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Pension Pontifications | Q3 2020

DWC 09/24/20


Over the last several months we’ve been in touch quite a bit to keep you up to date on the many changing regulations occurring in the industry as legislators work to react to current events and adjust to their impacts on retirement plans. So this quarter we’re using our Pension Pontifications column as an opportunity to round up all of the hot topics we’ve been sharing with you, and to remind you of the most pertinent upcoming deadlines related to the industry’s changes.

- As originally published in our Q3 2020 newsletter. Didn't get it? Sign up here.

Current Hot Topics

  • The relief provisions from the CARES Act wind down on December 31st.  Get ready for the questions about resuming loan payments and repaying coronavirus-related distributions.
  • PEPs are permitted as of January 1st, but they might not exactly come roaring out of the starting gate since the Department of Labor has yet to finalize how providers can register as Pooled Plan Providers, a step that is required at least 30 days before operations can begin.
  • In the meantime, two of the largest mega MEPs in the county have been sued for…wait for it…excessive fees. See here and here. Guess those economies of scale and that group buying power aren’t such a sure thing after all…a conclusion that a professor at the Boston College Law School already drew.
  • The window for the IRS-required Cycle 3 plan document restatements is now open, and defined contributions plans have until July 31, 2022 to update their plan documents.
  • Recordkeepers are working quickly to take full advantage of the Department of Labor’s new eDisclosure rules to distribute at least some of those participant notices electronically, which should provide welcome relief for plan sponsors.

CARES Act Reminders

  • Participants who suspended their plan loan repayments due to being impacted by COVID-19 must generally resume those payments with the first paycheck in January 2021.
  • Required Minimum Distributions are required in 2021.
  • Repayments of any coronavirus-related distributions should be treated as rollovers on the recordkeeping system.  If a participant took a CRD from your plan and rolls it back in to your plan, it is a “Related” rollover.  If the CRD was paid from a different company’s plan but repaid to your plan, it is an “Unrelated” rollover.

SECURE Act Reminders

  • The age at which an individual must begin taking RMDs changes this year.  For those with birth dates on or before July 1, 1949, the RMD beginning age is 70 ½.  For those born after that date, the RMD beginning age is 72.
  • If you have a 401(k) plan and are considering adding a safe harbor provision, you now have until December 1, 2020 to amend you plan to add the safe harbor nonelective feature for this year with the required contribution at 3% of pay.

As always, your friends at DWC are here to help you navigate these strange times. Have other questions as you begin planning for year-end and beyond? We’re happy to assist.

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The views expressed in this blog are those of the authors and do not necessarily represent the views of any other person or organization. All content is provided for informational purposes only and is not intended to be tax or legal advice.