As we noted in a post last year at this time, pension plans that are not fully funded for PBGC purposes have two parts to their PBGC premium. One part is a flat rate premium of $83 per participant in 2020 ($86 for 2021, as just announced by the PBGC). The other is a variable rate premium that looks to the value of the plan’s “unfunded vested benefits,” which is the excess, if any, of the plan’s Premium Funding Target over the fair market value of plan assets.
Join Morgan Lewis for these upcoming programs that address employment, employee benefits, and executive compensation topics:
- Hot Topics in Employee Benefits: What We’re Seeing | October 1 | Webinar presented by Andy Anderson, Lisa Barton, Elizabeth Goldberg, Michael Gorman, and Anna Pomykala
- Global Public Company Academy: 2020 Annual Meeting Hot Topics and What They Mean for 2021 | October 14 | Webinar presented by Erin Randolph-Williams, Patrick Rehfield, and Celia Soehner
- Navigating (and Avoiding) DOL Enforcement Actions Against ERISA Group Health Plans and Providers | October 21 | Webinar presented by Sage Fattahian, Elizabeth Goldberg, and Bob Hunter
Recent LawFlash publications include:
- IRS Notice 2020-68 Provides Secure Act And Miners Act Guidance. Notice 2020-68 from the IRS provides clarifications for sponsors and administrators of 401(k) plans and other qualified retirement plans, 403(b) plans, and 457(b) governmental plans on certain provisions in the SECURE Act of 2019 and the Bipartisan American Miners Act of 2019. The notice also provides valuable guidance for sponsors of multiple employer plans and pooled employer plans. Read more in our LawFlash.
- SECURE Act: IRS Sets Amendment Deadline For IRA Providers and Addresses Other IRA Issues. The IRS recently released new guidance in IRS Notice 2020-68 to assist owners of individual retirement accounts and annuities and IRA providers implement certain provisions of the SECURE Act. Read our LawFlash for further discussion and guidance.
Congratulations to Elizabeth (Liz) Goldberg and Erin Randolph-Williams on their election to the Morgan Lewis partnership in our employee benefits and executive compensation practice! Effective today, Liz (resident in Pittsburgh) and Erin (resident in Philadelphia) will join 23 other newly elected partners from 10 offices and eight practices. For more information about all of the firm’s newly elected partners, please see our press release, Morgan Lewis Elects 25 Partners.
Congratulations to our employee benefits and executive compensation partner Bob Abramowitz, who has been recognized as a Distinguished Leader by The Legal Intelligencer. In giving Bob this award, The Legal Intelligencer noted that as “a trailblazer in the ERISA and employee benefits field since the passage of ERISA in 1974, Abramowitz has impacted the Philadelphia workplace by helping numerous hospitals, educational institutions, and companies of all sizes throughout the United States shape their retirement benefits, health and welfare benefits, and executive compensation programs.”
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.
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.
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.