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Retirement Plans Newsletter

March 28, 2023

2 New Job Opportunities 2 New Job Opportunities


[Guidance Overview]

CRS In Focus: DOL Guidance and Regs on the Exercise of Shareholder Rights by Private-Sector Pension Plans

"Among other responsibilities, pension plan fiduciaries must manage plan assets that involve shares of corporate stock and, thus, may be required to make and monitor decisions about voting proxies and exercising shareholder rights. The [DOL] has published guidance over the past few decades outlining these responsibilities." [IF12362 Mar. 27, 2023]  MORE >>

Congressional Research Service [CRS]

[Guidance Overview]

SECURE 2.0: Financial Incentives for Participants for Deferrals

"Prior to the SECURE Act 2.0 the only financial incentive for a participant to make a deferral was a matching contribution. However, the new law permits 'de minimus' non-cash incentives for beginning participation or increasing deferrals, so long as the incentives are not paid for by the plan. This change will allow plan sponsors to use gamification to encourage eligible employees to defer into a plan or to increase deferrals."  MORE >>

Seventh Circuit Finds the Northwestern Excess Fee Case Plausible Based on an Obsolete Fact Pattern

"The Seventh Circuit held that the Northwestern excess recordkeeping and investment fee claims were plausible ... But the case involves an obsolete fee arrangement that even the Northwestern plan has replaced. Read correctly, the case only finds plausibility for fiduciary imprudence claims against plans with uncapped revenue sharing and retail share class investments without rebating the higher fees back to plan participants. Virtually no large plan today has this obsolete fee arrangement." [Hughes v. Northwestern Univ., No. 18-2569 (7th Cir. Mar. 23, 2023)]  MORE >>

Euclid Specialty Managers

National Education Association Retirement Plan Gets Schooled on Withdrawal Liability Interest Rate Assumptions

"Another court has found that actuaries who set discount rates for withdrawal liability purposes that are not based upon their 'best estimate of anticipated experience' for investments under the plan -- in this case, basing the rate assumption only on estimated returns for 40% of the Plan's assets in low risk fixed income investments -- cannot withstand judicial scrutiny." [Employees' Retirement Plan of the National Education Assoc. v. Clark County Education Assoc., Case No. 20-3443 (D.D.C. Feb. 27, 2023)]  MORE >>


De-Risking in 2023, Part 1

"For calendar year plans with a 1-year stability period, 2023 lump sums for this participant are 33%-47% lower than 2022 lump sums. That is an unprecedented decline in the cost of paying lump sums. For plans contemplating a 2023 lump sum window that have latitude with respect to lookback month and stability period, ... different lookback months produce very different 2023 lump sum values (the October lookback month produces a lump sum 22% lower than the August lookback month)."  MORE >>

October Three Consulting


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Common Mistakes Plan Sponsors Make in Retirement Plan Administration

"Mistakes can and do happen in retirement plan administration.... These mistakes can result in penalties, liability and, in some situations, disqualification of the retirement plan.... [H]ere are a baker's dozen [common mistakes] and best practices for stopping problems before they occur."  MORE >>


CRS In Focus: Social Security Taxable Earnings Base: An Overview

"Since 1982, the Social Security taxable earnings base has risen at the same rate as average wages in the economy. By law, the base is raised whenever an automatic benefit increase -- a cost-of-living adjustment (COLA) -- is payable to Social Security beneficiaries, assuming wages have risen.... The taxable earnings base serves as a cap on both contributions and benefits."  MORE >>

Congressional Research Service [CRS]

Government Plans Face Unique Challenges with SECURE 2.0 Implementation

"Section 603 requires the enhanced catch-up contributions for participants ages 60 through 63 to be made using after-tax dollars to a Roth account if the participant is a highly compensated employee, starting in 2024.... [A]pproximately 20% of government plans do not have a Roth feature and would need state law and collective bargaining agreements to be updated in order to add one.... [M]any government retirement plans are planning to suspend catch-up contributions entirely as a temporary solution until they are able to come into compliance with Section 603."  MORE >>


