Retirement Plans Newsletter
June 3, 2020
Newly PostedWebcasts, Conferences
Incorporating ESG into a DC Plan: Practical Guidance
June 17, 2020 WEBCAST
Defined Contribution Institutional Investment Association [DCIIA]
Form 5500 Update - What You Need To Know
June 18, 2020 WEBCAST
Worldwide Employee Benefits Network [WEB] - New York Chapter
DB Regulatory Update
June 23, 2020 WEBCAST
American Society of Pension Professionals & Actuaries [ASPPA]
ESOP Leadership Summit: COVID-19 Response
July 8, 2020 WEBCAST
National Center for Employee Ownership [NCEO]
Automatic Enrollment Plans - Design & Administrative Challenges
July 9, 2020 WEBCAST
ASC
ESOP Leadership Summit: COVID-19 Response
July 15, 2020 WEBCAST
National Center for Employee Ownership [NCEO]
ESOP Leadership Summit: COVID-19 Response
July 22, 2020 WEBCAST
National Center for Employee Ownership [NCEO]
2020 Employee Benefits Law Update - 17th Annual Advanced Seminar
September 28, 2020 in GA
Institute for Applied Management & Law, Inc.
Discussions
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[Official Guidance]
"[A] plan fiduciary would not, in the view of the [DOL], violate the fiduciary's duties under section 403 and 404 of ERISA solely because the fiduciary offers a professionally managed asset allocation fund with a private equity component as a designated investment alternative for an ERISA covered individual account plan in the manner described in this letter. There may be many reasons why a fiduciary may properly select an asset allocation fund with a private equity component as a designated investment alternative for a participant directed individual account plan. Private equity investments, however, present additional considerations to participant-directed individual account plans that are different than those involved in defined benefit plans. In making such a selection for an individual account plan, the fiduciary must engage in an objective, thorough, and analytical process that compares the asset allocation fund with appropriate alternative funds that do not include a private equity component, anticipated opportunities for investment diversification and enhanced investment returns, as well as the complexities associated with the private equity component."
Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL]
[Guidance Overview]
DC Tricycle Restatements Are About to Begin
"The IRS has just announced ( Announcement 2020-7 ) the key details for the third cycle ('Tricycle') of restatements for preapproved defined contribution plans.... This will begin the formal restatement process. Employers who previously adopted a prototype or volume submitter defined contribution plan, or who wish to migrate from an individually designed plan to a preapproved plan, must restate their document onto a Tricycle preapproved document by no later than July 31, 2022."
Ferenczy Benefits Law Center
"[We] conclude that the hanging paragraph is best read to exclude from disposable income the monthly 401(k)-contribution amount that Davis's employer withheld from her wages prior to her bankruptcy. That interpretation reads the amendment to Section 541(b), which added the hanging paragraph, in a way that actually amends the statute. It also gives a meaningful effect -- one not already accomplished by Section 1325(b)(2) -- to Congress's instruction in Section 541(b)(7) that 401(k) contributions 'shall not constitute disposable income.' The Trustee's proposed interpretation fails on these objectives." [In re Davis, No. 19-3117 (6th Cir. Jun. 1, 2020)]
U.S. Court of Appeals for the Sixth Circuit
"The opinion did not directly ... answer the question most were expecting: whether the defined benefit standing analysis turns on the plan's funding status. Instead, the Court appears to have erected a general bar for participants to bring defined benefit fiduciary suits due to the structure of such plans.... If applied literally, the opinion could significantly limit future plaintiffs' defined benefit breach of fiduciary claims. It could also encourage future defendant plan sponsors to rid themselves of defined benefit fiduciary claims by funding their plans during the course of the litigation[.]" [ Thole v. U.S. Bank N.A. , No. 17-1712 (S. Ct. Jun. 1, 2020)]
The Wagner Law Group
Supreme Court Decision Limits Plaintiffs' Ability to Sue Plan Fiduciaries
"The decision may also affect fee and expense cases against defined contribution plans. In most of these cases, plaintiffs challenge the prudence of a wide array of investment options, including options in which plaintiffs themselves never invested.... By making clear that 'there is no ERISA exception to Article III' and that plaintiffs do not have standing by virtue of the fact that the plan suffered an arguable injury, Thole strongly supports the conclusion that plaintiffs lack standing to challenge options in which they never invested." [ Thole v. U.S. Bank N.A. , No. 17-1712 (S. Ct. Jun. 1, 2020)]
Sidley Austin LLP
Supreme Court Limits Rights of DB Plan Participants to Sue for Fiduciary Violations
"The Court indicated that until the claimant has suffered an injury in fact, the claimant has not suffered an injury sufficient for standing under Article III of the U.S. Constitution. The Court left open a possible narrow exception -- where a defined benefit plan's mismanagement is so egregious that it substantially increases the risk that both the plan and the employer would fail and would be unable to provide the future benefits promised under the terms of the plan." [ Thole v. U.S. Bank N.A. , No. 17-1712 (S. Ct. Jun. 1, 2020)]
Davis Wright Tremaine LLP
DOL Gives Green Light to Private Equity in DC Plans
"Defined contribution plan sponsors can include certain private equity strategies into diversified investment options, such as target date, target risk or balanced funds, while complying with ERISA ... In [ Information Letter 2020-06-03 ], the [DOL] said when evaluating whether to include a particular investment vehicle with an allocation of private equity as a designated investment alternative, a plan must evaluate the risks and benefits associated with the investment alternative."
