COVID-19: DOL provides filing and disclosure relief

This is what we have been waiting for. In our earlier post, we reported that the Internal Revenue Service (IRS) extended various deadlines for retirement plan filing and payment obligations. At the time of that publication, the Department of Labor (DOL) had not provided relief for ERISA filings.

On April 28, 2020, the DOL provided guidance issuing three publications that addressed the impact of COVID-19 on ERISA reporting and disclosures responsibilities. For now, we’ll focus on Disaster Relief Notice 2020-1 which provides relief on retirement plan deadlines Here is a summary:

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COVID-19 extensions for retirement plan filings and payments

Grappling with COVIT-19 issues has certainly been difficult, but retirement plan filings and payments are still required. The Internal Revenue Service has provided relief for some of them by granting extensions. Here is a summary of those extensions:

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CARES Act provides access to participant retirement plan accounts

The Coronavirus Aid, Relief, and Economic Security Act known as the “CARES Act” passed on March 27, 2020 provides $2 trillion in financial relief to individual taxpayers and loans and other concessions to businesses.

The Act also includes several provisions affecting retirement plans which we will cover in later blog posts.

For now, we’ll focus on two important provisions that can benefit participants in 401(k)and profit sharing plans:

  • The normal 10% early distribution penalty is waived on up to $100,000 in 2020 for Coronavirus-related distributions from employer retirement plans and IRAs. A three-year repayment period is available.
  • Loan limits for Coronavirus-affected participants in employer retirement plans are increased to the lesser of $100,000 or 100% of the vested account balance from the lesser of $50,000 or 50% of the vested account balance. The new limits are applicable through September 27, 2020.

These provisions are optional. Calendar year plans do not have to be amended until December 31, 2022 but must be administered in “good faith”.

Here are the details.

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SECURE Act: How to take credit (tax, that is) for your retirement plan

The $1.4 trillion appropriations package signed into law by President Trump on December 20, 2019 designed to fund federal agencies through September of this year contained the most significant legislative enhancements to retirement plans in over 10 years.

These law changes designed to encourage retirement savings are bundled up in one of those Congressional legislative acronyms,  the SECURE Act, which is political short hand for the Setting Every Community Up for Retirement Enhancement Act. I’ll be covering the most significant ones in later blog posts, but for now, here’s a summary of two tax credits you may find valuable. Continue Reading

Who owns a 401(k) participant’s personal information?

Service providers for 401(k) and other retirement plans require access to personal data on participants including name, age, address, date of hire, compensation and possibly social security number to provide recordkeeping services. Are these plan service providers simply taking advantage of a business opportunity or are they improperly exploiting information that is a  plan asset that plan fiduciaries must protect?

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The Restatement Requirement for Defined Benefit Plans: FAQs for Employers Adopting a Pre-Approved Plan

If you’re an employer who has adopted a pre-approved defined benefit pension plan, it’s time to amend and restate your plan. All defined benefit plans using pre-approved plan documents must restate their plan before April 30, 2020. It’s important that you understand why your plan document must be restated. What follows is a non-technical explanation in Question and Answer format.

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How not to hire an ERISA auditor

Selecting an auditor for an ERISA plan is one of those fiduciary responsibilities which has been a continuing concern of the Department of Labor (“DOL”).

At a June 25, 2019 meeting of the DOL’s ERISA Advisory Council, James Haubrock of the American Institute of CPAs responded to the Council’s request for recommendations on how the DOL could help Plan Administrators improve the process of selecting an auditor. You can read Mr. Haubrock’s testimony here which provides valuable recommendations.

But I’ll approach the auditor selection process from anther and more basic direction. If you are a plan sponsor with that fiduciary responsibility, here are a few mistakes to avoid:

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Retirement Funds and Business Startups: Do “ROBS” Work?

Here’s a not unusual scenario for Baby Boomers who have reached their company’s retirement age but are not quite ready to retire. Why not start a business or even buy a franchise? That can require a large personal investment, but he or she has a sizable 401(k) account. Why not use those funds to start a second career?

Here’s how they work.

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The elephant in the room for ERISA purposes could be that “other” company


The passage of the Tax Reform and Jobs Act (“TRJA”) in 2018 made entity selection an important part of tax planning. The TRJA made fundamental changes affecting individual and entity tax rates. Combined with corporate transactions for strategic reasons and business owners acquiring interests in other companies, we’re seeing businesses and owners using multiple entities.

And that’s where the elephant in the room gets into the act. The elephant being the complex set of IRS rules that must be considered regarding retirement benefits offered to employees. Consider the following:

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Defined Benefit Plans Have Issues Too

Defined  benefit plans may have markedly declined (44% since 1975 according to the Department of Labor), but they haven’t become any more understandable to employers.

Indeed, the IRS continues to find the same type of mistakes during audit examinations. Here are the ones that made the IRS Top Ten list:

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