The US Department of Labor (DOL) published in the September 18 Federal Register its Interim Final Rule (Rule) to implement “lifetime income illustrations,” which must be provided to defined contribution plan participants pursuant to the Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE Act). With this publication, the Rule is set to become effective on September 18, 2021, and apply to pension benefit statements furnished after this date. The deadline for comments to be submitted to the DOL regarding the Rule is November 17, 2020. 

For a summary of the key provisions of the Rule and some of our preliminary observations, please see our recent LawFlash. 

The Pension Benefit Guaranty Corporation (PBGC) published a final rule (Final Rule) on September 9 providing that effective January 1, 2021, it will use the interest and mortality assumptions under Internal Revenue Code (Code) Section 417(e)(3) when determining de minimis lump sum benefits for single-employer defined benefit plans undergoing distress or involuntary terminations. The Final Rule does not apply to multiemployer plans.

This change is part of the PBGC’s ongoing modernization initiative. To that end, the Final Rule also discontinues the PBGC’s monthly calculation and publication of interest rate assumptions. Acknowledging that many plans use the PBGC’s lump sum interest rates in the calculation of their own lump sum distributions, the Final Rule provides a table for plans to use to determine interest assumptions in accordance with the PBGC’s historical methodology.

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Keeping up the steady stream of new and proposed guidance coming from the US Department of Labor (DOL), the Employee Benefits Security Administration issued a proposed regulation on September 4, 2020 that would require significant changes in how ERISA fiduciaries consider and approach proxy voting and the exercise of other shareholder rights.

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As environmental, social, and governance (ESG) considerations continue to gain traction with investors, asset managers are confronted with varying levels of regulation that they must balance with the wide array of ESG demands being made by investors. Our global investment funds team has prepared a White Paper as a regulatory framework to navigate such considerations across the United States, United Kingdom, European Union, Hong Kong, and Singapore.

This Lexis Practice Advisor article, authored by Morgan Lewis partners Cosimo Zavaglia and Mary “Handy” Hevener and of counsel Justin Cupples, discusses the tax implications of employee stay-at-home orders amid the coronavirus (COVID-19) pandemic. The article explores the potential for the orders to trigger state payroll tax registration and filing requirements for businesses and potential relief at the state and federal levels.

Read the full Lexis Practice Advisor article >>

On August 18, the US Department of Labor issued an Interim Final Rule regarding the parameters and disclosures required to implement “lifetime income illustrations,” which must be provided to defined contribution plan participants pursuant to the Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE Act).

For a summary of the key provisions of the rule and some preliminary observations, read our LawFlash.

Amid the current climate of individuals engaging in protests for racial justice and other causes, some employers are looking for ways to help employees arrested in connection with exercising their first amendment rights to speech and assembly. One way to do so is an ERISA plan for prepaid legal services.

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The IRS issued proposed regulations and new frequently asked questions regarding the extension of the normal 60-day rollover period to roll over a qualified plan loan offset (QPLO), which was provided for under the Tax Cuts and Jobs Act of 2017 (TCJA). While the proposed regulations will primarily affect the recordkeepers of qualified plans (which will need to administer the extension), plan sponsors should be aware of the proposed regulations and discuss compliance with their recordkeepers and other paying agents for their qualified retirement plans that allow loans.

As background, when a qualified retirement plan loan becomes immediately due and payable—which most often occurs upon default, but could also happen if the plan’s terms require immediate repayment upon a termination of employment—and the loan is not repaid, the loan is either treated as a “deemed distribution” or a “loan offset,” depending on whether the participant has had a distributable event. If the participant has had a distributable event—for example, a termination of employment or reaching age 59½ where the plan allows for an in-service distribution at that age—then failure to repay the loan is treated as a loan offset. Otherwise, it is treated as a deemed distribution.

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Join Morgan Lewis for these upcoming programs that address employment, employee benefits, and executive compensation topics:

• New York Employers. Now. Normal. Next. | July 29 | Webinar presented by Leni Battaglia, Melissa Hill, Douglas Schwartz, Daniel Kadish, and Craig Bitman

• Returning to Campus – A Preliminary Guide For Colleges and Universities | August 5 | Webinar presented by Greg Needles, Klair Fitzpatrick, Eleanor Pelta, and Ami Wynne

Coronavirus COVID-19 Task Force

For our clients, we have formed a multidisciplinary Coronavirus COVID-19 Task Force to help guide you through the broad scope of legal issues brought on by this public health challenge. Find resources on how to cope with the post-pandemic reality on our NOW. NORMAL. NEXT. page and our COVID-19 page to help keep you on top of developments as they unfold. If you would like to receive a daily digest of all new updates to the page, please subscribe now to receive our COVID-19 alerts, and download our biweekly COVID-19 Legal Issue Compendium.

Recent LawFlash publications include:

• IRS Releases New Guidance for Distributions and Loans from Retirement Plans under Cares Act. The Internal Revenue Service recently published additional guidance on the coronavirus-related distributions and loans provisions of Section 2202 of the CARES Act. Notice 2020-50 is intended to assist employers and plan administrators, trustees and custodians, and qualified individuals in applying Section 2202 to take advantage of greater access to plan distributions and plan loans. Read more in our LawFlash.

• Recent Developments in ERISA Plan Investment Regulation. The US Department of Labor has issued guidance on private equity in 401(k) plan designated investment alternatives and a proposed regulation on environmental, social, and governance investing. Read our LawFlash for an analysis.

• COVID-19: Two New Stops on the Roadmap to Relief For IRA Owners and Providers. The Internal Revenue Service (IRS) recently released new guidance in IRS Notice 2020-50 and Notice 2020-51 to help owners and beneficiaries of individual retirement accounts and individual retirement annuities (IRAs) and IRA providers navigate the relief provided under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). Read our LawFlash to learn more.

Coronavirus COVID-19 Task Force

For our clients, we have formed a multidisciplinary Coronavirus COVID-19 Task Force to help guide you through the broad scope of legal issues brought on by this public health challenge. Find resources on how to cope with the post-pandemic reality on our NOW. NORMAL. NEXT. page and our COVID-19 page to help keep you on top of developments as they unfold. If you would like to receive a daily digest of all new updates to the page, please subscribe now to receive our COVID-19 alerts, and download our biweekly COVID-19 Legal Issue Compendium.