Retirement Plans Newsletter

February 18, 2021 logo logo
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Helping Small Business Owners and Their Employees Save for Retirement
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ASOPs - A Practical Approach
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[Official Guidance]

PBGC Announces New Inspector General Appointment

"The [PBGC] announced the appointment of Nicholas J. Novak as the agency's Inspector General. In his 35-year career, Novak spent nearly 20 years holding various positions within PBGC's Office of Negotiations and Restructuring (ONR) and the agency's Office of the Inspector General. Novak's ONR portfolio included supervising aspects of the Multiemployer Pension Insurance Program. He most recently served as PBGC's Acting Inspector General since April 2020."

Pension Benefit Guaranty Corporation [PBGC]

[Guidance Overview]

Applying the DOL's New Missing Participant Guidance in the Real World

"The DOL's guidance ... includes a host of best practices plan sponsors and other fiduciaries can use to locate missing or nonresponsive participants. Unfortunately, not every Best Practice will be appropriate for every plan.... [T]he Best Practices also include methods for locating missing participants that may raise concerns for some plan sponsors."

Foley & Lardner LLP

[Guidance Overview]

Best Interest Standard of Care for Advisors, Part 39

"The exemption and the associated expansion of the definition of fiduciary advice will have the greatest impact on recommendations by investment advisers and broker-dealers [1] to retirement plan participants to take rollovers to IRAs with the advisors, and [2] to IRA owners about how to invest in their IRAs."

Alternative Investments in 401(k) Plans: Takeaways from Recent Intel Retirement Plan ERISA Win

"[1] Employ a diligent investment selection process that includes expressly documenting the rationale for a particular investment.... [2] There is no obligation under ERISA to always choose the cheapest investment option ... [3] ERISA does not require conforming to market practice." [Anderson v. Intel Corp. Investment Policy Comm., No. 19-4618 (N.D. Cal. Jan. 21, 2021)]

Ropes & Gray LLP

Proactive Steps Can Help Protect Against 401(k) Plan Litigation

"Nestled within the chaos of 2020 was a significant increase in 401(k) class action lawsuits.... As a first defense, it might be time to look at key engagement metrics, consider boosting your communication and education resources especially as we recover from the pandemic and return to the office."

Fiduciary Benchmarks

Order of Benefit Deductions from Employee Pay

"Nothing in ERISA mandates a specific order for benefit deductions ... Employers should take care, however, to ensure that their internal policy governing the order of benefit deductions does not inadvertently create an operational failure with respect to their 401(k) plan."

Verrill Dana LLP

MEP, PEP, or Stand Alone Plan: Finding the Best Fit for Your Company

"An acronym solution may not be the best fit for the plan sponsor but is a great fit for the service provider. This is why plan sponsors should focus first on hiring the service providers that are the best fit. More importantly, sponsors should not feel the pressure to run to an acronym solution when the single employer plan model is alive and thriving -- thanks to technology and good old fashioned competition."


Retirement Insecurity 2021: Americans' Views of Retirement (PDF)

"The COVID-19 pandemic has impacted many Americans' concerns and plans for retirement ... A large swath of Americans is concerned about their economic security in retirement.... Americans are highly supportive of Social Security, and there is some support for expanding the program.... When it comes to pensions, Americans have highly favorable views about their role in the retirement equation and see these plans as better than 401(k) savings accounts."

National Institute on Retirement Security [NIRS]

403(b) Plans: The Trendsetters for ESG Investing?

"While ESG struggles to gain a foothold in most retirement plan types, there are many 403(b) plans that have held ESG investments for decades.... At the cutting edge of 403(b) investing are plans that offer complete ESG tiers of investments from which participants can craft a diversified investment array of ESG funds."

Cammack Retirement Group

Multiemployer Pension Plans Experience Highest Aggregate Funding Level Since 2007

"As of December 31, 2020, the aggregate funded percentage of all multiemployer plans climbed to 88%, from 85% the year prior. This marks the highest aggregate funding level for these plans since December 31, 2007, before the global financial crisis. Strong investment returns for the year helped buoy pension funding in 2020, despite a turbulent year full of market volatility and economic stressors due to the COVID-19 pandemic."


Annuity Purchase Update: February 2021 Interest Rates

"Plan funding status improved ... Annuity purchase cost increased: Annuity purchase interest rates increased; Annuity purchase activity decreased ... Annuity purchase cost is 98%-103% of the pension accounting value (GAAP PBO). Now is the time to analyze annuity purchase cost versus PBGC savings."

October Three Consulting

Benefits in General

2021 Employee Benefit Plan Opportunities for Employer Consideration

"[1] Student loan repayment by employer under an educational assistance program.... [2] Student loan repayment by employee under a 529 plan.... [3] Carryover of health and dependent care flexible spending account (FSA) amounts ... [4] Setting up a 401(k) plan and obtaining a tax credit for doing so.... [5] Penalty-free withdrawals from 401(k) plan to pay for birth or adoption of a child."

Jackson Lewis P.C.

New ERISA Ruling May Cut Claimants' Guesswork About Timeliness

"U.S. District Court for the Northern District of Illinois joined a growing chorus of rulings that have interpreted the prior version of the ERISA claim regulations to require what the revised regulations now explicitly mandate." [Hewitt v. Lincoln Financial Corp., No. 18-8235 (N.D. Ill. Feb. 2, 2021)]

DeBofsky Sherman Casciari Reynolds P.C.

Executive Compensation
and Nonqualified Plans

Delaware Court Preserves McDonald's Right to Seek Clawback of Ex-CEO's Severance Benefits

"The court's opinion lays out the requirements that a contract must satisfy in order to prevent a party from using the other party's deceptive or fraudulent statements made prior to entering the contract to seek repayment of the consideration provided." [McDonald's Corp. v. Easterbrook, No. 2020-0658 (Del. Ch. Feb. 2, 2021)]

Blank Rome LLP

Selected Discussions
on the BenefitsLink Message Boards

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Safe Harbor Contribution Not Made But Employer Has Filed for Bankruptcy

"One of our plans has a 3% safe harbor non-elective employer contribution. The employer has yet to make the 2019 contribution. Also the employer filed for bankruptcy in 2019. Is there a penalty or other problem with this? I know it's a failure to follow the plan document, but I'm not sure what the ramifications are."

BenefitsLink Message Boards

Multiple SEP Plans for One Employer

"I understand that a SEP may exclude union employees, but may an employer have a SEP plan for non-union employees and another SEP plan for union employees? How about 2 SEP plans for 2 separate union groups with unique collective bargaining agreements?"

BenefitsLink Message Boards

Cross Testing via Aggregation of a SEP Arrangement and a 401(k) Plan?

"Can SEP contributions be permissively aggregated for purposes of cross testing (i.e., Average Benefit Percentage Test, Average Benefit Test, and Gateway Minimum)?"

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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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