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Retirement Plans Newsletter

December 7, 2022

2 New Job Opportunities 2 New Job Opportunities

 

[Guidance Overview]

DOL Proposes Self-Correction Option Under Voluntary Fiduciary Correction Program

"Perhaps in a nod to the scores of employers choosing not to utilize the formal [VFCP] correction process for late deposit errors because of the time and expense involved in preparing the application, the DOL for the first time proposed ... to allow such corrections to be made on a self-correction basis with the full relief of the program, but on the condition the DOL is notified of the self-correction.... [T]hese changes are not yet effective[.]"  MORE >>

Fisher Phillips

[Sponsor]

Cycle 2 403(b) Pre-approved Plan Enrollment is OPEN

Enroll with ASC! We provide documents in a flexible and user-friendly adoption agreement-style format, with corresponding basic plan documents. View descriptions of ASC’s Cycle 2 403(b) Pre-Approved Plan Documents and enrollment details here!

Sponsored by ASC

[Guidance Overview]

Upcoming Deadline icon IRS Provides Plan Amendment Deadline Relief

"[A chart] includes the updated deadlines for any amendments required by [Notice 2022-23 and Notice 2022-45]. Importantly, the notices do not extend the amendment deadline applicable to nongovernmental section 457(b) plans (i.e., certain nonqualified plans sponsored by tax-exempt employers), so plan sponsors should consider reviewing their plans to determine whether there are any required changes prior to December 31, 2022 (for calendar-year plans)."  MORE >>

Ogletree Deakins

[Guidance Overview]

Do We Finally Have a Final Answer on ESG Investments and ERISA's Fiduciary Duties?

"With these final regulations: we are still left with the question of whether it is ill-advised for plan fiduciaries to engage in 'ESG investing' especially for those investments based solely on ESG considerations. While the final rule acknowledges that ESG factors may be appropriate factors to consider in the risk and return analysis, with the continued proliferation of class-action litigation attacking plan fees and investment selections ... a properly structured fiduciary process remains a must."  MORE >>

Seyfarth Shaw LLP

2023 Pension Lump Sums Dropping Like the New Year's Ball

"Corporate bond rates are up more than 250 basis points this year to levels not seen since Dick Clark's New Year's Rockin' Eve was actually hosted by Dick Clark.  ... [T]his year's historic run-up can reduce lump sum cash-outs by 30% or more -- larger reductions for younger payees, with smaller reductions for older payees. And for many, this change will arrive suddenly and possibly unexpectedly."  MORE >>

Principal Financial Group

2022 Fixed Indexed Annuity Industry Experience Studies

"The studies confirmed prior evidence of lower surrender behavior for fixed indexed annuity contracts that are utilizing income. The studies also explored policyholder behavior across factors including attained age, duration, tax status, contract size, and distribution channel."  MORE >>

Milliman

State and Local Government Contributions to Statewide Pension Plans: FY 2021 (PDF)

"[C]ontributions are a vital source of public pension funding: of the $10+ trillion in public pension revenue since 1992, 36 percent, or more than $3.5 trillion, came from contributions paid by employers and employees."  MORE >>

National Association of State Retirement Administrators [NASRA]

[Opinion]

The Endgame of ESG: Why It Matters to Policymakers and Enforcers (PDF)

37 pages. "This report will review what ESG is, the different kinds of ESG investing, the origins and historical development of the ESG movement, the global efforts to circumvent U.S. legal standards that hinder ESG investing, the recent push to mandate ESG by the current administration, the flaws of the ESG approach to investing, the societal harms caused by ESG, and the legal concerns that ESG presents for government officials who make and enforce public policy in Nebraska. In the end, the unavoidable conclusion is that the ESG movement has the potential to do substantial harm to both the financial system and society as a whole."  MORE >>

Office of the Attorney General, Nebraska Department of Justice

[Opinion]

