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Retirement Plans Newsletter

April 27, 2022


[Official Guidance]

Text of IRS Proposed Regs: Mortality Tables for Determining Present Value under Defined Benefit Pension Plans

"This document sets forth proposed regulations prescribing mortality tables to be used for most defined benefit pension plans. The tables specify the probability of survival year-by-year for an individual based on age, gender, and other factors. The tables are used (together with other actuarial assumptions) to calculate the present value of a stream of expected future benefit payments for purposes of determining the minimum funding requirements for the plan. These mortality tables are also relevant for determining the minimum required amount of a lump-sum distribution from such a plan."  MORE >>

Internal Revenue Service [IRS]

[Guidance Overview]

Exceptional Usefulness and Quality icon Analysis of DOL's Proposed Changes to Prohibited Transaction Exemption Procedures

"[The] changes would preempt the common practice of seeking a meeting with the DOL's exemption staff to discuss what the staff's attitude would be toward a requested exemption before a would-be applicant incurs the time and expense of preparing a formal application.... An exemption applicant who could not (or did not wish to) meet [the] impartial conduct standards would bear the burden of establishing why the standards should not apply to its requested exemption. This would be a significant expansion of the DOL's policy regarding impartiality.... The new 2% of revenue standard of independence will be harder for exemption applicants to meet ... It could impact smaller entities by limiting the amount of work they do for any one client and allow a larger entity to negotiate a larger fee by virtue of its overall revenue characteristics. "  MORE >>

The Wagner Law Group

Addressing Alternative Assets in Defined Benefit Plan Terminations (PDF)

"When a plan freezes or begins to de-risk, it can be a good time to flag any alternative investments to ensure that these investments have an investment horizon that will not exceed the expected life of the pension plan.... Some alternative assets may have buyers on the secondary market, but not all do.... ERISA's prohibited transactions rules that can limit some of the methods that can be utilized to make alternative assets liquid."  MORE >>

Groom Law Group and BCG Pension Risk Consultants | BCG Penbridge

This Private Equity Fund Was the Most Popular Among Pensions Last Year

"The California Public Employees' Retirement System committed the most capital to private markets among pension funds in 2021 ... [T]he private equity manager that was most popular among pension funds: Hellman & Friedman, which garnered commitments from ten public funds. In total, the amount of new capital commitments to alternatives in 2021 exceeded that of 2020 by $30 billion."  MORE >>

Institutional Investor

Retirement Industry Leaders on Emergency Savings (PDF)

"Over the last several years, the retirement industry has made significant progress on developing and implementing emergency savings solutions, with recordkeeping firms leading the way. While these solutions vary, the takeaway is clear: adequate emergency savings is an important part of financial wellness and retirement security.... One significant development would be explicitly allowing for automatic enrollment into emergency savings vehicles."  MORE >>

Commonwealth, and Defined Contribution Institutional Investment Association [DCIIA]


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What If Defined Benefit Plan Lump Sum Rates Were to Spike?

"We know that as interest rates rise lump sum values will decrease. Because plans generally have a one-year stability period neither participants nor the employer will notice the impact until the following year.... Participants who recognize this could take advantage of the rising interest rates and request a payout near the end of the year before rates increase for plan calculations. The possibility of having drops in lump sum amounts of at least 10% might spur more active participants to retire and more participants than expected to take a lump sum."  MORE >>


Milliman Pension Buyout Index, April 2022

"Estimated competitive retiree buyout cost, as a percentage of accounting liability, decreased by 60 bps from 98.9% to 98.3% during March.... [T]he competitive bidding process is estimated to save plan sponsors on average around 4.2% as of March 31."  MORE >>


Overview of Public Pension Plan Amortization Policies (PDF)

"Nearly every public pension plan has an unfunded liability; some plans have an actuarial surplus, which also is referred to as a negative unfunded liability. As financial obligations, public pension unfunded liabilities sometimes are likened to debt. As with other government obligations, unfunded liabilities typically are amortized, or paid, in a systematic manner over a period of time. Amortization policies are characterized by several factors described in this brief."  MORE >>

National Association of State Retirement Administrators [NASRA]

Employers Less Sure that Traditional Target Date Funds Meet Employees Retirement Needs

"66% of employers felt TDFs will help employees meet their retirement income needs, down from 78% in a previous survey in 2020. Employers are also increasingly concerned about their employees 'not saving enough for retirement' (66% in 2022 v. 57% in 2020) and 'risking outliving their savings' (63% on 2022 v. 58% 2020). Almost three quarters of employers (72%) now say they are highly interested in a new generation of TDFs that gear towards some allocation of lifetime income."  MORE >>



SECURE Act 2.0: Not the 401(k) Reform Americans Deserve

"[C]ost-efficiency is the key to making retirement as affordable as possible for 401(k) plan participants. To make more 401(k) plans cost-efficient, ... the following 401(k) transparency reform is necessary. [1] Define a safe harbor 401(k) investment menu.... [2] Make hidden 401(k) fees illegal.... [3] Standardize 408b-2 fee disclosures.... [4] Reform the Form 5500."  MORE >>

Employee Fiduciary

Benefits in General

[Official Guidance]

Text of IRS Notice 2022-21: Request for Public Recommendations on Items to Be Included in the 2022-2023 Priority Guidance Plan (PDF)

"The Department of the Treasury and the [IRS] invite the public to submit recommendations for items to be included on the 2022-2023 Priority Guidance Plan.... Taxpayers should ... briefly describe the recommended guidance and explain the need for the guidance.... [T]axpayers may include an analysis of how the issue should be resolved."  MORE >>

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

Selected New Discussions

PEO Plan Says It's a Single Employer Plan

"I am not heavily involved in the PEO, MEP, PEP, etc. field, so would appreciate any input here. I've come across a few large PEO plans that treat their 401(k) plans as multiple-employer plans on their 5500s. They generally report as a multiple-employer plan and file the schedule of contribution allocations for participating employers. I recently came across one that, on its 5500, says it is a 'single employer plan which is operated consistently with the requirements for a multiple employer plan[.]' Am I missing a nuance between a multiple-employer PEO plan and a single-employer PEO plan that is treated as a multiple-employer plan?"

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Press Releases

Enterprise Iron Receives California DGS Agreement

Enterprise Iron

Last Issue's Most Popular Items

401(k)ology: Correcting the Missed Deferral Opportunity


Fidelity to Allow Retirement Savers to Put Bitcoin in 401(k) Accounts

The Wall Street Journal; subscription may be required

'Cryptocurrency' Offerings in the 401(k): Potential Growth and Diversification Strategy, or Potential Breach of Fiduciary Duty Suit?

Michael Best

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

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