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Retirement Plans Newsletter

September 20, 2022


[Official Guidance]

Text of IRS Notice 2022-40: Weighted Average Interest Rates, Yield Curves, and Segment Rates for September 2022 (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]


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[Guidance Overview]

CRS Report on Social Security: The Windfall Elimination Provision

19 pages. "The windfall elimination provision (WEP) ... reduces the Social Security benefits of certain retired or disabled workers who are also entitled to pension benefits based on earnings from jobs that were not covered by Social Security ... Recent legislation has generally proposed either to eliminate the provision for all or some affected beneficiaries, or replace the current-law provision with a new proportional formula based on past earnings from both covered and noncovered employment." [98-35 updated Sep. 19, 2022]  MORE >>

Congressional Research Service [CRS]

District Court: Goldman Sachs Did Not Violate ERISA Requirements

"A federal judge has ruled in Goldman Sachs' favor in a summary judgement that holds that the firm was not in breach of the fiduciary duty under ERISA to its employees invested in defined contribution retirement plans maintained by the firm." [Falberg v. The Goldman Sachs Group, Inc., No. 19-9910 (S.D.N.Y. Sep. 14, 2022)]  MORE >>

PLANSPONSOR; free registration may be required

District Court Rules St. Joseph Retirement Fund No Longer Qualifies as Church Plan

"A U.S. District Court judge in Rhode Island ruled that the St. Joseph Health Services of Rhode Island Retirement Plan does not have a church-plan exemption from ERISA because it is no longer affiliated with a relevant sponsor....[The judge] denied the remaining defendants motion to dismiss, and ordered the parties to return to mediation." [Del Sesto v. Prospect CharterCare, No. 18-328 (D.R.I. Sept. 13, 2022)]  MORE >>

Pensions & Investments

The Tide May Be Turning on Flood of ERISA Excessive Fee Class Actions

"[Recent] Seventh and Sixth Circuit decisions collectively call for pleadings by plaintiffs that show the specifics of how a bad process was involved in fiduciary choices about vendors or investment vehicle offerings ... That may be welcome news to plan fiduciaries at a time when plaintiffs' attorneys are inundating employers with lawsuits alleging excessive fees and poorly performing investments in defined contribution plans based only on market comparators."  MORE >>

Greenberg Traurig

Retirement Plan Fiduciary Mistake: Focusing Solely on Past Investment Performance

"In times of extreme market volatility such as we are experiencing currently, past performance could turn on a dime. It's not uncommon for non-index funds to perform several percent below their benchmark due to their security selection and sector weightings. We have seen category ranking moves from mid-30's to mid-70's within one quarter. Looking solely at past investment returns may lead to premature decisions which could negatively impact a plan's long-term investment strategy."  MORE >>

Conrad Siegel Actuaries

Personalization and the Defined Contribution System

"A typical platform might use age and salary to generate investment recommendations. However, additional factors [could] lead to more customized solutions ... Tailored content and delivery may have the added benefit of keeping people engaged even as attention spans become ever shorter ... [S]tart embedding customization options where possible and aligning them with goals and overall strategy."  MORE >>

PLANSPONSOR; free registration may be required

Top Issues (and Their Solutions) 401(k) Plan Sponsors Have with Education Providers

"When the 401k plan blossomed in the 1980s, ... [p]lan sponsors understood they needed to offer an education program to their employees. What started as simple enrollment meetings quickly evolved into makeshift investment training.... If plan sponsors remain responsible for education, then they need to adopt audit and control procedures to ensure the program is executed properly."  MORE >>

Fiduciary News; free registration required

Milliman Pension Buyout Index, September 2022

"During August 2022, average accounting discount rates increased by 43 basis points (bps), while competitive annuity purchase rates increased by 58 bps. This caused the estimated competitive retiree buyout cost as a percentage of accounting liability to decrease from 98.0% to 96.9%."  MORE >>


Spending and Saving Behavior of Public-Sector Defined Contribution Plan Participants (PDF)

19 pages. "[P]ublic-sector DC plan participants' spending and savings behaviors are examined to see if cohorts of workers who have different primary plans (DB vs. non-DB) or different generosity of DB plan benefits have differences in these behaviors."  MORE >>

PRRL [Public Retirement Research Lab]

Defining the Retirement Crisis: It's Going to Get Worse Before It Will Ever Get Better

"[H]ow much of their paycheck will participants retiring in the future have to save to finance the same adequate retirement as those who have retired in the past? ... A current 55-year old female, born in 1967 and expecting to retire in 2032, will need to have saved 11.5% of pay, year in and year out from age 25, and invested those savings in a target date fund, in order to enjoy an 'adequate' standard of living in retirement comparable to what a female born in 1950 could achieve by saving 5.8% of pay, a doubling of the cost of retirement over a 17 year period."  MORE >>

