High Risk Issue iconThe New E-Delivery Rule: The Price of Simplification

"Although the E-Delivery Rule promises to expand greatly the use of electronic delivery, retirement plans still retain a fiduciary duty to protect participants' personal information from cybertheft. Thus, retirement plans taking advantage of the new rule may face increased exposure to ERISA fiduciary breach claims alleging inadequate cybersecurity measures." Icon to read more

Fred Reish, Bruce Ashton and Stephen Pennartz, via American Retirement Association [ARA]

DOL Publishes Limited Guidance on Missing Participants, Allows Transfers from Terminating DC Plans to PBGC Program

"Sponsors typically interact with DOL on these issues in the context of an audit. Obviously, demonstration that a sponsor has taken DOL's suggestions, e.g., in its description of best practices, seriously will help in the audit process. But sponsors may find some of DOL's suggestions impractical or may have developed more effective ways of tracking participants." Icon to read more

October Three Consulting

The ABCs of RFPs

"[T]he basic steps of an ERISA RFP: [1] Identify good candidates.... [2] Develop your proposal request.... [3] Set a schedule.... [4] Review responses.... [5] Make your choice.... [6] Coordinate with other providers.... Make periodic RFPs part of your prudent process." Icon to read more

Cohen & Buckmann, P.C.

Exceptional Usefulness and Quality iconUpcoming Deadline iconIn Rehire Mode? Keep March 31, 2021 in Mind for Your 401(k) Plan

"March 31, 2021 ... is the date set under ... the Consolidated Appropriations Act, 2021 as the snapshot date on which a partial plan termination may be avoided through rehires that restore earlier plan participation levels. Specifically, a plan will not be treated as having experienced a partial plan termination if on March 31, 2021, the number of active plan participants is at least 80 percent of the number covered by the plan on March 13, 2020[.]" Icon to read more

E is for ERISA

Annual Retirement Plan Compliance and Notice Requirements (PDF)

"Dates are applicable to plans and companies that follow a December 31 plan/tax year-end date. Dates will vary for plans and companies that follow different year-end dates." Icon to read more


Recent Fiduciary Liability Developments

"DOL eclipses ESG investing: fiduciaries must use only pecuniary considerations for all investment selection ... 401(k) plan fees and investments challenges continue ... Hedge funds in target date funds ... Smaller 401(k) plan's one-year limit for filing suit prevails ... Smaller 401(k) plan fiduciaries win fees case ... Profit-sharing plan asset allocation decision costs plan fiduciaries $17.5 million." Icon to read more


Annuity Purchase Update: January 2021 Interest Rates

"Sponsors flocked to complete annuity purchases in the fourth quarter of 2020.... [I]nsurance company participation was limited as a result of resource constraints from the influx of market activity. This further demonstrated the need to begin the annuity purchase process as early as possible to secure insurer availability. December 2020 was a strong month for pension plans. Equity markets performed well and funding status improved. Annuity purchase prices increased slightly." Icon to read more

October Three Consulting

Social Security: The Windfall Elimination Provision (PDF)

17 pages. "The windfall elimination provision (WEP) is a modified benefit formula that reduces the Social Security benefits of certain retired or disabled workers who are also entitled to pension benefits based on earnings from jobs that were not covered by Social Security and thus not subject to the Social Security payroll tax.... WEP's supporters argue that the formula is a reasonable means to prevent overgenerous payments and unintended benefits to people who have earnings not covered by Social Security and receive pensions from noncovered work. Opponents argue that the provision substantially reduces a benefit that workers may have included in their retirement plans, and it reduces benefits disproportionately for lower-earning households." [Report 98-35, updated Feb. 1, 2021] Icon to read more

Congressional Research Service [CRS]

Social Security: The Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO)

"The Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO) are two separate provisions that reduce regular Social Security benefits for workers and their eligible family members if the worker receives (or is entitled to) a pension based on earnings from employment not covered by Social Security." [In Focus IF10203, updated Feb. 1, 2021] Icon to read more

Congressional Research Service [CRS]


Questioning Monte Carlo: The Odds Are That Retirees Don't Care About the Odds

"Although ubiquitous within the financial services industry, Monte Carlo analysis is likely an ineffective tool that wastes resources and distracts most investors from the essence of the problem.... Monte Carlo is wildly inaccurate in its predictions of how long a retiree's savings are likely to last and employs a methodology that is the opposite of what retirees want. Eliminating it from conversations should lead to safer, simpler, and more-personalized retirement-income portfolios for investors and help advisors create a brand of original thinking." Icon to read more

James Sandidge, via SSRN


How Effective Is Your Financial Advisor's Monte Carlo Analysis as a Retirement Planning Tool?

"[The authors] agree with Mr. Sandidge's concerns regarding Monte Carlo models typically used by financial advisors.... [A] planning approach, utilizing basic actuarial principles and processes (including periodic stress testing) and Liability Driven Investing principles can be a more effective retirement planning tool than Monte Carlo models and can lead to better financial decisions." Icon to read more

Ken Steiner, FSA Retired

Selected Discussions
on the BenefitsLink Message Boards

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Mistaken About Having Made a Mistake -- Now Get a Refund of Already-Paid Excise Taxes?

"2019 plan fails the ADP test. They correct it with refunds in August 2020. The Form 5330 tax is $1,050 and was paid. Then, in January 2021, they realize that some HCE comp was lower than in had been used in the testing. With the new numbers, the plan passes. What happens to that $1,050 excise tax? The plan didn't really need to be corrected. Can they ask for a refund?" Icon to read more

BenefitsLink Message Boards

Date by Which a Claimant Must File an Appeal, as Affected by DOL/IRS COVID Guidance

"Given the DOL/IRS May 2020 guidance (85 FR 26351) extending the deadline under ERISA/IRC by which a participant can file an appeal under a retirement plan during the COVID-19 emergency, by what date does a participant have to file an appeal? 60 days after an announced end of the COVID-19 emergency?" Icon to read more

BenefitsLink Message Boards

1099-R Question for CARES Act -- An' a 1, An' a 2...

"I know the IRS has said that we could use either '1' or '2' for Box 7. Just curious what the majority of people have been doing? Also, I assume we mark the entire distribution as taxable?" Icon to read more

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Press Releases

River and Mercantile Recruits Group Head of ESG
River and Mercantile Group [RMG]

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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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