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.
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.
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.
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.
Congratulations to Morgan Lewis partner Handy Hevener, who has been honored with a Lifetime Achievement Award by the New York Law Journal as part of its 2020 New York Legal Awards. The Lifetime Achievement Award is given to lawyers who have made a significant impact on the legal community throughout their career. Handy has made significant contributions throughout her 42 years of practice, particularly in relation to critical payroll tax, fringe benefit, executive compensation, and contingent workforce issues. Handy and the other winners are set to be recognized at an October 27 ceremony in New York.