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This digest contains a wide variety of the freshest source material dealing with current trends, opinion, news, legislative action, investments, marketing, sales, consulting, and legal issues regarding 401k, 403b and other retirement plans. Each listing contains a headline (hyperlinked to the source document), description, source of the item, and the month and year posted to this digest.

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SECURE Act Guidance for 401k Plan Sponsors to Remember in the New Year

The IRS continues to provide important guidance for 401k plan sponsors regarding the Setting Every Community Up for Retirement Enhancement Act of 2019. Most immediately impactful is additional guidance concerning long-term, part-time employee eligibility for 401k plans and qualified birth and adoption distributions from 401k plans.

Source: Thompsonhine.com, January 2021

COVID Pressured a Few Employers to Suspend Their 401k Match

Data suggest that less than 1% of plan sponsors (with more than 100 participants) covering 1.6% of plan participants have suspended the match. A similar calculation for the Great Recession in 2008-2009 showed 5% of participants saw their employer’s match suspended. The conclusion seemed to be that companies were not affected by the pandemic, did not experience liquidity pressures, and saw no need to suspend the employer match.

Source: Marketwatch.com, January 2021

Households Are Plundering 401ks to Survive the Covid-19 Crisis

Large numbers of American households were forced to plunder their retirement accounts to make ends meet during the last year, even as the federal government plunged trillions of extra taxpayers' dollars into the economy to keep it afloat. And that grim news is going to add to the looming retirement crisis already faced by tens of millions.

Source: Marketwatch.com, January 2021

When You Have to Tailor Your 401k Plan

When it comes to 401k plans, most plan sponsors forget to realize that the plan should be perfectly tailored to fit their needs. And those needs change from time to time. This article is all about how you need to make sure that the 401k plan is tailored to your needs as a plan sponsor and employer.

Source: Jdsupra.com, January 2021

2021 Appropriations Bill Includes New and Expanded Relief for Employee Benefit Plans

The Consolidated Appropriations Act, 2021 was passed and signed into law in late December 2020. In addition to funding for the current fiscal year, the Act also includes numerous provisions addressing employee benefit plans and providing a range of relief provisions relating to the COVID-19 pandemic and other disasters. While many of these changes are new, some of them extend or add on to previous legislation issued earlier in 2020 under the CARES Act. This article describes the key provisions of the Act applicable to employer-sponsored welfare and retirement plans.

Source: Huntonak.com, January 2021

Lessons Learned From ERISA Class Action Litigation Arising Out of the "Great Recession"

Often fiduciary duties are magnified and called into question when the country is plunged into an economic crisis and retirement plans suffer significant losses. Most notably, we saw an increase in the number of ERISA class action lawsuits in the wake of the Great Recession of 2008. This article analyzes the ERISA litigation trends that emerged after the Great Recession, the lessons learned, and what we may expect in the wake of the economic impacts resulting from the novel coronavirus pandemic, COVID-19.

Source: Dechert.com, January 2021

Amending Your 403b Plan for Updated Hardship Withdrawal Regs

A guide to what 403b plan sponsors need to know about upcoming plan amendments for IRS final hardship withdrawal regulations, CARES Act, and SECURE Act. Five key takeaways for 403b plan sponsors.

Source: Voya.com, January 2021

The Emerging Patchwork of Fiduciary Investment Advice Regulation: Putting the Pieces Together

Many fiduciary and best interest investment advice regulations advanced at both the federal and state levels last year. As we begin 2021, firms subject to these regulations face challenges in dealing with rules that impose a host of new obligations, and that at times overlap and conflict with one another. This chart is intended to help firms take stock of the evolving framework and aid firms in putting the pieces together.

Source: Eversheds-sutherland.com, January 2021

Missing Participants: Best Practices for Pension Plans

This DOL document outlines best practices that the fiduciaries of defined benefit and defined contribution plans, such as 401k plans, can follow to ensure that plan participants and beneficiaries receive promised benefits when they reach retirement age.

Source: Dol.gov, January 2021

DOL's Fiduciary Interpretation and Exemption: Impact on Rollover Recommendations

Since the effective date for the exemption is after the inauguration of the Biden administration, it is almost certain that the effective date will be further delayed. During that delay, we think it is likely the exemption will be revised or possibly withdrawn. But, it is just as likely that the expanded definition of fiduciary advice for rollover recommendations will be retained and possibly expanded. That could make life more difficult for broker-dealers, investment advisers, and insurance companies. While these rules will affect all of those industries, this article focuses on the impact of the likely outcomes on broker-dealers.

