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Retirement Plans Newsletter

January 27, 2022

4 New Job Opportunities 4 New Job Opportunities


[Guidance Overview]

IRS Updates Guidance on Substantially Equal Periodic Payments Exception to 10% Additional Tax

"The three distribution methods described in the previous guidance are largely unchanged, but some of the requirements have been clarified.... The life expectancy tables that can be used to determine substantially equal payments have been updated.... A 5% floor has been added to the maximum interest rate that can be used when applying the fixed amortization or fixed annuitization method.... A safe harbor method can be used to determine the account balance when applying the fixed amortization and fixed annuitization methods."  MORE >>

Thomson Reuters / EBIA


CE Webcasts by ASPPA Educator of the Year, John Griffin, J.D., LL.M.

ASC’s ERISA experts led by John Griffin, J.D., LL.M. offer popular CE webcasts to keep you current with trends and ever-changing IRS regulations. Join live webcasts or view recorded webcasts anytime, anywhere. View Webcasts

Sponsored by ASC

District Court Compels Individual Arbitration of ERISA Class Action

"Given the disagreement among district courts as to the propriety of ERISA plans' relief-limiting provisions, plan sponsors that wish to maximize the enforcement potential of their arbitration provisions should ensure that the language does not preclude relief available under ERISA -- and severability provisions should authorize courts to sever only those portions of a plan that are unenforceable or contrary to law." [Holmes v. Baptist Health South Florida Inc., No. 21-22986 (S.D. Fla. Jan. 20, 2022)]  MORE >>

Faegre Drinker

Supreme Court Declines to Establish Pleading Standard for Defined Contribution Plan Excessive Fee Litigation

"By focusing on, and rejecting, the Seventh Circuit's 'investor choice' rationale, the Supreme Court avoided the need to address the various other issues that have divided lower courts wrestling with the massive surge of excessive fee and investment prudence litigation brought against the fiduciaries of 401(k) and 403(b) plans since 2015." [Hughes v. Northwestern Univ., No. 19-1401 (S. Ct. Jan. 24, 2022)]  MORE >>


Supreme Court Sends Case Involving Pleading Standard for ERISA Fiduciary Breach Back to Seventh Circuit

"In upholding dismissal of plaintiffs' claims, the Seventh Circuit noted that Northwestern 'provided prudent explanations for the challenged fiduciary decisions involving alleged losses or underperformance' and that plaintiffs' allegations 'depict valid reasons' for Northwestern's decisions. 'Due regard' for these explanations and reasons could be sufficient for the Seventh Circuit to still find plaintiffs' claims implausible and uphold dismissal consistent with the Supreme Court's opinion." [Hughes v. Northwestern Univ., No. 19-1401 (S. Ct. Jan. 24, 2022)]  MORE >>


Supreme Court Ruling May Cause More Fiduciary Lawsuits

"[M]any plan fiduciaries simply add 'ESGs' to investment lineups and assume it is prudent because there are other funds in the same investment category that clearly meet the prudent selection requirements. This Supreme Court decision states clearly that all funds, including ESGs, must stand on their own as prudent investment options." [Hughes v. Northwestern Univ., No. 19-1401 (S. Ct. Jan. 24, 2022)]  MORE >>

Smith & Downey, P.A.

What Does the Supreme Court's Newest Fee Decision Mean for Retirement Plans?

"First, the Supreme Court held that fiduciaries cannot judge the prudence of higher-fee investment options based solely on the availability of other lower-cost investment options in the plan.... Second, the Supreme Court recognized that plan fiduciaries have a range of judgments that are all proper, provided they are reasonable." [Hughes v. Northwestern Univ., No. 19-1401 (S. Ct. Jan. 24, 2022)]  MORE >>


TDF Suite Questioned in ERISA Lawsuit

"The lawsuit calls into question the plan's use of what it calls 'custom' target-date funds (TDFs), which the plan uses as its qualified default investment alternative (QDIA). According to the complaint, the TDFs are managed by BlackRock and mirror the BlackRock LifePath Index Funds, a collective investment trust (CIT) TDF suite." [Locascio v. Fluor Corp., No. 22-0154 (N.D. Tex. complaint filed Jan. 24, 2022)]  MORE >>

PLANSPONSOR; free registration may be required

Total Annuity Sales Jump in 2021

"Total U.S. annuity sales were $254.8 billion in 2021, up 16% from 2020. This represents the highest annual annuity sales since 2008, and the third highest sales recorded in history ... Total annuity sales were $63.4 billion in the fourth quarter, 8% higher than fourth quarter 2020.... Total variable annuity (VA) sales were $32.3 billion in the fourth quarter, up 17% from prior year. In 2021, total VA sales were $125.6 billion, 27% higher than prior year."  MORE >>

