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Retirement Plans Newsletter

September 13, 2021


[Guidance Overview]

Exceptional Usefulness and Quality icon IRS Issue Snapshot: Calculation of Plan Compensation for Sole Proprietorships

"If nonelective contributions ... on behalf of a sole proprietor (the SEI) are determined under a plan's formula as a percentage of the sole proprietor's Earned Income, then the Earned Income calculation is dependent on the SEI's contribution, but the SEI's contribution is also dependent on the Earned Income."  MORE >>

Internal Revenue Service [IRS]

[Guidance Overview]

Exceptional Usefulness and Quality icon IRS Issue Snapshot: Combined Limits Under Section 404(a)(7)

"If a DB plan and a DC plan have overlapping coverage and employer contributions to the DC plan (other than elective deferrals defined under IRC Section 402(g)) do not exceed 6% of the aggregate compensation of DC plan beneficiaries ... the IRC Section 404(a)(7) combined limit only applies to contributions to the DB plan."  MORE >>

Internal Revenue Service [IRS]

Northern District of Illinois Dismisses ERISA Stock-Drop Suit

"The district court's ruling ... reinforces the significant pleading burden that plaintiffs face when bringing stock-drop class actions based on theories of 'inside information.' ... [It] rejects the ever-more-common attempt by plaintiffs to overcome that burden by pleading general economic principles that would apply in every case." [Osborne v. Employee Benefits Board of Kraft Heinz, No. 20-2256 (N.D. Ill. Aug. 23, 2021)]  MORE >>

Faegre Drinker

Second Circuit Revives Share-Class Claim in NYU Retirement Plan Class Action

"The Court observed Plaintiffs' complaint alleged in detail that the cost differentials of specified basis points for the funds were included in the fund prospectuses and, therefore, available to the fiduciaries when making their decision, and that an adequate investigation would have revealed the readily apparent superior alternative investments.... The Court clarified that, between the fiduciaries and those covered by the employee benefit plans, the burden of proof first lay upon Plaintiffs and then on the fiduciaries[.]" [Sacerdote v. New York Univ., No. 18-2707 (2d Cir. Aug. 16, 2021)]  MORE >>

Jackson Lewis P.C.

IRS Prioritizes Guidance on Student Loan Repayment Contributions

"The current state of guidance on using student loan repayments as a base for employer contributions to a qualified retirement plan or 403(b) plan is limited to a private letter ruling issued in 2018 ... [P]roposed measures are contained in various pieces of federal legislation including the Securing a Strong Retirement Act of 2021, commonly referred to as SECURE 2.0."  MORE >>

E is for ERISA


Register for the 2021 CCA Annual Meeting before Sept. 24 and Save

Register for CCA’s Annual Meeting by the early bird deadline & save $100. The program offers world-class education & networking that is mindful of the health challenges we face due to the pandemic. The program offers 65 sessions and 37.6 credits.

Sponsored by Conference of Consulting Actuaries [CCA]

403(b) Plan Sponsor Checklist: Written Plan vs. Plan Document

"What are the required elements of the written 403(b) plan? ... What are 403(b) optional plan features? ... Key 403(b) plan best practices: [1] Keep all written plan materials, including any updates, in a secure place.... [2] Periodically review and confirm that the written 403(b) plan aligns with the employer's protocols.... [3] Update the written 403(b) plan."  MORE >>


How to Handle Failed or Invalid Rollovers

"A rollover to an IRA could be a failed or invalid rollover under several circumstances ... When an invalid rollover contribution is made to an IRA ... the invalid rollover amount is deemed to be a regular IRA contribution for that taxable year. What happens next depends on whether the amount is an eligible contribution or an excess contribution."  MORE >>

Retirement Learning Center, LLC

Virginia Public Pensions Make a Direct Bet on Cryptocurrencies

"While many pension funds and endowments are exploring cryptocurrencies, few besides Fairfax have publicly announced they are jumping in. Regulatory uncertainty and high volatility of the coins have been partly responsible for the hesitancy. But that same volatility can lead to outsized returns, which have been one reason for Fairfax's expanded investment."  MORE >>

Treasury & Risk; free registration required

The Impact of Public Pension Deficits on Households' Investment and Economic Activity

"Comparing households residing on opposing sides of states' borders ... households hold 0.70 dollars more in deposits and 0.35 dollars less in stocks for each additional dollar of pension deficit.... [H]ouseholds respond consistently when states reduce pension deficits; they shift savings from deposits to stocks."  MORE >>

Jinyuan Zhang, via SSRN

Democrats May Change the Rules for 'Mega' IRAs Over $5 Million

"Congressional Democrats are weighing a new type of required distribution from individual retirement accounts, based on the account value instead of age ... There are few specifics.... If it gets enough support, the proposal would be part of legislation to spend up to $3.5 trillion to enhance the U.S. safety net."  MORE >>


Benefits in General

[Official Guidance]

IRS Announces Tax Relief for North Carolina Victims of Remnants of Tropical Storm Fred

"Victims of Remnants of Tropical Storm Fred that began August 16, 2021 now have until December 15, 2021, to file various individual and business tax returns and make tax payments ... Individuals and households affected by Remnants of Tropical Storm Fred that reside or have a business in Avery, Buncombe, Haywood, Madison, Transylvania, Watauga and Yancey counties qualify for tax relief."  MORE >>

Internal Revenue Service [IRS]

Selected New Discussions

Plan Sponsor Using EPCRS Wants to Contribute 100% of Missed Deferrals, Not Just 25%

"Client wants to put in 100% of missed deferrals instead of 25% under EPCRS. Can the client do that, or would the additional 75% be considered a non-elective contribution?"

BenefitsLink Message Boards

Hours for Service for Benefit Accrual vs. Hours of Service for Vesting

"Client wants to set up a plan that has 500 hours for a Year of Accrual Service (so they are eligible to receive a contribution) but 1,000 hours for a Year of Vesting Service. Cash Balance Plan. Entry is going to be 21 with 3 months of service. Is that permitted?"

BenefitsLink Message Boards

Press Releases

Dan Mayfield Named Partner at Farient Advisors

Farient Advisors LLC

Ahead of DOL IRA Rollover Requirements, Broadridge Fi360 Offers Enhanced Solution

Broadridge Financial Solutions, Inc.

As Open Enrollment Season Begins, Health-E Commerce Reminds Employers, Benefits Managers of Key Account Changes That Employees Need to Understand

Health E-Commerce

iJoin Adds the Power of ProNvest’s Full-Service Managed Account Solution


Webcasts and Conferences
(Retirement Plans / Executive Compensation)

Retirement Committee Field Guide: 401(k) Plans from the Platform Provider’s Perspective



Retirement & Welfare Benefits To Boost Your Business: A Case Study Approach to Compliance Learning

September 28, 2021 WEBCAST

New England Employee Benefits Council [NEEBC]

I'm a 3(16) Fiduciary. Now What?

November 4, 2021 WEBCAST

Last Issue's Most Popular Items

IRS Extends Interim Amendment Deadline for Pre-Approved Plans

Thomson Reuters / EBIA

Treasury Department 2021-2022 Priority Guidance Plan (PDF)

Internal Revenue Service [IRS], U.S. Department of the Treasury

The U.S. Needs Only One 401(k) Plan

John Rekenthaler, via Morningstar

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

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