Source: Brokerdealerlawblog.com, January 2021

Barriers to In-Plan Retirement Income Adoption

Annuities have been part of successful individual retirement income strategies for a long time. But the adoption of income solutions has eluded the institutional market for decades. This is because the design of these first-generation income solutions has been fundamentally flawed, creating six barriers to adoption.

Source: 401kspecialistmag.com, January 2021

DOL's Rule on Investment Duties of ERISA Fiduciaries and Its Impact on Retirement Plan ESG Investing

The DOL adopted the final rule amending the investment duties regulation which governs the obligations of ERISA fiduciaries when selecting investments for ERISA plans. Although the final rule does not mention ESG investing, it is clearly intended to govern the use of ESG investments in ERISA plans. This article covers the final rule's impact on retirement plan ESG investing.

Source: Workforcebulletin.com, January 2021

Form 5500: The Body Language of ERISA Compliance

Last month, the DOL, the IRS, and the PBGC released advance copies of the 2020 Form 5500 Series. When filed, they will join those of prior years' morphing into the body language of ERISA compliance. Here's how.

Source: Retirementplanblog.com, January 2021

The Mechanics of Moving to a PEP

The goal of the provisions of the SECURE Act that created pooled employer plans was to encourage employers that didn't have retirement plans for employees to offer one. But employers that already sponsor a plan may also decide a PEP is a better choice for them and their participants. With a lack of regulatory guidance, plan sponsors can rely on certain existing rules to know the steps to take if they decide to move from a single-employer plan to a pooled employer plan.

Source: Plansponsor.com, January 2021

Vail Resorts Wins Dismissal of ERISA Fiduciary Breach Lawsuit

A new ruling out of the U.S. District Court for the District of Colorado grants the dismissal motion filed by the defense in an ERISA lawsuit known as Kurtz v. Vail Corp. The underlying lawsuit accuses the Vail Corp. of permitting excessive fees in the Vail Resorts 401k Retirement Plan.

Source: Planadviser.com, January 2021

401k Plan Administrator Sues VALIC Over Surrender Fees Charged to Plan

The administrator of the D.L. Markham, DDS, MSD, INC. 401k Plan has filed a lawsuit against the Variable Annuity Life Insurance Co. over fees he says were improperly withheld from plan assets. The insurer is charged with engaging in a prohibited transaction under ERISA when the fees were charged during a move to a new provider, as well as with self-dealing.

Source: Planadviser.com, January 2021

DST Systems Settles Lawsuit Over Risky Retirement Plan Investment

The lawsuit said the DST Systems Inc. profit sharing and 401k plans were invested too much in Valeant Pharmaceuticals. A settlement amount of $27 million to be paid by DST Systems was reached.

Source: Planadviser.com, January 2021

Temporary Enforcement Policy Regarding the Participation of Terminating DC Plans in the PBGC Missing Participants Program

This Field Assistance Bulletin No. 2021-01 announces a temporary enforcement policy regarding the transfer of a missing or non-responsive participant's account balance in a terminating or abandoned individual account plan to the Pension Benefit Guaranty Corporation.

Source: Dol.gov, January 2021

The Saver's Credit - 2021

This is a description of the Saver's Credit, updated for 2021, with a question and answer explanation intended for employers and employees who want to know all the related details. Also, a two-page notice to explain the rules to employees.

Source: Consultrms.com, January 2021

Vail 401k Lawsuit Dismissed

Vail Resorts on Wednesday won dismissal of a lawsuit over the Colorado-based skiing company's 401k plan. The plaintiff failed to raise issues with the company's process of selecting and monitoring funds, a judge wrote.

Source: Investmentnews.com (registration may be required), January 2021*

IRS Rev. Proc. 2021-4 Updates the Determination Letter Program

The Internal Revenue Service (IRS) issued Revenue Procedure 2021-4, which makes several changes to the determination letter program and Voluntary Correction Program fees.

