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Pension News in 2020

The following list tracks important guidance that were released during 2020.

Last Updated: February 1, 2024

Legislative Developments

Treasury Regulations

IRS Guidance

  • Annual update of general procedures for obtaining Employee Plans determination letters and private letter rulings, and calculating user fees for determination letters, rulings, and VCP submissions [Citation: Rev. Proc. 2020-4, 2020-1 I.R.B. (January 2, 2020)]
    Text available at https://www.irs.gov/irb/2020-01_IRB
  • IRS establishes uniform deadline for adopting interim amendments under Pre-Approved Plans to comply with the final 401(k) hardship regulations [Citation: Rev. Proc. 2020-9, 2020-2 I.R.B. (January 6, 2020)]
    Text available at https://www.irs.gov/pub/irs-drop/rp-20-09.pdf
  • IRS issues 2020 covered compensation table [Citation: Rev. Rul. 2020-2, 2020-3 I.R.B. (January 13, 2020)]
    Text available at https://www.irs.gov/pub/irs-drop/rr-20-02.pdf
  • Guidelines for withholding on periodic payments when no withholding certificate has been furnished [Citation: Notice 2020-3, 2020-3 I.R.B. (January 13, 2020)]
    Text available at https://www.irs.gov/pub/irs-drop/n-20-03.pdf
  • Guidance for financial institutions reporting RMDs for 2020 [Citation: Notice 2020-6, I.R.B. 2020-7 (February 10, 2020) (advance release on January 24, 2020)]
    Text available at https://www.irs.gov/pub/irs-drop/n-20-06.pdf
  • Third cycle submission period opens for Defined Benefit Pre-Approved Plans [Citation: Rev. Proc. 2020-10, 2020-10 (March 2, 2010) (advance release on December 19, 2019)]
    Text available at https://www.irs.gov/pub/irs-drop/rp-20-10.pdf
  • 2020 list issued for review of Pre-Approved DB Plans in the 3rd remedial amendment cycle [Citation: Notice 2020-14, 2020-13 I.R.B. (March 23, 2020) (advanced release on March 6, 2020]]
    Text available at https://www.irs.gov/pub/irs-drop/n-20-14.pdf
  • SECURE Act amendment deadline applies to interim amendments and discretionary amendments relating to the SECURE Act [Citation: [Citation: Notice 2020-14, 2020-13 I.R.B. (March 23, 2020)]
    Text available at https://www.irs.gov/pub/irs-drop/n-20-14.pdf
  • Two-year restatement window for the second remedial amendment cycle for pre-approved defined benefit plans extended to July 31, 2020 [Citation: Deadlines Extended for 403(b) Plans, www.irs.gov (March 30, 2020)]
    Text available at: https://www.irs.gov/retirement-plans/deadlines-extended-for-403b-plans-and-pre-approved-defined-benefit-plans
  • Extension of initial remedial amendment period for 403(b) plans [Citation: Deadlines Extended for 403(b) Plans, www.irs.gov (March 30, 2020)]
    Text available at: https://www.irs.gov/retirement-plans/deadlines-extended-for-403b-plans-and-pre-approved-defined-benefit-plans
  • IRS extends income tax filing deadline, tax payment deadlines, and numerous other actions required under the tax code to July 15, 2020 [Citation: Notice 2020-23, 2020-18 I.R.B. (April 27, 2020; advance release on April 9, 2020) (amplifying Notice 2020-18, 2020-15 I.R.B. (April 6, 2020; advance release on March 23, 2020)), Notice 2020-20, 2020-16 I.R.B. (April 13, 2020; advance release on March 27, 2020), (amplifying Notice 2020-18), and Filing and Payment Deadlines Questions and Answers (IRS) (updated periodically)]
    Text available at https://www.irs.gov/pub/irs-drop/n-20-18.pdf (Notice 2020-18), https://www.irs.gov/pub/irs-drop/n-20-20.pdf (Notice 2020-20); https://www.irs.gov/pub/irs-drop/n-20-23.pdf (Notice 2020-23), https://www.irs.gov/newsroom/filing-and-payment-deadlines-questions-and-answers (Q&As from IRS); https://www.irs.gov/coronavirus-tax-relief-and-economic-impact-payments (other COVID-19 relief)
  • Additional actions added to Notice 2020-23 extension [Citation: Notice 2020-35, 2020-25 I.R.B. (June 15, 2020) (advance release on May 28, 2020)]
    Text available at https://www.irs.gov/pub/irs-drop/n-20-35.pdf
  • Two-year restatement window and determination letter submission cycle under third remedial amendment cycle for pre-approved defined contribution plans [Citation: Announcement 2020-7, 2020-25 I.R.B. (June 15, 2020)]
    Text available at https://www.irs.gov/pub/irs-drop/a-20-07.pdf
  • Temporary relief waives physical presence requirement for spousal consent if certain conditions are met [Citation: Notice 2020-42, 2020-26 I.R.B. (June 22, 2020)]
    Text available at https://www.irs.gov/pub/irs-drop/n-20-42.pdf
  • Formal IRS guidance on CARES Act provisions relating to coronavirus-related distributions, and loan suspensions [Citation: Notice 2020-50, 2020-28 I.R.B. (July 6, 2020) (advance release on June 19, 2020)]
    Text available at https://www.irs.gov/pub/irs-drop/n-20-50.pdf
  • IRS provides formal guidance on the 2020 waiver of required minimum distributions enacted by the CARES Act and provides transitional guidance for SECURE Act change to required beginning date [Citation: Notice 2020-51, 2020-29 I.R.B. (July 13, 2020; advance release on June 23, 2020)]
