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Retirement Plans Newsletter

October 4, 2022

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[Official Guidance]

Text of IRS Notice and Request for Comments: Proposed Revision to Annual Return/Report of Employee Benefit Plan and Payment of Pension Plan Excise Taxes

"Currently, Form 5558 is used by a filer to request an extension of time to file Form 5500 series, Form 8955-SSA as well as the Form 5330, Return of Excise Taxes Related to Employee Benefit Plans. Form 5558 does not extend the time to pay the excise taxes. Any tax due for Form 5330 filers must be paid with Form 5558 for the application for an extension of time to file Form 5330.

"The DOL EFAST2 system will not take the IRS tax payment. Thus, the IRS will revise Form 5558 to remove the items about the extension of time to file Form 5330. This will allow DOL to electronically collect the form. The Form 5558 will be used to solely request extensions on the Form 5500 series and Form 8955-SSA. The payment information from Form 5558 will be incorporated into Form 8868. The Form 8868 will be revised to allow extensions for Form 5330 and payment of excise tax due. Form 8868 will only allow for the extension to file, and will not extend the payment of the excise tax."  MORE >>

Internal Revenue Service [IRS]


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Eighth Circuit: Principal Did Not Breach Its Fiduciary Duty to 401(k) Plan Participants Despite Conflict of Interest

"This decision solidifies that companies like Principal, who offer fixed-income investment products, can create fiduciary responsibilities when they deduct from investment returns and set participant rates." [Rozo v. Principal Life Ins. Co., No. 21-2026 (8th Cir. Sep. 2, 2022)]   MORE >>

Jackson Lewis P.C.

Exceptional Usefulness and Quality icon Deference Declined: Fiduciary Status for Rollovers Not a Given, and New Developments in Uses of Plan-Related Data Under ERISA

"A September 27, 2022 decision by the Southern District of New York addresses several key theories recently advanced by the plaintiffs’ bar in ERISA-based lawsuits against plan service providers.... [T]he decision ... marks something of a setback to DOL in its multi-year effort to expand the scope of those deemed to function as investment advice fiduciaries in a manner that would broadly include providers of rollover recommendations ... The decision also further develops the nascent body of case law addressing the status of participant data as a plan asset and the potential consequences of uses of that data by service providers[.]" [Carfora v. Teachers Insurance and Annuity Association of America, and TIAA-CREF Individual & Institutional Services, LLC, No. 21-8384 (S.D.N.Y. Sep. 27, 2022)]   MORE >>

Groom Law Group

District Court Sides with Home Depot in Fiduciary Breach Suit

"The judge noted that Home Depot ... did not do a survey of plan fees, nor engage in a competitive bidding process ... However, the plaintiffs did not prove that they actually suffered any loss ... [T]he judge ruled that even though some funds underperformed comparators briefly, keeping underperforming assets as part of a long-term strategy is not imprudent, and their underperformance in hindsight is not the basis for a claim[.]" [Pizarro v. The Home Depot Inc., No. 18-1566 (N.D. Ga. Sep. 30, 2022)]  MORE >>


Evolution of the QDIA: Is Your Plan Due for a Review?

"This article offers a quick hit on where we have been, provides a high-level summary of the range of QDIA offerings in today's marketplace, identifies key assessment and decision points, and provides insight for plan sponsors to consider when evaluating their current QDIA relative to the range of newer offerings in the marketplace."  MORE >>


How to Choose a 401(k) for a High-Growth Startup

"Historically, the 401(k) has been nearly opaque in its complexity, but technology, automation, and the desire to make the 401(k) a much simpler benefit for small businesses is in full swing. Here are some of the areas where that simplicity is playing out for startups."  MORE >>


Safe-Harbor Leveraging for Small Business Top-Heavy Retirement Plans, 2022

"The purpose of this article is to illustrate the provisions that allow owners of small businesses to get the most in return for what they are willing to contribute on behalf of their non-owner employees.... Many of these provisions will even be of interest to sponsors of plans not required to make a top-heavy minimum contribution."  MORE >>

Retirement Management Services, LLC

Most Americans Financially Unable to Retire at 65

"Of those surveyed, the median retirement savings were valued at $128,000 and more than half (55%) of respondents reported their financial situation as fragile or being just able to get by financially. Going by the old 4% rule, that equates to just $5,120 per year that the majority of retirees could safely withdraw from their investments to supplement other retirement income sources."  MORE >>

401(k) Specialist

401(k) Plan Sponsor Fiduciary Question: Is ESG an Investment Strategy, a Fad, or a Political Football?