Source: Westlaw.com, January 2021

Annual Plan Deadlines for the Plan Year Ending December 31, 2021

This 7-page chart explains key plan events and the deadline for each for Section 401(a) and 401k defined contribution plans with a plan year ending December 31, 2021. Off-calendar year plans should adjust the deadlines accordingly based on the time frames described in the chart. The chart is intended as a tool to assist employers with monitoring the key annual plan requirements.

Source: Voya.com, January 2021

Appropriations Act Includes Several Provisions Applicable to Qualified Retirement Plans

The Consolidated Appropriations Act of 2021 includes several provisions affecting qualified retirement plans. A relaxation of the partial plan termination rules should provide relief to plans which see unusual turnover in the number of active participants during the COVID-19 pandemic. Other provisions, including an amendment of the CARES Act which allows coronavirus related distributions to be made from money purchase pension plans, may provide retroactive relief to plan sponsors.

Source: Reinhartlaw.com, January 2021

DOL Issues Final Investment Advice Prohibited Transaction Exemption

Under the PTE, plan fiduciaries are required to meet impartial conduct standards, provide certain disclosures, conduct annual reviews, maintain policies and procedures, and keep records. However, the PTE relaxes proposed restrictions on fiduciary compensation to allow fiduciaries to be compensated for advice to rollover assets from retirement plans to individual retirement accounts and engage in transactions that previously were not permitted.

Source: Icemiller.com, January 2021

Value Taking Centre Stage When It Comes to DC Investment Fees

Anyone flipping through a prospectus for an employer's DC pension plan or group registered retirement savings plan will notice a recurring theme when it comes to statements on investment fees: "Better than retail!" they might as well scream. It's a familiar refrain from both capital accumulation plan sponsors and providers trumpeting the lower rates available with group offerings, but it doesn't do much for Michelle Loder, a partner in DC solutions at Morneau Shepell Ltd. "It's a very low bar to clear," she says. "There's not much cause for celebration when you realize that Canada is one of the worst places in the world for retail investment fees."

Source: Benefitscanada.com, January 2021

Why Should Taking a Hardship Distribution Be a Hardship?

Self-certification facilitates automation of the hardship approval by the recordkeeper. However, electronic approval of hardship distribution requests through the plan website is not always the default. Thus, there continue to be instances in which neither backup nor compliant self-certifications were obtained for hardship distributions. Unfortunately, self-certification does not mean that an email or a phone call from the participant is sufficient.

Source: Belfint.com, January 2021

Senate Tilt Portends Big Policy Shifts

The election of the two Georgia Senate Democratic candidates and the resulting shift in control of the U.S. Senate could have profound implications for President-elect Joe Biden's policy agenda, including retirement plans.

Source: Asppa.org, January 2021

3(38) Advisor in 2021

2021 is a good time for retirement plan sponsors to consider hiring an advisor who will accept delegation to serve as their 401k plan's fiduciary investment manager. Often known as a 3(38) advisor, these professionals bring a high level of investment expertise and fiduciary prudence to the selection and monitoring of 401k plan investments. They also remove that responsibility -- and the potential liability that accompanies it -- from the plan sponsor.

Source: Alliant401k.com, January 2021

Partial Employee Benefit Plan Terminations

The AICPA Employee Benefit Plan Audit Quality Center has prepared this 18-page advisory to provide plan sponsors, administrators, or trustees with an understanding of partial plan terminations under ERISA and your related responsibilities. As a plan fiduciary, you are subject to certain responsibilities, such as following the plan document and prudently carrying out your responsibilities.

Source: Aicpa.org, January 2021

Americans Need to Change Their Retirement Trajectory

There is a problem with the difference between Americans' current retirement trajectory and where they want to be when they actually get there. A new report from digital financial wellness platform Savology on the current state of personal finance in the U.S. shows Americans need to make changes to achieve the retirement they expect.

Source: 401kspecialistmag.com, January 2021

Poll Finds 60% Raided Retirement Accounts During Pandemic

While we've often seen studies showing that people have largely refrained from raiding their 401ks to help cover expenses during the COVID-19 pandemic, every now and then we hear differently. According to a new poll released Jan. 6, nearly 60% of Americans withdrew or borrowed money from an IRA or 401k during the pandemic, and nearly two-thirds (63%) used those retirement savings to cover basic living expenses.