Pensions & Investments
First Hints of Potential New DOL Fiduciary Rule Emerge
"The [DOL] has filed for [OMB] review a draft regulation titled 'Improving Investment Advice for Workers & Retirees Exemption' ... The actual language of the proposed rule is not yet available ... but sources are speculating that this proposal likely represents the DOL's new fiduciary rule, and that the 'exemption' referenced in the title of the rule will be related to the Regulation Best Interest package currently being implemented by the [SEC]."
planadviser
Benefit Plan Sticker Shock: Don't Drop the Ball on Fiduciary Liability Insurance
"In the midst of the COVID-19 pandemic and the ensuing volatility of the economy, companies and their employees are facing unprecedented economic challenges. In many cases, this sudden economic shift has significantly affected the value of employee benefit plans. Companies should consider these mounting risks to assess whether a claim related to its sponsorship, oversight, or administration of an employee benefit plan may be imminent, and whether fiduciary liability insurance may be available to neutralize any potential financial risk."
Reed Smith LLP
DC Plan Nondiscrimination Testing in the Age of COVID-19 (PDF)
"As defined contribution (DC) plan sponsors prepare for annual nondiscrimination testing, they may need to consider the potentially adverse effects that coronavirus-related employer actions could have on their test results and how they can best respond to those possible effects.... Furloughs, employer match suspensions, salary reductions, and other employer actions taken in response to the financial crisis prompted by the coronavirus may negatively impact ADP and ACP testing, in addition to any changes plan participants may make to their deferral rates."
Vanguard
Which 401(k) Plans Are Suspending Matching Contributions in 2020?
"The Center for Retirement Research at Boston College has compiled a chart of all the companies known to have suspended their 401(k) matching contributions because of the COVID-19 pandemic.... According to [one] of 816 U.S. companies, 12% said they suspended matching contributions for retirement plans, with those operating in hard-hit industries like retail and business services more likely to report doing so. Another [survey] ... found more than 20% of large organizations indicated they are suspending matching contributions, while only 3.6% of small plans have moved to do so."
401(k) Specialist
How Composite Plans Can Bring Sustainability to the Multiemployer Pension System (PDF)
21 pages. "Composite plans are a proposed new type of retirement plan that will provide greater stability and sustainability than current plans, while not making promises that plans are unable to keep. A detailed case study illustrates how the key features of composite plans, including a conservative funding target and the ability to adopt modest benefit reductions early in response to a funding shortfall, can provide greater long-term benefit security than current pension plans."
Groom Law Group, for eight construction employer groups
Pension Finance Update, May 2020
"Rebounding stock markets gave pension finance a boost in May. Both model plans ... gained ground last month, with Plan A improving 2% and plan B up almost 1%. For the year, Plan A is down 10% and Plan B is down 3% through the first five months of 2020:"
October Three Consulting
Benefits in General
[Guidance Overview]
COVID-19: IRA and HSA Providers Have Until August 31 to File Form 5498 for 2019
"The IRS recently issued new guidance in Notice 2020-35 that further extends the July 15, 2020 deadline until August 31, 2020 for IRA trustees, custodians, and issuers to file Form 5498 (IRA Contribution Information) for 2019 with the IRS and provide a copy to IRA owners and beneficiaries. This extension also applies to Form 5498-ESA (Coverdell Contribution Information) and Form 5498-SA (HSA, Archer MSA, or Medicare Advantage MSA Information). The Notice further explains that the penalty for failure to file Form 5498 will not begin to accrue until September 1, 2020."
Morgan Lewis
Selected Discussionson the BenefitsLink Message Boards
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Repayment of RMD Paid in Stock During 2020
"If a participant took an RMD in 2020 as a stock distribution and was determined to meet the CRD requirements, can that repayment during the 3-year window be made in the form of stock or does it have to be at the cash value of the stock on the date it was distributed?"
BenefitsLink Message Boards
When Does a Self-Employed Owner 'Terminate' Employment?
"When does a self-employed individual truly have a termination of employment allowing him to take a distribution from his qualified plan? Is it: [1] When he moves from one type of business to another? (So he's effectively terminated is current trade or business) [2] When he runs the same type of business, but he significantly relocates it? As an example, suppose a real estate agent has moved from one agency to another."
BenefitsLink Message Boards
Loan Suspension under CARES Act: When Is First Payment Due, If I Take Out a Loan Today?
"If I am a 'qualifying participant' pursuant to the CARES Act, and I take a loan today and request a suspension of the payments, when would my first payment be due? I thought it would be June 1, 2021 (i.e., a full 12 month suspension), but I have seen a reference to January 1, 2021, and a separate reference to March 27, 2021, as the next payment date for any loan suspended as per the CARE Act."
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Press Releases
BCG Pension Risk Consultants Unveils New Corporate Brand and Website and Launches Customized Buyout Price Monitoring (CBPM) Service BCG Pension Risk Consultants | BCG Penbridge [BCG]
OneAmerica Names New Chief Actuary OneAmerica
MillenniuM Investment & Retirement Advisors Creates a Next Generation Retirement Plan Solution Millenium Investment & Retirement Advisors, LLC
Most Popular Items in the Previous Issue
SECURE Act Encourages Plan Sponsors to Offer Lifetime Income Options (PDF) Legacy Retirement Solutions
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