"There are real issues with ESG investment products that aren't limited to encouraging retirement savers to invest in them. In fact, there may be more typical and more urgent issues that regulators might be overlooking because politics has encroached into the arena.... The impact of this political ping pong makes ESG risky for 401k fiduciaries. Still, there is a way to have it both ways."  MORE >>

Fiduciary News; free registration required


Exceptional Usefulness and Quality icon Searching for Solutions to Participant Account Theft

"We need a practical solution that respects the types of reasonable fiduciary arguments made by the plan fiduciaries and the recordkeeper in this case, but provides a solution for innocent participants. The obvious solution is to require plan fiduciaries to seek contractual indemnification from the recordkeeper to guarantee participant account security, or require the recordkeeper to maintain insurance coverage for cyber fraud." [Disberry v. Employee Relations Committee of the Colgate-Palmolive Company, Alight Solutions, LLC, and the Bank of New York Mellon Corporation, No. 22-5778 (S.D.N.Y. complaint filed Jul. 7, 2022)]  MORE >>

Euclid Specialty Managers


Kentucky Deferred Comp is on Your Side

"Kentucky Deferred Comp ... [is] one of the most impressive state-run supplemental savings programs available to public school teachers ... [It's] not just an impressive 457(b). It's also an impressive 401(k), Roth IRA and traditional IRA. Both the 457(b) and the 401(k) plans are automatically available to all Kentucky school employees.... [A] K-12 school employee in Kentucky [has] exactly ZERO reasons to contribute to a 403(b)."  MORE >>


Benefits in General

[Official Guidance]

Text of IRS Proposed Regs: Substantially Higher User Fees Relating to Enrolled Actuaries

"The proposed regulations increase both the enrollment and renewal of enrollment user fees for enrolled actuaries from $250.00 to $680.00. The proposed regulations affect individuals who apply to become an enrolled actuary or seek to renew their enrollment."  MORE >>

Internal Revenue Service [IRS]

Alert (High Risk Issue) icon House Passes ERISA Bill to End Arbitration and Require De Novo Review of Benefit Claims

"On September 29, 2022, the U.S. House of Representatives passed the [Employee and Retiree Access to Justice Act (part of HR 7780)] ... [which] seeks to amend ERISA's civil enforcement provision (ERISA Section 502) to make any arbitration provisions in ERISA plans invalid and unenforceable ... [unless] the participant or beneficiary consented in accordance with particular rules ... Additionally, the Act would eliminate discretionary authority for claim administrators and allow only de novo review of a benefit claim in court."  MORE >>

Faegre Drinker

Executive Compensation and Nonqualified Plans

How 10b5-1 Plans Can Help You Build Wealth and Avoid Insider Trading with Your Company Stock

"Executives and other key employees with equity compensation ... often cannot sell company shares because they possess ... material nonpublic information (MNPI), i.e. knowledge of confidential company info that will affect the stock price when made public.... A 10b5-1 plan is a prearranged stock-trading plan ... that provides an affirmative defense against charges of insider trading when you later sell or buy stock while you know MNPI about your company. Created when you do not know MNPI, the plan is set up in advance to make automatic, periodic sales and/or purchases of your company's stock."  MORE >>

Employee Benefits Jobs

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The Standard

Austin TX

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Selected New Discussions

2021 5500 Needed for New Plan If Adoption Agreement Was Signed in 2022?

"I have a combo plan -- 401k PSP and CB plan -- and the documents were signed in February 2022 for the plan year effective 1/1/2021 (a calendar year plan). Does SECURE allow for us to 'skip' Form 5500 filing for 2021 filing because it was signed in 2022?"

BenefitsLink Message Boards

Deadlines for Statewide Florida Clients Have Been Extended to February 15, 2023

"In case anyone not aware -- ALL parts of Florida have received an IRS extension until 2/15/23."

BenefitsLink Message Boards

Can 5500-EZ Be Filed Before Schedule SB Is Signed?

"Can 5500-EZ be filed before Schedule SB is certified?"

BenefitsLink Message Boards

Coverage of Tipped Employees under a 401(k) Plan

"Employer is a high end restaurant where employees are paid a minimal wage, with income primarily from tips. While these tips are actually reported on Form W-2, they are not paid through the employer. Instead, the employees declare tip values to the employer, who then includes in records for taxes and such. When taxes, health premiums, etc... are applied, many of these employees actually owe the firm money and must pay back the firm these costs with a check they provide to the employer. Can these employees participate in a 401(k)? Are they required to be covered? How would deferrals be made, as a practical matter?"

BenefitsLink Message Boards

Press Releases

Financial Advisors Vote for The Wagner Law Group as the Best ERISA Law Firm for 2022

The Wagner Law Group P.C.

Wealthspire Advisors Partners with Chapter to Offer Comprehensive Medicare Guidance for Clients Approaching Retirement

Wealthspire Advisors LLC

Blitman & King Hires ERISA Associate

Blitman & King

Webcasts and Conferences
(Retirement Plans / Executive Compensation)

Negotiating Equity Compensation: How Advisors Can Help Clients

October 13, 2022 WEBCAST

Last Issue's Most Popular Items

401(k)ology: Excess Deferrals


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Withdrawal Liability and the Building and Construction Industry Exception

Jackson Lewis P.C.

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

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