LIMRA Secure Retirement Institute

Massachusetts Secretary of State Launches Sweep of Target Date Fund Offerings

"Massachusetts Secretary of State William Galvin ... said his office will investigate broker-dealers offering target-date funds, concerned about changes that created large tax bills for small-dollar investors.... Galvin said his securities division sent letters seeking information from companies including BlackRock Inc, T. Rowe Price Group, a unit of Vanguard Group and others."  MORE >>

Reuters; free registration may be required

Public Pension Funded Status at End of 2021 Is Highest in More Than Five Years

"Public pensions closed out 2021 with a funded status of 85.5%, up from 83.9% in Q3 and the highest recorded funded status since ... 2016. In aggregate, these plans experienced an investment return of 3.21% for the quarter, though individual plans' estimated returns ranged from 0.57% to 6.80%. Nearly half of the plans in [this study] are now funded over 90%[.]"  MORE >>


Uncover Your Retirement Clients' Preferences with This Spender/Saver Score

"Conventional wisdom assumes all retirees spend their balance through retirement, buying the same amount of goods and services each year. But different retirees have different spending and saving preferences... Have your clients answer these questions to uncover their preferences and use the insight to better align solutions to who they are."  MORE >>

T. Rowe Price

Benefits in General

Understanding the Great Resignation and Work for Older Adults

"The top reason for leaving or considering leaving [for employees age 50 and over] was being near retirement age. Not surprisingly, the pandemic played a major role -- about two in five (38%) never would have retired, left a job, or considered leaving a job had it not been for the pandemic. One in five retired earlier than planned because of the pandemic."  MORE >>


More Than Half of State and Local Government Employees Contemplating Leaving Their Jobs

"State and local workers say they are considering changing jobs because they want a higher salary or a better benefits package (52%), are burned out from stress during the pandemic (47%), and/or want better work-life balance (36%). Public sector employees are considering retiring and/or leaving the workforce entirely due to pandemic burnout (42%), a desire to do things that bring joy (37%), and tension from working with the public [students' parents] (26%)."  MORE >>


Employee Benefits Jobs

View job as Client Manager DB/DC
for CMC Pension Professionals Client Manager DB/DC

CMC Pension Professionals

Remote / Glendale CA

View job as Client Manager DB/DC
for CMC Pension Professionals

View job as Actuary
for Pension Benefit Guaranty Corporation [PBGC] Actuary

Pension Benefit Guaranty Corporation [PBGC]

Remote / Washington DC

View job as Plan Administrator/ Consulting
for Associated Pension Consultants Plan Administrator/ Consulting

Associated Pension Consultants

Chico CA / Sacramento CA

View job as 401(k) Administrator
for Blue Ridge ESOP Associates 401(k) Administrator

Blue Ridge ESOP Associates


Selected New Discussions

One Employer Leaves a Controlled Group; Effect on Plan Document

"A profit sharing plan has been sponsored by a 3-entity controlled group. On 1/1/2021, one of the members ceased to be part of the group due to a change in ownership. Code section 410(b)(c) provides a transition period of the last day of the plan year following the year of the change for coverage testing purposes. Does that transition period also apply to the plan documentation?"

BenefitsLink Message Boards

Employer Contributions to a HSA Made Through a Section 125 Plan -- Income for 401(k) Plan Purposes?

"Employer contributions to the HSA are a 'qualified benefit' under the Section 125 proposed regs. And under the W-2 instructions, they would need to be included in Box 12 with a Code W. Assuming for the moment that the contributions, when made, are 'reasonably' excluded from the employee's income, is this considered a Section 125 'deferral' which is added back in as compensation under the terms of the plan?"

BenefitsLink Message Boards

Reporting on Forms W-2 and 941 for a 83(b) Election Across Calendar Years

"A privately held employer issues restricted stock to an employee on December 20, 2021. It is subject to five-year cliff vesting. The employee's last 2021 paycheck is December 31, 2021. The employee files an 83(b) election on January 10, 2022. The employee's next paycheck is paid on January 15, 2022. Regardless of whether the employer withholds income tax and FICA from the January 15, 2022, paycheck or the employee writes the company a check for withholding on January 10, 2022, how would the employee's W-2 and the employer's 941s (4Q21 and 1Q22) look?"

BenefitsLink Message Boards

Press Releases

Garrey Joins OneAmerica® to Bolster Health Care Sector Momentum


AIG Retirement Services Selected as Exclusive Retirement Plan Provider for Ontario County, New York

AIG Retirement Services

AIG Retirement Services Appoints Scott Ramey Executive Vice President of Market Strategy and New Business Development

AIG Retirement Services

Webcasts and Conferences
(Retirement Plans / Executive Compensation)

Employer Plans: SEP Plans



Employer Plans: SIMPLE IRA Plans



Last Issue's Most Popular Items

Life Expectancy Table Revised, Resulting in Lower Required Minimum Distributions

Schneider Downs

The Supreme Court's Northwestern Decision: A Win for Plaintiffs But a Possible Turn in the Tide?

Groom Law Group

IRS Updates Determination and Opinion Letter Procedures


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

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