American Retirement Association [ARA]


Serious Flaws in Investment Allocation Rules of Thumb for Retirees

"Most investment allocation rules of thumb ignore the existence of non-financial household assets such as Social Security, pension benefits and life annuities in the calculation of a portfolio's target investment allocation. As a result, such allocations frequently fail to properly measure the amount of risk being assumed by the retired household in its overall retirement asset allocation."  MORE >>

Ken Steiner, FSA Retired


Making the Case for Alternatives, Particularly Commercial Real Estate, in DC Plans

"[T]he average institutional investor allocates 10.1% to private commercial real estate. By comparison, Large US DC plans are dramatically underweight to alternative investments with just a 0.26% allocation within their target-date and balanced funds as of 2020."  MORE >>

Seeking Alpha; free registration may be required

Benefits in General

[Official Guidance]

Text of IRS Disaster Relief Notice PR-2022-10, for Puerto Rico Victims of Hurricane Fiona

"Victims of Hurricane Fiona beginning September 17, 2022, now have until February 15, 2023, to file various individual and business tax returns and make tax payments ... Individuals and households affected by Hurricane Fiona that reside or have a business in all 78 municipalities in Puerto Rico qualify for tax relief."  MORE >>

Internal Revenue Service [IRS]

Selected New Discussions

Multiemployer 401(k) Plan Needs ADP Testing -- Treat as Single Employer?

"I have a multiemployer 401(k) plan that is comprised of 20 employers, with all participants collectively bargained (i.e., there are no non-union employees in the plan), and all part of the same CBA. When performing the ADP testing for this plan, would I test each employer on its own or am I required to test the entire population as one employer?"

BenefitsLink Message Boards

Add Retroactive Benefit for an HCE to Fix a 401(a)(26) Failure?

"A cash balance plan excludes all HCEs except the owner. The plan defines the contribution credit for Group 2 (all participants other than the owner) as 0.5% accrual to cover meaningful benefits. All NHCEs are participating but the 40% coverage requirement of 401(a)(26) isn't satisfied for 2021. The only way this can be cured is by making one HCE a participant retroactive to 2021. Can this be done by an 11(g) amendment naming one HCE a participant, or will that be deemed discriminatory because effectively the amendment is granting an accrual just to one HCE? Must this go through VCP?"

BenefitsLink Message Boards

PS Plan Established on 9/16/2022 for 2021 -- No Income Tax Filing Extension Has Been Filed -- File a 5500?

"Retirement Plan set up for the first time today, effective 2021. Therefore no extension was filed. I have checked the box indicating that the plan was adopted retroactively under SECURE Act. Should I indicate in the 'Special Extension' box 'SECURE Act Section 201'? Perhaps the IRS has even already issued something about this?"

BenefitsLink Message Boards

Solo 401(k) 5500-EZ Filed Through IRS Relief Program -- Still Subject to DOL Penalties?

"I need to file two 5500-EZ via the IRS relief program, dating back 7 and 8 years, when my solo/individual 401k exceeded $250k (I was ignorant of the requirement to do this). The $500 penalty per submission is a bargain compared to the alternative. What I don't understand is why the Department of Labor DFVC program doesn't also cover solo 401k's 5500-EZ submissions. Is that right?"

BenefitsLink Message Boards

Press Releases

Mintz's Michelle Capezza Inducted as a Fellow of the American College of Employee Benefits Counsel


'Income Blueprint' for Retirement Plan Fiduciaries Launches

American Century Investments

Equitable Launches New Turnkey 401(k) Program for Small Businesses


Webcasts and Conferences
(Retirement Plans / Executive Compensation)

You’re Gonna Need a Bigger Boat: Navigating ERISA Fiduciary Duties to Avoid Litigation

October 20, 2022 WEBCAST

Worldwide Employee Benefits Network [WEB] - New York Chapter

IRA Withholding Rules - And Getting them Right

October 25, 2022 WEBCAST


Major Retirement Legislation Is on the Horizon: What is Congress Considering?

November 16, 2022 WEBCAST

Worldwide Employee Benefits Network [WEB]

Last Issue's Most Popular Items

What New Student Loan Relief Means for Employee Benefits

Ogletree Deakins

Supreme Court Asked to Provide Uniform ERISA Arbitration Guidelines

Pensions & Investments

How Your Retirement Income Could Look in 2030

Motley Fool

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

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