    Text available at https://www.irs.gov/pub/irs-drop/n-20-51.pdf
  • IRS confirms that suspension or reduction of HCE safe harbor contributions is permissible; COVID relief for suspending nonelective safe harbor contributions and supplemental notice requirements [Citation: Notice 2020-52, 2020-29 I.R.B. (July 13, 2020; advance release on June 29, 2020)]
    Text available at https://www.irs.gov/pub/irs-drop/n-20-52.pdf
  • IRS updates Operational Compliance List to reflect changes effective through 2020 [Citation: Operational Compliance List (July 8, 2020), www.irs.gov]
    Text available at https://www.irs.gov/retirement-plans/operational-compliance-list
  • IRS updates the model 402(f) explanation to reflect the SECURE Act and the CARES Act [Citation: Notice 2020-62, 2020-35 I.R.B. (August 24, 2020) (advance release on August 6, 2020)]
    Text available at https://www.irs.gov/pub/irs-drop/n-20-62.pdf
  • IRS provides advance warning of user fee increases to become effective in 2021 [Citation: Announcement 2020-14, 2020-36 I.R.B. (August 31, 2020) (advance release on August 12, 2020)]
    Text available at https://www.irs.gov/pub/irs-drop/a-20-14.pdf
  • IRS provides guidance on special rules relating to funding of single-employer DB plans and related benefit limitations under the CARES Act [Citation: Notice 2020-61, 2020-35 I.R.B. (August 24, 2020) (advance release on August 6, 2020); as modified by Notice 2020-82, 2020-50 I.R.B. (December 7, 2020) (advance release on November 20, 2020)]
    Text available at:
    https://www.irs.gov/pub/irs-drop/n-20-61.pdf (Notice 2020-61)
    https://www.irs.gov/pub/irs-drop/n-20-82.pdf (Notice 2020-82)
  • IRS granted authority to extend the deadline for adopting discretionary amendments [Citation: Rev. Proc. 2020-40, 2020-38 I.R.B. (September 14, 2020)]
    Text available at https://www.irs.gov/pub/irs-drop/rp-20-40.pdf
  • Initial guidance on several SECURE Act and other 2019 legislative changes: small plan automatic enrollment tax credit, lifting of age cap on IRA contributions, long-term part-time employees, qualified birth or adoption distributions, difficulty of care payments, and age 59½ in-service distributions from pension plans and governmental 457(b) plans [Citation: Notice 2020-68, 2020-38 I.R.B. (September 14, 2020)]
    Text available at https://www.irs.gov/pub/irs-drop/n-20-68.pdf
  • IRS extends deadline for paying IRC §4971 excise tax on late minimum funding payments relating to the extended CARES Act deadline [Citation: Announcement 2020-17, 2020-40 I.R.B. (September 28, 2020)]
    Text available at https://www.irs.gov/pub/irs-drop/a-20-17.pdf
  • Transfer of qualified plan interest to State’s unclaimed property fund results in income tax withholding a Form 1099-R reporting with respect to the affected participant or beneficiary [Citation: Rev. Rul. 2020-24, IRB 2020-45 (November 2, 2020; advance release on October 16, 2020)]
    Text available at https://www.irs.gov/pub/irs-drop/rr-20-24.pdf
  • An individual may self-certify that the conditions for a waiver of the 60-day rollover period are met with respect to benefits that had been transferred to a State unclaimed property fund; self-certification procedure revised [Citation: Rev. Proc. 2020-46, IRB 2020-45 (November 2, 2020; advance release on October 16, 2020)]
    Text available at https://www.irs.gov/pub/irs-drop/rp-20-46.pdf
  • Adjusted dollar limits for 2021 [Citation: Notice 2020-79, 2020-46 I.R.B. (November 9, 2020; advance release October 26, 2020) (pension-related adjustments); Rev. Proc. 2020-45, 2020-46 I.R.B. (November 10, 2020; advance release October 26, 2020) (miscellaneous tax code adjustments, including Form 1099-R penalties)
    Text available at:
    https://www.irs.gov/pub/irs-drop/n-20-79.pdf (Notice 2020-79)
    https://www.irs.gov/pub/irs-drop/rp-20-45.pdf (Rev. Proc. 2020-45)
  • IRS provides guidance on how a custodial account 403(b) plan successfully terminates [Citation: Rev. Rul. 2020-23 and Notice 2020-80, 2020-47 I.R.B. (November 16, 2020); advance release on November 5, 2020]
    Text available at:
    https://www.irs.gov/pub/irs-drop/rr-20-23.pdf (Rev. Rul. 2020-23)
    https://www.irs.gov/pub/irs-drop/n-20-80.pdf (Notice 2020-80)
  • 2020 remedial amendment list [Citation: Notice 2020-83, 2020-50 (December 7, 2020) (advance release on November 20, 2020)]
    Text available at https://www.irs.gov/pub/irs-drop/n-20-83
  • IRS guidance on SECURE Act changes made to safe harbor 401(k) rules; clarifies when safe harbor notice is needed to qualify for ACP test waiver and other regulatory requirements under safe harbor plans that provide for the safe harbor nonelective contribution [Citation: Notice 2020-86, 2020-53 I.R.B. (December 28, 2020; advance release on December 9, 2020)]
    Text available at: https://www.irs.gov/pub/irs-drop/n-20-86.pdf

