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Retirement Plans Newsletter

August 17, 2021

2 New Job Opportunities


[Official Guidance]

Text of IRS Notice 2021-50: Weighted Average Interest Rates, Yield Curves, and Segment Rates for August 2021 (PDF)

"This notice provides guidance on the corporate bond monthly yield curve, the corresponding spot segment rates ... and the 24-month average segment rates ... [as well as] the interest rate on 30-year Treasury securities ... as in effect for plan years beginning before 2008 and the 30-year Treasury weighted average rate[.]"  MORE >>

Internal Revenue Service [IRS]

[Sponsor] -- Plan Corrections eSource

Plan problems? No problem.'s Plan Corrections eSource is fully updated with the new EPCRS rules. Contact us: 612-605-2266

Sponsored by Burrmont Compliance Labs LLC

[Guidance Overview]

IRS FAQs: Substantially Equal Periodic Payments

"[1] Is there an exception to the tax for distributions in substantially equal periodic payments? ... [2] Is there guidance on this exception? ... [3] How are interest rates determined? ... [4] How is life expectancy determined? ... [5] How is the account balance determined? ... [6] How are payments determined under the three methods? ... [7] Can I change from one method to another in calculating substantially equal periodic payments? ... [8] What is the effect of an account being completely depleted? ... [9] Are these the only acceptable ways of determining substantially equal periodic payments? ... [10] Can I take my substantially equal periodic payments on a monthly basis? ... [11] When do I fulfill my obligation to take substantially equal periodic payments?"  MORE >>

Internal Revenue Service [IRS]

[Guidance Overview]

The Limited Utility of the 'One Bad Apple' Rule for MEPs and PEPs

"The more frequently occurring problems which are not addressed by the SECURE Act are those caused by the time it takes to correct other more mundane problems which arise during normal plan operations that a bad actor can cause a plan.... Even assuming the P3 is following the new IRS's proposed disgorgement procedures to protect the plan from 'bad apple' consequences, because of the timing demands of the IRS's procedure, a plan year will almost always be crossed."  MORE >>

Business of Benefits

[Guidance Overview]

IRS Makes Important Changes to Plan Correction Program

"Sunset provision for correcting elective deferral failures is extended for three years.... Deadline is extended for self-correction of certain significant operational failures.... Anonymous submissions are eliminated.... New correction methods are added for defined benefit overpayments.... De minimis threshold is increased.... Correcting an operational failure by a plan amendment is easier under SCP."  MORE >>


[Guidance Overview]

Best Interest Standard of Care for Advisors, Part 62: Compliance with PTE 2020-02 -- Conflicted Compensation

"The DOL's language can be read to mean that, if an investment professional recommends a more expensive investment option that pays more to the professional (and the financial institution), the operating presumption will be -- at least from the DOL's perspective--that the recommendation was imprudent."  MORE >>

[Guidance Overview]

Employer Withdrawal Liability Concerns When Multiemployer Pension Plans Receive Special Financial Assistance

"The question confronting most contributing employers to SFA-eligible plans is: will the withdrawal liability to that plan change and how? The answer ... requires an assessment of a plan's individual circumstances.... Whether an employer's withdrawal liability will increase or decrease is unclear. For many employers ... liability to an SFA-eligible plan was likely subject to the 20-year cap and that isn't likely to change after the receipt of SFA."  MORE >>

Fox Rothschild LLP

Second Circuit Opinion Overturning Dismissal of Fiduciary Breach Claim Against New York University 403(b) Plan (PDF)

"On appeal, plaintiffs challenge: [1] the dismissal of their claim that NYU breached its duty of prudence by offering particular share classes of mutual funds in the retirement plans, [2] the denial of leave to amend their complaint to name additional defendants, [3] the striking of their demand for a jury trial, [4] the use of written declarations rather than live examination for direct testimony in the bench trial, [5] some of the district court's findings in NYU's favor after the bench trial, and [6] the denial of their motion for a new trial, which argued that the judge presiding over the trial should have been disqualified. [The court finds] merit in the first two of these challenges, but none in the remainder." [Sacerdote v. New York Univ., No. 18-2707 (2d Cir. Aug. 16, 2021)]  MORE >>

U.S. Court of Appeals for the Second Circuit

Pleading Standard for Excessive Fee Lawsuits: An In-Depth Analysis of the Northwestern Excessive Fee Case Before the Supreme Court (PDF)