The New Emperors: Responding to the Growing Influence of the Big Three Asset Managers (PDF)

"This report surveys the laws, corporate trends, and academic research relating to the opaque but significant influence the Big Three exercise over their portfolio companies. It concludes with seven recommendations to illuminate this regulatory blind spot and clarify the policy implications of the Big Three's influence."  MORE >>

Minority Staff of the U.S. Senate Committee on Banking, Housing, and Urban Affairs

[Opinion]

Annuities, SECURE 2.0, and Fiduciary Law

"[A]nnuity salesmen stress the 'guaranteed income' benefit, while avoiding any discussion of the costs an annuity owner must incur in order to receive such income.... Such costs often include the generally high costs of annuities and the requirement that the annuity owner must give up ownership of the annuity and control of the balance in the annuity, with no guarantee of recovering either the principal or any other kind of commensurate return. The implications of these conditions are significant for plan sponsors and other investment fiduciaries."  MORE >>

The Prudent Investment Fiduciary Rules

Benefits in General

The ABCs of 401(h) Accounts

"Pension plan sponsors may find 401(h) accounts appealing as one way to provide for the payment of retiree medical benefits. Depending on the terms of the plan, a 401(h) account can receive employer and/or employee contributions as well as transfers of excess pension benefits, provided certain requirements are met. 401(h) account contributions are tax deductible; earnings are tax-deferred; and distribution can be tax free."  MORE >>

American Retirement Association [ARA]

Employee Benefits Jobs

View job as Onboarding Associate
            for Betterment

Onboarding Associate

Betterment

Remote

View job as Onboarding Associate for Betterment

View job as Plan Change Consultant - RP
            for The Standard

Plan Change Consultant - RP

The Standard

Remote

View job as Plan Change Consultant - RP for The Standard

Selected New Discussions

Trying to File Form 8955-SSA But FIRE Is Down?

"Doesn't this happen every year -- the FIRE system goes down for December? What are we supposed to be doing for 8955-SSAs due by 12/15? Just file them ASAP when it comes back up on 1/6/23 and wait to see what happens? I don't recall ever running into this personally before, which is hard to believe (maybe I've just gotten my 2/28 plans done earlier in the year before?)."

BenefitsLink Message Boards

When Does the Distribution Occur for 1099-R and Withholding Purposes When You Interplead a Benefit?

"Suppose that A dies and it's not clear whether B or C is entitled to A's 401(k) account. The plan administrator decides to interplead the benefit into Federal court. Assume also (which may not be the case) that the interpleader rules require that the funds be deposited into the court. Finally, assume it takes a couple of years before the court reaches its decision. Does this mean that a distribution has occurred for 1099-R and withholding purposes when the transfer of funds is made to the court?

It seems to me that the only practical answer (although it is also not without complication, especially where RMDs may be involved) is that the court is the plan's agent and that reportable distributions for 1099-R and withholding purposes do not occur until the court cuts a check to B or C, but I cannot find any guidance on this. It certainly would be hard to tell B and C that either of them have income for Federal income tax purposes if neither of them has received any portion of A's account yet, and one of them will probably not ever receive any portion of it."

BenefitsLink Message Boards

Webcasts and Conferences
(Retirement Plans / Executive Compensation)

Social Security, Your Clients' Largest (Underappreciated) Asset Hiding in Plain Sight

December 8, 2022 WEBCAST

Broadridge Financial Solutions, Inc.

DOL Final Regs on ESG Investments and Proxy-Related Rules: Key Issues for ERISA Counsel, Plan Sponsors, Administrators

February 8, 2023 WEBCAST

Strafford

Last Issue's Most Popular Items

401(k) Plan Matching Contributions: To True Up or Not True Up?

Verrill Dana LLP

Retirees Can Still Reduce Taxes in Retirement

Kiplinger

The Benefits of Sabbaticals: Attracting and Retaining Employees

Ogletree Deakins

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

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