IRS General Counsel Memoranda, Field Service Advice, Chief Counsel Advice, Private Letter Rulings and Technical Advice Memoranda

  • Tax-exempt entity providing services to developmentally disabled ruled to be controlled by a church and its plan ruled to be a church plan [Citation: PLR 202001008 (January 3, 2020)]
    Text available at https://www.irs.gov/pub/irs-wd/202001008.pdf
  • IRS grants extension of 60-day rollover period for individual where notice of financial institution’s retitling of IRA assets in his name pursuant to institution’s resignation as custodian was sent to his former address and not forwarded [Citation: PLR 202033007 (March 11, 2020; made public on June 4, 2020)]
    Text available at https://www.irs.gov/pub/irs-wd/202023007.pdf
  • IRS declines to grant extension on 60-day rollover period merely because individual was not advised of the rollover period when he withdrew IRA funds to purchase new home [Citation: PLR 202033008 (May 18, 2020; made public on September 17, 2020)]
    Text available at https://www.irs.gov/pub/irs-wd/202033008.pdf

DOL Regulations

DOL Formal Guidance/Prohibited Transaction Exemptions

PBGC Regulations and Other Guidance

EBSA Advisory Opinions, Field Assistance Bulletins and other informal guidance from the DOL

  • Prohibition on QPAM criminal convictions under PTE 84-14 does not apply to convictions under foreign laws [Citation: Letter from Kat O’Scannlain, Solicitor, DOL, to Lisa Bleier, Managing Director & Associate Legal Counsel of the Securities Industry and Financial Markets Association (SIFMA), November 3, 2020]
    Text available at https://info.groom.com/28/623/uploads/sifma-solicitor-s-letter.pdf

