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Retirement Plans Newsletter

August 24, 2022

2 New Job Opportunities 2 New Job Opportunities


[Official Guidance]

Text of EBSA Proposed PTEs Allowing Restorative Payments to BCBS Retirement Plan Pending Resolution of Fiduciary Breach Litigation Against Allianz and Aon

"The proposed exemption relates to legal actions and claims against Allianz Global Investors U.S. LLC and Aon Investments USA Inc., that arose from certain losses incurred by the Non-Contributory Retirement Program for Certain Employees of Blue Cross and Blue Shield Association in the first quarter of 2020. This proposed exemption would permit the Plan sponsor, Blue Cross and Blue Shield Association, to make a series of payments to the Plan, including: [1] the past payment of $69,000,000, made on March 12, 2021; and [2] the past payment of $13,500,000, made on March 28, 2022. If the Plan receives litigation proceeds from the Claims, the Plan will transfer the lesser of the ligation proceeds amount or the Restorative Payments amount, plus reasonable attorney fees to BCBSA."  MORE >>

Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL]


ASC CE Webcast: Distribution and Forfeitures

Eventually, plan participants receive distributions from their defined contribution plan accounts. Plans must satisfy certain distribution and forfeiture rules based on their specific plan design. Learn more! Register Now!

Sponsored by ASC

[Guidance Overview]

IRS Issue Snapshot: Third Party Loans from Retirement Plans

"Audit tips: [1] Inspect the plan's records to determine whether it has direct or indirect loans between third parties and the plan. If yes, determine if any of the third party loans were made to a disqualified person under IRC Section 4975. [2] Review the plan document and ensure any third party loans that were made are in accordance with the terms of the plan document. [3] Review plan assets to ensure they are appropriately valued. [4] If the plan is subject to minimum funding, consider any valuation deficiencies for their effect on the employer's plan funding obligations. [5] Determine whether loans have been 'written off' or otherwise deemed uncollectible such that a party has been discharged from debt.... [6] Look for indicators of fraud."  MORE >>

Internal Revenue Service [IRS]

Sixth Circuit Issues Mixed Rulings in Two ERISA Excessive Fee Cases

"In both cases, the 6th Circuit upheld the lower court's dismissal of claims challenging the prudence of actively managed funds, as well as allegations of excessive investment and administrative fees. But in one case, the court revived allegations that plan fiduciaries imprudently offered retail share class mutual funds instead of cheaper -- but otherwise identical -- institutional share classes." [Smith v. CommonSpirit Health, No. 22-5964 (6th Cir. Jun. 21, 2022); Forman v. TriHealth, Inc., No. 21-3977 (6th Cir. Jul. 13, 2022)]  MORE >>


Second Circuit: ERISA Anti-Alienation Provision Does Not Protect 401(k) of Shkreli Co-Conspirator Lawyer

"A former Katten Muchin Rosenman LLP lawyer convicted of conspiring with Martin Shkreli to commit securities fraud can be forced to put part of his $921,000 retirement accounts toward his $10.4 million restitution order, the Second Circuit ruled ... In allowing portions of Greebel’s retirement accounts to be garnished, the Second Circuit acted in line with earlier decisions by the Fourth and Ninth circuits." [United States v. Greebel, No. 21-993 (2d Cir. Aug. 24, 2022)]  MORE >>

Bloomberg Law

An ERISA Potboiler for Your End of Summer Reading Pleasure

"[T]he court rejected defendants' argument that Nancy lacked standing to sue as she was not a participant in the plan. The court stated that Nancy's claims were rooted in the plausible idea that she would have been a plan participant but for defendants' actions, which conferred her with standing. Finally, the court stated that the ERISA claims as currently pled were sufficient to withstand merits challenges at the motion to dismiss stage." [Batal-Sholler v. Batal, No. 21-0376 (D. Me. Aug. 15, 2022)]  MORE >>

Kantor & Kantor LLC

Avoiding Improper Retirement Plan Distributions: The DOL and the Good, the Bad and the Ugly

"One of the challenges of administering a retirement plan is the timely and proper payment of distributions to plan participants.... More complicated situations include: [1] Missing or non-responsive participants with less than a $5,000 balance in their retirement account.... [2] Retired participants, at or beyond normal retirement age, who have not started receiving their retirement benefits. [3] Deceased participants in Defined Benefit plans. [4] Uncashed/unclaimed distributions."  MORE >>


Many 401(k) Plan Sponsors Considering Changes to Investments, Advisers, Recordkeepers

"Almost half of the 1,285 plan sponsors surveyed (47%) said they were actively seeking a new adviser, up from 34% that said so in 2021. The need for better employee communications as well as superior investment menus offered by rival advisers were cited as the top reasons for plan sponsors wanting to switch."  MORE >>

Pensions & Investments

Exceptional Usefulness and Quality icon Takeaways for Broker-Dealers After SEC's Reg BI Action

"In June, the [SEC] filed its first complaint alleging violations of the care obligation and the compliance obligation of Regulation Best Interest, or Reg BI ... Analysis of the complaint provides some insight as to how to facilitate compliance with the rule and how to defend such claims going forward." [SEC v. Western International Securities, Inc., No. 22-4119 (C.D. Cal. complaint filed Jun. 15, 2022)]  MORE >>

Carlton Fields

Florida Eliminates ESG Considerations from State Pension Investments

"This update to the fiduciary duties of the SBA's investment fund managers and investment advisors clearly defines the factors fiduciaries are to consider in investment decisions and states that ESG considerations will not be included in the state of Florida's pension investment management practices."  MORE >>

Office of Florida Governor Ron DeSantis

Public Pension Funding Index, August 2022

"Funded ratios of the 100 largest U.S. public pension plans tumbled from 78.4% as of May 31, 2022, to 74.0% as of June 30, 2022, but favorable winds during July brought funded ratios back up to 77.3% as of July 31, 2022 ... The deficit between the estimated assets and liabilities narrowed during July, from $1.521 trillion at the beginning of the month to $1.327 trillion at the end of the month."  MORE >>


State and Local Government Employees Without Social Security Coverage: What Percentage Will Earn Pension Benefits That Fall Short of Social Security Equivalence?

"The authors analyze 66 plans and project that a significant minority of them are likely to fall short of providing Social Security-equivalent benefits, potentially affecting 750,000 to 1 million noncovered workers annually."  MORE >>

Jean-Pierre Aubry, Siyan Liu, Alicia H. Munnell, Laura Quinby, and Glenn Springstead, via SSRN

Employee Benefits Jobs

View job as North America Total Rewards Manager
          for Air Products and Chemicals, Inc North America Total Rewards Manager

Air Products and Chemicals, Inc

Macungie PA

View job as North America Total Rewards Manager
          for Air Products and Chemicals, Inc

View job as Benefits Analyst
          for Chromalloy Benefits Analyst


Palm Beach Gardens FL

View job as Benefits Analyst
          for Chromalloy

Last Issue's Most Popular Items

Text of IRS Notice 2022-35: Weighted Average Interest Rates, Yield Curves, and Segment Rates for August 2022 (PDF)

Internal Revenue Service [IRS]

Equity Compensation Considerations for the Private Company

Alvarez & Marsal

'Dean of Financial Planning' Harold Evensky Says Reg BI 'Makes Absolutely No Sense'

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

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