The Secret Role That Consultants Play at Public Pension Funds

"Investment consultants to pension funds with political members on their boards can do double duty: provide crucial advisory services and be a convenient scapegoat for poor performance.... [The research] found that political board members at pension funds typically have strong financial education and expertise backgrounds, which suggests that their reliance on consultants is not due to a lack of skills."  MORE >>

Institutional Investor


Measuring Target Date Fund Performance (PDF)

"Participants in TDFs receive the standard time-weighted returns (TWRs) that are designed to eliminate the effects of savings. Contributions have no effect on TWRs.... Dollar-weighted returns (DWRs) combine the effects of investment performance with the impacts of the amounts and timing of contributions ... DWRs are a more informative performance measure for TDFs because they help participants recognize the efficacy of savings."  MORE >>

Target Date Solutions, via Journal of Performance Management

Benefits in General

[Official Guidance]

IRS Disaster Relief Notice MS-2023-02, for Victims of Severe Storms, Straight-Line Winds and Tornadoes in Mississippi

"Victims of severe storms, straight-line winds and tornadoes in Mississippi from March 24, 2023, to March 25, 2023, now have until July 31, 2023, to file various individual and business tax returns and make tax payments.... [I]ndividuals and households affected by severe storms, straight-line winds and tornadoes that reside or have a business in Carroll, Humphreys, Monroe, and Sharkey counties qualify for tax relief."  MORE >>

Internal Revenue Service [IRS]

Employee Benefits Jobs

View job as Healthcare Actuarial Consultant
            for BPAS

Healthcare Actuarial Consultant



View job as Healthcare Actuarial Consultant for BPAS

View job as Enrolled Actuary
            for Prime Pensions, Inc.

Enrolled Actuary

Prime Pensions, Inc.


View job as Enrolled Actuary for Prime Pensions, Inc.

Selected New Discussions

Excluding a Family Member from Profit Sharing/401(k) Plan

"The central issue is whether or not a family member can be excluded entirely from the plan (0 deferral, 0 SH 0 PS)?"

BenefitsLink Message Boards

Excess Deposits/415 Issues

"Hi Here is a new one never dealt with before. I found out that the client (over age 50) has an excess situation and not sure how to tackle it The plan has the following features: 401k+NESH (3% mandatory)+PS. The plan is also used as a QRP -- qualified replacement plan During 2022, $136,000 was deposited with the following breakdown

  • April 2022 -- $6,500 -- from biz -- 2021 catch up
  • July1 2022 -- $58,000 -- from QRP -- 2021 NESH+PS
  • July2 2022 -- $6,500 -- from biz -- 2022 catch up
  • November 2022 -- $65,000 -- from biz -- towards 2022 NESH+PS

The July2 and November deposits created a $4,000 excess deposit during 2022 i.e. over the 415(c) limit. (71,500-67,500 (max 2022 415(c) limit) = 4,000 How is this to be corrected?"

BenefitsLink Message Boards

When Can Distributions Be Permitted from 457(f) Plan?

"When are 457(f) contributions actually payable? I know it depends on the document, but under the regulations, when can a 457(f) plan allow for distributions? Is it permissible to distribute upon full vesting, if the participant is still employed? I don't see anything in the regulations that allow actively employed participants to withdraw vested amounts, other than for unforeseeable emergencies, taxes, or attainment of age normal retirement age, or at a stated event. Would becoming fully vested be considered a 'Stated Event'?"

BenefitsLink Message Boards

Press Releases

Employee Benefit Research Institute Announces Appointment of Barb Marder as President and CEO

EBRI [Employee Benefit Research Institute]

John Hancock Retirement Selects Wayne Park as New CEO Bringing Decades of Experience Working Alongside Intermediaries, Plan Sponsors, and Participants as a Champion of Retirement Readiness

John Hancock Retirement

Webcasts and Conferences
(Retirement Plans / Executive Compensation)

SECURE 2.0: Long-Term/Part-Time Employees

April 26, 2023 WEBINAR

Thompson Hine LLP

Last Issue's Most Popular Items

The Final 2022 DOL ESG Rule and Why 25 States Oppose It

T. Rowe Price

The DOL's 2023 Regulatory Agenda for Retirement Plans at a Glance

Morgan Lewis

Seventh Circuit Northwestern Ruling Eases ERISA Pleading Standard (PDF)

The Wagner Law Group, via Law360

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

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