Source: 401kspecialistmag.com, January 2021

Benefits-Plan Sponsors Face a Tough Year on Compliance

The pandemic, remote work, and changing needs have created unique and novel challenges that have necessarily dominated employer attention in the past nine months. The pandemic hasn't affected, however, the constant drum of change to employee benefit plan requirements. Here are some things for plan sponsors to look out for this year.

Source: Wagnerlawgroup.com, January 2021

Allstate Faces Additional ERISA Fiduciary Breach Lawsuit

A new complaint filed in the U.S. District Court for the Northern District of Illinois, Eastern Division, accuses Allstate of various breaches of fiduciary duty and prohibited transactions under ERISA. A new complaint echoes allegations leveled against the insurance company in a complaint from November.

Source: Planadviser.com, January 2021

Plaintiffs Claim Fiduciary Breach in Recent Retirement Plan Class Action

Nestle USA and its board of directors have been served with an ERISA class action on behalf of 401k plan participants and their beneficiaries. The suit alleges that Nestle and its representatives failed to monitor fees or act to reduce expenses passed along to plan participants. Plaintiffs claim fiduciary breach while acknowledging insufficient data to determine reasonable fee levels.

Source: Hallbenefitslaw.com, January 2021

Retirement Fiduciary Calendar for 2021

TRI-AD seeks to make it fast, simple, and easy for plan fiduciaries to keep their retirement plans in compliance with the Internal Revenue Service, Department of Labor, and ERISA regulations. They have created this useful calendar to help you stay in front of such administrative deadlines and submission complexities.

Source: Tri-ad.com, January 2021

Qualified Retirement Plan Relief in the Consolidated Appropriations Act of 2021

The Consolidated Appropriations Act of 2021 contains various relief provisions applicable to qualified retirement plans. This article summarizes provisions in the Act, including the temporary rule preventing partial plan terminations, coronavirus-related distributions, and qualified disaster distribution and loan relief provisions.

Source: Shermanhoward.com, January 2021

Analysis Shows Participant Fees Higher in Plans With Revenue Sharing

Mutual funds that pay revenue sharing to recordkeepers of DC plans are more likely to be added to plan investment menus and are less likely to be deleted from them, according to researchers from Vanderbilt University; the University of Texas at Austin, and the National Bureau of Economic Research; and the Board of Governors of the Federal Reserve System. In a paper, the researchers also noted that Investment Company Institute data shows that in 2018, mutual funds managed more than 60% of the $5.2 trillion invested in 401k plans.

Source: Planadviser.com, January 2021

When You May Have to Fire Your 401k Advisor

For most 401k plan sponsors, it's the financial advisor that serves as their ombudsman. When things aren't going so well it is often the result of the financial advisor not doing their job competently. This article is about situations where, as a plan sponsor, you may have to fire your financial advisor.

Source: Jdsupra.com, January 2021

The Risks Recordkeepers See With PEPs

The forthcoming plans present challenges and opportunities. Retirement plan recordkeepers see some promise in pooled employer plans, but they also anticipate even more risk to their businesses, regardless of whether they provide them.

Source: Investmentnews.com (registration may be required), January 2021

Employers Beware! Retirement Plan Disclosures Are Required Under 408(b)(2)

To fulfill their fiduciary obligations, plan sponsors need to ensure that service providers subject to 408(b)(2) rules satisfy their disclosure requirements under ERISA. If a service provider fails to meet their reporting requirements under 408(b)(2), the plan sponsor is required to act by sending the service provider a written request for compliance.

Source: Hallbenefitslaw.com, January 2021

2020 ERISA Litigation Trends Hint at What's Ahead This Year

By any measure, 2020 was a record-setting year for litigation under the Employee Retirement Income Security Act. The U.S. Supreme Court issued four ERISA decisions, more than it has issued in a single year in the 45-year history of the statute. And just over 200 new ERISA class actions were filed, a record that represents an 80% increase over the number of ERISA class actions filed in 2019 and more than double the number filed in 2018. This trend shows no sign of slowing down, with important developing issues related to fee and performance litigation for smaller retirement plans, COBRA notices, arbitration clauses and class action waivers, actuarial assumptions, cyber theft, and employee stock ownership plans, or ESOPs.

