Retirement Plans Newsletter

February 3, 2021 logo logo
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[Guidance Overview]

DOL Issues Missing Participant Guidance

"[T]he Release explains how the DOL identifies plans that have difficulty tracking terminated vested participants and timely distributing benefits, red flags that can suggest a problem, and its approach to closing out cases. In particular, the DOL identified [1] plans that report a large number of terminated vested participants entitled to future benefits, [2] bankruptcy, and [3] corporate merger and acquisition activities, as instances where plans could face problems with loss of participant data." Icon to read more

Seyfarth Shaw LLP

[Guidance Overview]

Partial Plan Terminations: An Update

"The usual tests for a partial termination ... include a rebuttable presumption of partial termination if the employer has turnover of 20% or more during a plan year. The special rule provides relief for employers that prevents the occurrence of a partial termination during certain plan years if the number of active plan participants decreases by no more than 20% during a period of roughly one year from the onset of the pandemic." Icon to read more

Verrill Dana LLP

[Guidance Overview]

Traditional and Roth Individual Retirement Accounts (IRAs): A Primer (PDF)

27 pages. "This report explains [traditional and Roth] IRAs' eligibility requirements, contribution limits, tax deductibility of contributions, and withdrawal rules, and it provides data on the accounts' holdings. It also describes the Saver's Credit and provisions enacted after the Gulf of Mexico hurricanes in 2005, the Midwestern storms in 2008, the hurricanes in 2012 and 2017, the California wildfires in 2017, certain other federally declared disasters occurring on or after January 1, 2018, and the Coronavirus Disease 2019 (COVID-19) pandemic to exempt distributions to those affected from the 10% early withdrawal penalty." [RL34397, updated Feb. 3, 2021] Icon to read more

Congressional Research Service [CRS]

Despite COVID-19, Retirement Savers Protect Their Accounts

"A strong majority (65 percent) of US individuals did not take financial actions as a result of COVID-19.... Actions that drew on retirement accounts were the least common responses: 6 percent of individuals reported taking withdrawals from 401(k)-type retirement plan accounts; 3 percent took withdrawals from individual retirement accounts (IRAs); and 3 percent took loans from 401(k)-type retirement plan accounts as a result of COVID-19." Icon to read more

Investment Company Institute [ICI]

Ethics, Earnings, ERISA and the Biden Administration

"[This] article introduces the current types of ethical investing, their history, their financial and ethical performance, and their pre-Biblical progenitors.... This article suggests how the Biden Administration may encourage ethical-factor investing by ERISA retirement plan fiduciaries. This may be done with revised ERISA regulations and other interpretative documents. No ERISA amendments would be needed." Icon to read more

Law Offices of Albert Feuer, via SSRN

Building Your Floor Portfolio

"[Dirk Cotton] boldly described ... 'The most important decision you will make in retirement planning is how much of your resources to allocate to the upside and floor portfolios'... As an homage to Dirk, in this post we are going to reiterate the relatively simple steps ... you can take to help you make this 'most important decision.' " Icon to read more

Ken Steiner, FSA Retired

January 2021 Pension Finance Update

"Higher interest rates gave pension finance a boost in January. Both model plans ... gained ground last month, with Plan A improving 2% while the more conservative Plan B gained less than 1%:" Icon to read more

October Three Consulting

Text of Supreme Court Opinion: Railroad Retirement Board's Refusal to Reopen a Prior Benefits Determination Is Subject to Judicial Review (PDF)

21 pages. "The Railroad Retirement Act of 1974 ... establishes a system of disability, retirement, and survivor benefits for railroad employees [which] is administered by the U. S. Railroad Retirement Board (Board). The Board denied benefits to petitioner Manfredo M. Salinas, a former railroad employee, when he applied in 2006, but it later granted him benefits when he reapplied in 2013. Salinas then requested that the Board reopen its decision to deny his 2006 application, but the Board declined. This case asks whether the Board's refusal to reopen the prior denial of benefits is subject to judicial review. The Court holds that it is." [Salinas v. U.S. Railroad Retirement Board, No. 19-199 (S. Ct. Feb. 3, 2021)] Icon to read more

Supreme Court of the United States

Benefits in General

[Guidance Overview]

Tracking Federal COVID-19 Laws Affecting Employee Benefits, Jobs (PDF)

20 pages. Summary of significant employment-related provisions in COVID-19 relief legislation, including measures affecting: [1] Retirement plans; [2] Health benefits; [3] Paid leave benefits; [4] Other health, welfare and retirement benefit requirements; [5] Other tax credits, deductions and financial aid for employers and individuals. Icon to read more


Executive Compensation
and Nonqualified Plans

[Guidance Overview]

162(m) Grandfathering Rules: Account Balance Plans and Nonaccount Plans

"Whether additional contributions and earnings and losses credited to the account balance after the termination date, (through the earliest possible date the account balance could have been distributed to the employee) are grandfathered depends on whether the terms of the plan require the corporation to make those contributions or credit those earnings and losses through the earliest possible date the account balance could be distributed if it were terminated. The final regulations also provide a similar rule for non-account balance plans." Icon to read more

Fulcrum Partners LLC

Selected Discussions
on the BenefitsLink Message Boards

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Liability for Accepting Invalid Beneficiary Form?

"401(k) participant submitted a beneficiary form in 2018 naming wife and 3 children as equal beneficiaries (25% each). Participant signed his own name on the line for the spouse's signature for the spousal waiver. There was no witness signature. Form was accepted by plan sponsor. Participant died last month. My opinion is this was not a valid spousal waiver and therefore the spouse is entitled to the entire balance in the plan. One of the children is threatening suit against the plan sponsor for leading the participant to believe it had been properly submitted. Trouble in River City?" Icon to read more

BenefitsLink Message Boards

All Non-Highly Compensated Employees Signed Irrevocable Waivers of Participation

"A new 401(k) plan was adopted 1/1/2020 -- not safe harbor, with discretionary match and profit sharing. Volume submitter plan document allows for irrevocable waivers and the plan sponsor wanted it because many employees wanted no part of the plan due to religious beliefs. We received the irrevocable waivers in December of 2019. We have now received the 2020 census data. Every NHCE signed an irrevocable waiver, so the only eligible plan participants are the owners. There were 7 NHCEs who met the statutory eligibility requirements so they are showing up as eligible, not benefiting, for 410(b). These employees want no contributions from the employer due to religious beliefs, which is why they signed irrevocable waivers in the first place. How this should be handled?" Icon to read more

BenefitsLink Message Boards

QDRO Entered But Participant Died Before Designating a New Beneficiary

"Participant recently went through a divorce. QDRO was processed, paying the former spouse. The participant passed away last week. He was provided, but never returned, a new beneficiary form. The form on file is the old one listing the now-former spouse. Did the divorce and QDRO cause the designation form to be null and void?" Icon to read more

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Plan Sponsors Aren't Warming Up to Provisions of the SECURE Act
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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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