Year-End Compliance Update for Retirement Plans
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Compliance and Regulatory Year-End Compliance Update for Retirement Plans As 2020 draws to a close, this is a good time for employers sponsoring retirement plans to wrap up year-end compliance issues and prepare for the upcoming year. Here is a quick list of topics that plan sponsors may want to consider as 2021 approaches. Source: Millerjohnson.com If you are the plan sponsor of a large ERISA retirement plan which requires an annual financial statement audit, there is a new audit standard that will require you to provide additional information and documentation to your CPA firm. Source: Linkedin.com Rules for Retaining Benefit Plan Records When paper documents are overwhelming, electronic records can be a safe and convenient fix, as long as employers follow proper guidelines. This article reviews the legal requirements and suggests guidelines to follow. Source: Plansponsor.com IRS Issues 2020 Required Amendments List for Qualified Retirement Plans and 403bs The IRS on Nov. 20 issued the 2020 list of required amendments for individually designed plans qualified under Internal Revenue Code Sections 401(a) and 403(b). The list is contained in Notice 2020-83. Source: Ntsa-net.org Safe Harbor Match Notice Not Distributed? The barrage of changes introduced by the SECURE Act, closely followed by the CARES Act, along with furloughs, remote work, and all the work-life changes of the pandemic year 2020 may have resulted in administrative errors in plan operations, such as missed notice distributions. So now what? Source: Belfint.com »» Click here for more Compliance and Regulatory Material Fiduciary and Plan Governance When You May Have to Fire Your 401k TPA There are many times where you do need to say goodbye. As a 401k plan sponsor, that goodbye is when you have to fire a plan provider. When it comes to firing a third-party administrator, there are many reasons why you have to fire a TPA and there are reasons when you have no choice. This article is about when you may have to fire your TPA. Source: Jdsupra.com DOL Now Requires Plan Investments Based Only on Pecuniary Factors Many plan committees will be holding their Q4 meetings soon and should begin reviewing compliance with recently issued final rules governing investments in plans covered by ERISA. Bottom line: ERISA plan fiduciaries must focus solely on pecuniary factors in choosing plan investments and never sacrifice investment returns, take on additional investment risk, or pay higher fees to promote non-pecuniary goals. Source: Dwt.com »» Click here for more Fiduciary and Plan Governance Material Insight: Studies, Research, and White Papers COVID-19 and Its Effects on Retirement Accounts On January 20, 2020, the first case of COVID-19 was diagnosed in the United States. As the virus continued to spread, many states issued stay-at-home orders, employers instituted work-from-home policies and the decade-plus bull market quickly reversed course. This not only impacted personal savings but also $6.3 trillion in retirement plan assets. Source: Dimeoschneider.com DC Plan Participants' Activities, First Three Quarters of 2020 This 20-page report covered DC plan participants' activities in the first nine months of 2020. In this period, stock prices declined sharply before recovering. Preliminary data indicate that the commitment to contribution activity continued at the high rate observed in the first nine months of other years. Most DC plan participants stayed the course with their asset allocations despite high stock market volatility at the end of the first quarter of 2020. DC plan participants' loan activity edged down in the third quarter of 2020, perhaps partly reflecting the use of CRDs instead of loans. Source: Ici.org Steady Growth for Self-Directed 401k Balances Heading into the fourth quarter, there are both encouraging signs and cause for caution, as markets have been walking a fine line, according to the latest findings from Charles Schwab. In looking at the retirement plan participant investment activity within self-directed brokerage accounts, the report found that the average SDBA balance across all participant accounts finished the third quarter of 2020 at $302,256, a 9% increase year-over-year and a 6% increase from the second quarter. Source: Napa-net.org »» Click here for More Studies, Research, and White Papers Items of Special Interest to Service Providers Documenting Rollover Recommendations: The DOL and SEC Requirements The DOL and the Securities and Exchange Commission SEC are focusing on rollover recommendations and their impact on plan participants. The DOL has historically taken the position that a recommendation by a fiduciary advisor is subject to the ERISA prudent man rule and the duty of loyalty, and has recently expanded the definition of who is a fiduciary advisor. The SEC says that rollover recommendations by investment advisers and broker-dealers are subject to its best interest requirements. This article discusses the recent DOL guidance and the SEC's Regulation Best Interest. Source: Brokerdealerlawblog.com Why Recordkeepers Get Hired and Fired In a year unlike any in recent memory, advisors were asked to identify their primary considerations in recommending a recordkeeping partner get hired, or fired. And no, it was not fees. As a primary factor, fees drew only half as much consideration, and that was only slightly ahead of participant engagement. Source: Napa-net.org 403b Plans Guidance Provides More Detail on Terminating 403b Plans The SECURE Act directed that guidance be issued providing that a section 403(b)(7) custodial account could make distributions in kind upon plan termination. On November 5, the IRS issued Revenue Ruling 2020-23 and a related Notice, 2020-80, in response to this directive. Source: Groom.com »» Click here for More 403b Material Court and Legal Teva Pharma Excessive Fee Case Reaches Sizable Settlement The pharmaceutical company has agreed to pay more than $2.5 million to settle an ERISA excessive fee lawsuit, out of which up to $850,000 can be paid to the plaintiffs' attorneys. Source: Plansponsor.com »» Click here for more Court and Other Legal Issues Legislative and Washington DC Congress Mulls Expanding 401k Enrollments, Easing Retirement Fund Withdrawals A proposed law to increase the age for mandatory retirement fund withdrawals and to boost 401k enrollment may be stuck for now in the lame-duck Congress, amid legislative gridlock over new COVID-19 relief. Source: Ai-cio.com »» Click here for more on Legislative and Washington Actions Multiple Employer Plans (MEP) The Race to Register: DOL Issues Final Rule on PPP Registration The Final Rule creates a new Form PR that PPPs will be required to file at least 30 days before the PPP begins operations. In addition to this initial filing, the DOL will require supplemental filings at the occurrence of specific reportable events. Lastly, the Final Rule requires a PPP to submit a final filing after a PPP's last PEP is terminated and ceases operations. PPPs must submit the Form PR electronically through DOL's electronic filing system. Source: Groom.com »» Click here for more on Multiple Employer Plans Marketplace News PenChecks Streamlines Retirement Distribution Processing Principal to Launch Pooled Employer Plan
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