Source: Groom.com, January 2021

Comparing Seven Defined Contribution Plan Designs - 2021

Here is an example showing the results of comparing seven plans for a small business. The owner was willing to spend on staff an amount equal to 5.0% of their total combined payroll. In this case, a cross-tested plan with 401k safe-harbor features was the best design. The results show the differences that can be obtained from various plan designs. The best design for any given situation will vary depending on employee ages and salaries, as well as company objectives.

Source: Consultrms.com, January 2021

Year-End Stimulus Bill Effectively Extends Key Cares Act 401k Provisions

On December 27, 2020, President Trump signed the Consolidated Appropriations Act of 2021, which includes the much-heralded coronavirus stimulus package that has been the subject of intense negotiations in recent months. For 401k plans, the Stimulus Act's provisions in many ways replace or extend similar provisions that were contained in the CARES Act.

Source: Compliancedashboard.net, January 2021

Retirement Plan Provisions in the New COVID-19 Relief Acts

The recently enacted COVID-19 Related Tax Relief Act of 2020 and the Taxpayer Certainty and Disaster Tax Relief Act of 2020, both of which are part of the "Consolidated Appropriations Act, 2021," includes the following provisions that expand and extend changes intended to provide relief to retirement plan sponsors and participants affected by the COVID-19 pandemic and other disasters.

Source: Bradley.com, January 2021

Partial Plan Termination Relief Explained

There is a lot to unpack in the recently passed COVID relief legislation, but the most significant element for plan sponsors impacted by the COVID-19 pandemic may well be the temporary rule preventing partial plan termination. Here's what it means for you and your plan sponsor clients.

Source: Asppa.org, January 2021

Mutual Fund Revenue Sharing in 401k Plans

Recordkeepers in DC plans are often paid indirectly in the form of revenue sharing from third-party funds on the menu. We show that these arrangements affect the investment menu of 401k plans. Revenue-sharing funds are more likely to be added to the menu and are less likely to be deleted. Overall, revenue-sharing plans are more expensive as higher expense ratios are not offset by lower direct fees or by superior performance. Rebates increase with the market power of the recordkeeper suggesting that third-party funds may revenue share to gain access to retirement assets.

Source: Ssrn.com, December 2020*

2021 ERISA Plan Compliance Calendar

Being a retirement plan sponsor involves juggling many tasks, one of the more important is to make sure your plan complies with all pertinent federal and local regulations. A compliance calendar keeps track of your company’s required filings, their due dates, and related details so you can avoid incurring any fines or other penalties for late filings or missing information. This schedule will help plan sponsors track important due dates for their plan.

Source: Plansponsor.com, December 2020

Key DOL Prohibited Transaction Exemption Considerations

A recent webinar emphasized a few important points about the new prohibited transaction exemption recently finalized by the DOL. It was explained that everyone is initially eligible for the DOL's new prohibited transaction exemption, but the regulator reserves the right to suspend eligibility for up to 10 years after certain violations.

Source: Planadviser.com, December 2020

DOL Reconsiders Who Can Be Considered a Fiduciary

Attorneys with Groom Law Group explain how the DOL has extended the reach of its "five-part test" for determining fiduciary status under ERISA. This makes its new prohibited transaction exemption all the more important, according to attorneys.

Source: Planadviser.com, December 2020

Understanding Private Equity Investments in DC Plans

The DOL recently released an "information letter" in response to inquiries from the private equity industry as to whether private equity investments can be offered to defined contribution plans. In giving its green light to such investments, the DOL laid out several factors that plan sponsors should keep in mind, given potentially problematic features of private equity investing for some plan participants. These include the typical multiyear holding period for portfolio companies and the challenge in providing an accurate stock valuation before a sale.

Source: Orba.com, December 2020

The New Pooled Employer 401k Plan and the Hazards of Advisor-Led PEPs

Ultimately, while the PEP may become a valuable tool for small business owners to be able to offer employees competitive retirement plan options, RIAs will need to carefully consider whether to choose to take on the role of a PPP for their small business clients plans and the associated ramifications if they do choose to do so. Including asking the question of whether branching out into plan administration would result in more business anyway, or if it will be better to find a third-party administrator to partner with instead?

