PLANSPONSOR - December/January 2020 - 9

Intel's argument about how the statute
of limitations provision read when it was
originally written. "
In basic terms, Intel's counsel
argued that " actual knowledge " should
mean the same thing in the statute
today as it did when it was written and
enacted. " When ERISA was enacted, it
was understood that simply filing information
directly with the Department of
Labor [DOL] was enough to create actual
knowledge for participants, even in cases
where those documents or disclosures
were never sent directly to participants, "
Jay explains. " According to Intel, with
this history in mind, it doesn't make
sense to think that actual knowledge
means something as robust as the plaintiffs
are arguing. "
2019 Required Amendments
Now that its determination letter program
has ended, the IRS is sending out a
Required Amendments List (RAL) each
year to inform sponsors of individually
designed plans what plan amendments
they must make. The plans specifically
are those satisfying the requirements of
sections 401(a) and 403(b) of the Internal
Revenue Code (IRC).
This year, plans must be amended to
reflect rule changes in two areas. The first
is hardship distributions. Plans with provisions
for suspending an employee's elective
deferrals or contributions in order for
him to obtain a hardship must be amended
to eliminate the suspension. Also, plans
not requiring a seeker of a hardship distribution
to show representation that he lacks
the money or access to it must now require
that he show representation. Both changes
apply for hardship distributions made on
or after January 1, 2020.
The second area is collectively
bargained hybrid defined benefit (DB)
plans in relation to their market rate of
return (ROR). Under the IRS new rule,
sponsors of a DB plan not complying with
the market ROR requirement must amend
their plan to adopt an interest crediting
rate that was permitted under the previous
final hybrid plan regulations; plans may do
so without violating the anti-cutback rules.
Sponsors have until December 31, 2021, to
remedy any disqualifying provisions.
2020 Contribution Limits
The IRS announced that the contribution
limit for employees participating
in 401(k) plans, 403(b) plans, most 457
plans and the federal government's thrift
savings plan has increased from $19,000
to $19,500 for 2020. The catch-up contribution
limit for employees ages 50 and
over who are enrolled in these plans has
increased from $6,000 to $6,500. The
limitation regarding SIMPLE [Savings
Incentive Match Plan for Employees]
retirement accounts for 2020 is $13,500,
up from $13,000 for 2019
Online Plan Disclosures
To reduce printing and mailing expenses,
the Department of Labor (DOL) has
proposed a new rule that would let plan
sponsors make their plan disclosures
available online. The proposal would offer
a safe harbor for sponsors that want electronic
plan disclosures to be their default.
Participants would be notified that information
is available online, including
instructions for how to access the disclosures
as well as the employee's right to
receive paper copies.
Private Equity Funds Not Liable for
Plan Withdrawal Liability
The 1st U.S. Circuit Court of Appeals
has reversed a district court ruling that
found two private equity funds liable to
a multiemployer plan when a member
company they owned went bankrupt. The
district court had demanded, under the
Multiemployer Pension Plan Amendments
Act (MPPAA), that the funds pay a pro
rata share of unfunded vested benefits for
Scott Brass Inc., as they were a partnership
controlling the company.
The 1st Circuit reversed the decision
because, it concluded, the multi-factored
partnership test set forth in the case of
Luna v. Commissioner had not been met;
it, therefore, could not conclude that
Congress would have intended to impose
liability in this scenario. According to the
opinion, the MPPAA regulations adopted
in 1996 by the Pension Benefit Guaranty
Corporation (PBGC) include the Treasury
Department's regulation governing
" common control. "
Plaintiffs Say AutoZone Breached
ERISA Fiduciary Duties
AutoZone Inc. faces an Employee
Retirement Income Security Act (ERISA)
fiduciary breach lawsuit for the operation
of it's retirement plan. According
to the complaint, AutoZone described
GoalMaker to participants as a service
that would " guide you to a model portfolio
of investments available, then rebalance
your account quarterly to ensure
your portfolio stays on target. " The
lawsuit states: " Plaintiffs bring this action
because of AutoZone's extraordinary
breaches of its fiduciary duties under
ERISA, including the approval, maintenance
and recommendation of an abusive
'GoalMaker' asset allocation service that
served Prudential's interests. "
Mortality Table Update Proposed
An executive order has directed the secretary
of the Treasury to decide whether the
life expectancy and distribution period
tables affecting required minimum distributions
(RMDs) from retirement accounts
should be updated. The IRS issued a notice
of proposed rulemaking in November .
The tables in the proposed regulations
have been developed based on mortality
rates for 2021 and would apply for distribution
calendar years beginning on or after
January 1, 2021. -PS
For in-depth coverage of these topics and more, go to plansponsor.com/compliance.
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