20 pages. "[P]lan sponsors need a fair and reliable pleading standard to be articulated by the Supreme Court. There must be some set of rules to regulate how and when plaintiffs can claim that retirement fees are too high: simply claiming fees are too high without substantiation should not be allowed to subject plan fiduciaries to the current litigation burdens and disruption.... But with these high stakes, plan sponsors should be wary of the prospects of the Northwestern case.... [T]he Northwestern plan's recordkeeping and investment arrangement is, at best, problematic, and bad facts often make bad law."  MORE >>

Euclid Specialty Managers

Ensuring Clean Participant Data

"Having correct Social Security numbers and dates for critical life points, including birth and retirement, is integral to identifying missing and deceased participants ... Educating participants about why it's important to keep their own data up to date is crucial to keeping data clean ... Working with multiple providers could create inconsistency and discrepancies in data."  MORE >>

PLANSPONSOR; free registration may be required

Impact of ADP-ACP Distributions Due to Nondiscrimination Test Failure

"Corrections for failed nondiscrimination tests can have impacts far beyond the financial statements for a given plan year. Failures in a plan that has generally passed nondiscrimination testing in previous years can be the result of M&A activity or other shifts in the employee population, and repeated failures may indicate that a plan design change is necessary to ensure that the plan continues to meet the goals of the plan sponsor."  MORE >>

Alvarez & Marsal

Many 401(k) Plan Participants Need Information Now But Can't Wait for the Wiz to Show Up at the Office (PDF)

"To demonstrate fiduciary responsibility in 2021, plan sponsors still need to deliver all participants the same experience but also to modulate the experience according to the needs of each' just-in-time', triggered by specified 'events'. 'On-demand communications' are defined as delivered to the recipient as soon as ... required."  MORE >>

401k Listening Post

Steps 401(k) Plan Sponsors Can Use to Better Align Plan Education with Plan Participant Priorities as It Relates to Risk

"The problem with Sequence of Return Risk is that there's no way of knowing if you'll experience it. It's a roll of the dice. The best way to avoid this risk is to prepare as if it were going to happen. If it does, you're safe. If it doesn't, well, you just earned a bonus you didn't expect. This isn't a single-step process, though. There is, in fact, a sequence of steps one must take to best defend against the Sequence of Return Risk."  MORE >>

Fiduciary News; free registration required

Bill Would Provide Permanent Retirement Distribution Relief for Federal Disasters

"The proposal follows previous disaster distribution guidance and provides for a waiver of the 10 percent early withdrawal penalty tax on distributions of up to $100,000 per disaster made to those who have a primary residence in the affected area and have sustained an economic loss."  MORE >>


Benefits in General

Important Factors for Hiring Quality Employee Benefit Plan Auditors

"[H]iring an auditor is considered a fiduciary function. As such, plan administrators should use the same care and prudence in hiring an auditor that they use when hiring any individual or entity that provides services to the plan. The advisory [discusses] four important factors for hiring a quality auditor: experience and professional development, identifying quality audit firms, independence, and licensing."  MORE >>

Meaden & Moore

Employee Benefits Jobs

View job as Senior Retirement Plan Administrator
for RetireWell TPA Senior Retirement Plan Administrator

RetireWell TPA

Remote / Marlton NJ

View job as Sr. Confidential Specialist (Benefits)
for National Education Association Sr. Confidential Specialist (Benefits)

National Education Association

Washington DC

Selected New Discussions

Safe Harbor Plan: OK to Contribute Less for HCEs?

"I know that the Safe Harbor isn't mandatory for the Highly Compensated Employees, but could the client make a lesser match for those people (say 1% to all HCE and the typical 100% of the first 3% + 50% of the next 2% to the Non-Highly)?"

BenefitsLink Message Boards

Fidelity Bonds For More Than $500K -- How to Report on Form 5500?

"For sponsors who have bond coverage greater than statutory limit of $500,000, I'm curious if 5500s are generally prepared with the actual coverage amount or the higher amount? Does it matter? Not necessarily for audit purposes, but it does matter when the 5500 signer cares?"

BenefitsLink Message Boards

Press Releases

Refocus, Revive, and Reset with PSCA’s New 401(k) Day® Campaign

PSCA [Plan Sponsor Council of America]

Colonial Surety Launches Cyber Liability and Fiduciary Liability Protection Package, Protecting Plan Sponsors Against Significant and Growing Cyber Risk

Colonial Surety Company

Last Issue's Most Popular Items

Proper Documentation of Mergers: There's More to Mergers Than Just the Assets (PDF)

Ferenczy Benefit Law Center, via Journal of Pension Benefits

How America Saves, 2021: Insights to Action (PDF)


Would You Rather Buy an Annuity or a Guaranteed Income for Life?


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BenefitsLink Retirement Plans Newsletter, ISSN no. 1536-9587.

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