Source: Kitces.com, December 2020

IRS' Version of Missing Participant Guidance

The IRS issued two new pieces of guidance that work together to address missing participants in a qualified plan. Specifically, the IRS issued Rev. Rul. 2020-24 and Rev. Proc. 2020-46 to add to their existing portfolio on missing participant guidance. This guidance focuses on the treatment of escheatment to the state unclaimed property funds for reporting and withholding requirements and indirect rollover relief.

Source: Groom.com, December 2020

401k Investors Warming Back up to Equities

Following a month when all trading days favored fixed income, 401k investors resumed trading into equities, according to the latest Alight Solutions 401k Index. With the S&P 500 posting its best November ever, there were nine days during the month where net trades went from fixed income to equities. By comparison, October had no such days, which was the first time in the more than 20-year history of the Index that an entire month saw net trading flows move to fixed income.

Source: Asppa-net.org, December 2020

Partial Plan Termination Relief Provided in New Stimulus Bill

The latest COVID-19 relief bill, attached to the Consolidated Appropriations Act, 2021, enables certain retirement plan sponsors that laid off or furloughed employees due to the economic effects of the pandemic to avoid a partial plan termination.

Source: Plansponsor.com, December 2020

2021's Best Mutual Funds in 401k Retirement Plans

On December 18, 2020, the DOL adopted with limited changes its Proposal 3.0 regarding ERISA fiduciary investment advice, focused on the fiduciary status of rollover advice and a "best interest" prohibited transaction exemption for conflicted advice aligned with the primary regulation of various types of financial services providers. While the final guidance broadly retains the structure and approach of Proposal 3.0, the DOL incorporated some important changes in response to comments.

Source: Kiplinger.com, December 2020

Consolidated Appropriations Act, 2021: Employer-Sponsored Retirement Plans

The Act relaxes several normally rigid health, welfare, and retirement plan rules in light of the on-going COVID-19 pandemic, easing the financial impact of pandemic-caused employment changes while instituting new rules related to surprise medical billing. This article covers the Act's effects on employer-sponsored retirement plans.

Source: Jacksonlewis.com, December 2020

DOL's Fiduciary Rule 3.0 -- Exemption and Investment Advice Fiduciary Definition

On December 18, 2020, the DOL adopted with limited changes its Proposal 3.0 regarding ERISA fiduciary investment advice, focused on the fiduciary status of rollover advice and a "best interest" prohibited transaction exemption for conflicted advice aligned with the primary regulation of various types of financial services providers. While the final guidance broadly retains the structure and approach of Proposal 3.0, the DOL incorporated some important changes in response to comments.

Source: Eversheds-Sutherland.com, December 2020

Four Retirement Planning Tips for the Self-Employed

Like their traditionally employed counterparts, self-employed workers need to prepare for retirement, but they have more obstacles to saving. Workers with unstable income streams are more reluctant to lock up money in qualified accounts forget about an employer match or auto-enrollment. With those barriers in mind, here are four factors self-employed workers need to consider to protect their retirements.

Source: 401kspecialistmag.com, December 2020

Cybersecurity for the Plan Sponsor From a Plan Auditor Perspective

Plan sponsors should now have on their priority list for 2021 the development of cybersecurity policies and procedures for both the company and the plan. Here are a few key items plan sponsors should consider including as they develop or update their company cybersecurity policy.

Source: Linkedin.com, December 2020

IRS Guidance on SECURE Act Provides More Detail on Changes to Safe Harbor Plans

The SECURE Act made several changes to the rules for certain safe harbor 401k plans. One change increased the cap on automatic enrollment safe harbor plans to 15%. Another eliminated certain safe harbor notice requirements for plans that make safe harbor nonelective contributions and added new provisions for the retroactive adoption of safe harbor plans that make nonelective contributions. On December 9, the IRS issued Notice 2020-86 to elaborate on these changes as summarized here.

Source: Groom.com, December 2020

Congress Provides Retirement Plan Relief

Congress passed, and the President signed, the Consolidated Appropriations Act, 2021. This bill contains over seventy new tax policies, extensions, refinements, and other tax-law clarifications. Within its over 5000 pages is The Taxpayer Certainty and Disaster Tax Relief Act. The TCDT Act provides that the 10% early withdrawal penalty does not apply to qualified disaster distributions; that special rules apply to retirement plan distributions used for qualified disaster area home purchases; and for increases in the limit for retirement plan loans made because of a disaster.

