Compliance Duties and Litigation Risks in 2021
Attorneys review what regulations plan sponsors must adhere to and legal decisions to keep in mind for the new year.
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Looking ahead after the start of the new year, partners at Groom Law Group and the Wagner Law Group weighed in on new Department of Labor (DOL) rules and potential litigation that plan sponsors should be aware of.
The first DOL rule that sponsors should understand concerns new regulatory standards for fiduciary considerations of environmental, social and governance (ESG) investments, says Ivelisse Berio LeBeau, a partner with the Wagner Law Group. Berio LeBeau says ESG investing is likely to become more prevalent in retirement plans, as “more than 8,700 comments were submitted, the vast majority critical of the proposed regulation.
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Estate Planning in the first quarter of 2021 provides continuing
opportunities for clients seeking to preserve and transfer wealth
while minimizing or avoiding gift taxes. This Client Alert provides
information on
three hot topics:
Using Gift Tax Exemptions in
2021 While Avoiding Risk of Retroactive Cuts: Election
Outcome Leaves Retroactive Cut in Gift Tax Exemption a Possibility,
but Some Techniques Allow Use of the Larger Exemptions in 2021
While Protecting Against Retroactive Cuts
Interest Rates Still Low, But
Trending Upward: Estate and Gift Tax Savings From
Intra-family Loans, Installment Sales, Loan Refinancing, and
Deciding Whether an Annuity Is Right for Your Plan Participants
Plan sponsors should look at participant needs to determine whether annuities would be a fit for their plan and, if so, which types of annuities meet those needs.
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The passage of the Setting Every Community Up for Retirement Enhancement (SECURE) Act has put a greater focus on the goal of providing guaranteed lifetime income for defined contribution (DC) plan participants.
Plan sponsors now are faced with the decision of whether to offer annuities for their participants and the decision of whether to offer the opportunity within the plan or outside of the plan. A look at some characteristics of their participant base could help them decide which options are right.
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Notice 2020-86 (Notice) from the Internal Revenue Service (IRS) provides guidance to help interpret and apply certain Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE Act) provisions that impact so-called “safe-harbor plans.” Written in Q&A style, the Notice addresses and clarifies a number of interpretative questions that arose following the enactment of the SECURE Act.
While the Notice mainly confirms widely held understandings of the SECURE Act changes, the Notice also highlights how certain provisions of the SECURE Act (particularly the elimination of certain safe-harbor notice requirements) are complicated to apply and may not provide as much relief as originally anticipated. A brief overview of the main points covered by the Notice is below.
The Mechanics of Moving to a PEP
With a lack of regulatory guidance, plan sponsors can rely on certain existing rules to know the steps to take if they decide to move from a single-employer plan to a pooled employer plan.
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Art by Wenting Li
The goal of the provisions of the Setting Every Community Up for Retirement Enhancement (SECURE) Act that created pooled employer plans (PEPs) was to encourage employers that didn’t have retirement plans for employees to offer one. But employers that already sponsor a plan may also decide a PEP is a better choice for them and their participants.