Source: Graydon.law, December 2020

DOL Adopts Prohibited Transaction Exemption for Investment Advice Fiduciaries

The new class exemption would permit certain investment advice fiduciaries to (i) receive compensation as a result of providing investment advice and (ii) engage in principal transactions, including riskless-principal transactions and certain other covered principal transactions (i.e., non-riskless principal transactions that involve certain specified investments) and the receipt of a mark-up, mark-down, or other payment.

Source: Findknowdo.com, December 2020

A Few Important Points About the DOL's Fiduciary Actions

The DOL has confirmed that a financial professional cannot simply write their way out of a functional fiduciary relationship. This point relates to the "mutual understanding" prong of the five-part test which stipulates that two parties' "reasonable understandings of their relationship" are critical to determining whether they have arrived at a mutual agreement, arrangement, or understanding that the investment advice will serve as a primary basis for investment decisions. Under the new framework, written statements disclaiming a mutual understanding or forbidding reliance on the advice as a primary basis for investment decisions are not determinative.

Source: Planadviser.com, December 2020*

California and Oregon State-Sponsored Retirement Plans

State-sponsored retirement plans for private-sector workers generally require certain employers without their own retirement plans to make the state-sponsored plan available to their employees. Each state has different rules so it is imperative to confer with state authorities and reference state websites for guidance. Some of the states' plans have an employer registration requirement that is time-sensitive. California and Oregon are examples of two such states.

Source: Retirementlc.com, December 2020

Could the COVID Relief Bill Stall Out?

The COVID-19 relief bill may not get President Trump's signature after all, with implications for retirement plan sponsors.

Source: Napa-net.org, December 2020

IRS Reduces Minimum Withdrawal Amounts for IRAs and 401k Plans

The IRS recently finalized new regulations that determine the minimum amounts that retirees must withdraw from their retirement accounts and include in their taxable income. These new rules will apply to withdrawals made during 2022 and thereafter.

Source: Forbes.com, December 2020

New Stimulus Bill Allows Penalty-Free 401k Withdrawals

The $900 billion stimulus bill that Congress passed allows workers to take money from their 401ks without being hit with a tax penalty, a provision carried over from the CARES Act passed last March.

Source: Cbsnews.com, December 2020

Supreme Court Ruling Addresses ERISA Preemption

A recent decision filed by the U.S. Supreme Court has significant implications in the area of ERISA preemption of state laws and regulations, though the direct impact on retirement plans could be muted.

Source: Planadviser.com, December 2020

IRS Extends Relief From Physical Presence Requirement

The physical presence requirement for spousal consents and participant elections under qualified retirement plans will be lifted through June 30.

Source: Planadviser.com, December 2020

Curb Your Enthusiasm On These Annoying 401k Practices

In this article, the author expresses some of the things that aggravate him about the retirement plan business that you, as 401k plan sponsors, probably don't even know.

Source: Jdsupra.com, December 2020

ERISA's Fiduciary Saga Continues: DOL Issues Final Exemption With New Commentary

The DOL issued a release finalizing an important new initiative for retirement accounts that are subject to ERISA or Section 4975 of the Internal Revenue Code. The Release finalizes Prohibited Transaction Class Exemption 2020-2, but gives rise to at least three broad important considerations.

Source: Dechert.com, December 2020

IRS Extends Relief on Remote Notarization

In response to the continuing public health emergency caused by the COVID-19 pandemic, the Internal Revenue Service has extended remote notarization relief issued in June. Specifically, Notice 2021-03 extends from Jan. 1, 2021, through June 30, 2021, the temporary relief provided in Notice 2020-42, 2020-26 I.R.B. 986, from the physical presence requirement for participant elections to be witnessed by a plan representative or a notary public.

Source: Asppa.org, December 2020

Plan Fiduciaries: You Have No Right to Vote

The final regulations set out the basic premise that a plan fiduciary charged with the responsibility to manage plan assets that include shares of stock also has the responsibility to manage shareholder rights appurtenant to those shares, such as the right to vote proxies. The applicable fiduciary must exercise such authority under the loyalty and prudence standards prescribed under ERISA. Note, however, this responsibility will not apply to an individual account plan, such as a 401k plan, that provides for pass-through voting to participants and beneficiaries.

Source: Winstead.com, December 2020


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