ERISA Litigation

  • Supreme Court pauses the “celebration” over the Second Circuit’s recent decision on pleading standards for stock drop cases based on nonpublic information [Citation: Retirement Plans Committee of IBM v. Jander, No. 18-1165, 589 U.S. ___ (2020), (January 14, 2020)]
    Text available at https://www.supremecourt.gov/opinions/19pdf/18-1165_4gcj.pdf
  • Financial service provider was acting as a fiduciary when it set guaranteed rate of return on fixed income option [Citation: Rozo v. Principal Life Insurance Company, No. 18-3310 ___ F.3d ___ (8th Cir. February 3, 2020)]
    Text available at https://ecf.ca8.uscourts.gov/opndir/20/02/183310P.pdf
  • Unanimous Supreme Court applies literal interpretation of “actual knowledge” to determine the appropriate limitations period under ERISA §413 [Citation: Intel Corporation Investment Policy Committee v. Sulyma, No. 18-1116, ___ U.S. ___ (Sup.Ct. February 26, 2020)]
    Text available at https://www.supremecourt.gov/opinions/19pdf/18-1116_h3cj.pdf
  • IRAs held by spouse were community property subject to garnishment under the Mandatory Victims Restitution Act [Citation: U.S. v. Berry, No. 19-20050, ___ F.3d ___ (5th Cir. February 28, 2020)]
    Text available at http://www.ca5.uscourts.gov/opinions/pub/19/19-20050-CR0.pdf
  • Seventh Circuit rejects plaintiffs’ claims in excessive fee case; addressing allocation of recordkeeping fees, effect of broad investment options, choice of recordkeepers [Citation: Divane v. Northwestern University, No. 18-2569, ___ F.3d ___ (7th Cir. March 25, 2020)]
    Text available at: http://media.ca7.uscourts.gov/cgi-bin/rssExec.pl?Submit=Display&Path=Y2020/D03-25/C:18-2569:J:Brennan:aut:T:fnOp:N:2492344:S:0
  • Eighth Circuit joins Tenth Circuit in its interpretation of the term “principal purpose organization” for purposes of the church plan exemption from ERISA [Citation: Sanzone v. Mercy Health, No. 18-3574 ___ F.3d. ___ (8th Cir. March 27, 2020)]
    Text available at https://ecf.ca8.uscourts.gov/opndir/20/03/183574P.pdf
  • Securities held by plan in former employer lost status of employer securities after spin-off, so traditional concepts of prudence and diversification apply [Citation: Schweitzer v. Investment Committee of the Phillips66 Savings Plan, No. 18-20379, ___ F.3d ___ (5th Cir. May 22, 2020)]
    Text available at http://www.ca5.uscourts.gov/opinions/pub/18/18-20379-CV0.pdf
  • Choice of law provision in plan should be given effect as matter of federal law; standard of review of administrator’s denial of disability affected by which state law applied [Citation: Ellis v. Liberty Life Assurance Company of Boston, No. 19-1074, ___ F.3d ___ (10th Cir. May 13, 2020)]
    Text available at https://www.ca10.uscourts.gov/opinions/19/19-1074.pdf
  • Supreme Court holds DB participants lack standing where alleged fiduciary conduct did not adversely affect their promised benefits under the plan [Citation: Thole v. U.S. Bank, N.A., No. 17-1712, 590 U.S. ___ (June 1, 2020)]
    Text available at https://www.supremecourt.gov/opinions/19pdf/17-1712_0971.pdf
  • Chapter 13 debtor’s rate of 401(k) contributions is not part of disposable income and may continue rather than made available to creditors [Citation: In re Davis, No. 19-3117, ___ F.3d ___ (6th Cir. June 1, 2020)]
    Text available at https://www.opn.ca6.uscourts.gov/opinions.pdf/20a0167p-06.pdf
  • Repeated overstatement of life insurance benefit by agent of plan administrator may be litigated for equitable relief under ERISA §502(a)(3) [Citation: Sullivan-Mestecky v. Verizon Communications, No. 18-1591-cv, ___ F.3d ___ (2nd Cir. June 1, 2020)]
    Text available at https://bit.ly/30NLz9r
  • Plaintiff not entitled to attorney's fees associated with appeal of summary judgment for defendant, even though court reversed the summary judgment [Citation: Katherine P. v. Humana Health Plan, Incorporated, No. 19-50276, ___ F.3d ___ (5th Cir. June 29, 2020)]
    Text available at http://www.ca5.uscourts.gov/opinions/pub/19/19-50276-CV1.pdf
  • Tenth Circuit rules that deferential review standard does not apply unless administrator has notified plan participants and beneficiaries of its discretion over benefit claims [Citation: Lyn M. v. Premera Blue Cross, No. 18-4098, ___ F.3d ___ (10th Cir. July 24, 2020)]
    Text available at https://www.ca10.uscourts.gov/opinions/18/18-4098.pdf
  • Pinning down the “right” pleading approach under Dudenhoeffer for fiduciary breaches surrounding the investment in publicly-traded securities - Eighth Circuit rejects using generic economic theory to bolster a prudence claim [Citations: Dormani v. Target Corporation, No. 18-2543, ___ F.3d ___ (8th Cir. July 28, 2020)]
    Text available at https://ecf.ca8.uscourts.gov/opndir/20/07/182543P.pdf
  • Fourth Circuit green-lights fiduciary breach claims surrounding fiduciary’s failure to liquidate single-stock fund available to participants [Citation: Stegemann v. Gannett Company, Inc., No. 19-1212, ___ F.3d ___ (4th Cir. August 11, 2020)]
    Text available at https://www.ca4.uscourts.gov/opinions/191212.P.pdf
  • An attorney’s fees award incurred during the administrative proceedings relating to a claim for benefits is not appropriate under ERISA §502(g) [Citation: Castillo v. Metropolitan Life Ins. Co., No. 19-56093, ___ F.3d ___ (9th Cir. August 17, 2020)]
    Text available at https://cdn.ca9.uscourts.gov/datastore/opinions/2020/08/17/19-56093.pdf
  • Plan administrator reasonably interpreted that plaintiffs had not experienced a layoff or termination by plant shutdown where business continued operations (without modification) after sale [Citation: Hill v. Employee Benefits Admin. Comm. of Mueller Grp. LLC, No. 18-14026, ___ F.3d ___ (11th Cir. August 24, 2020)]
    Text available at https://media.ca11.uscourts.gov/opinions/pub/files/201814026.pdf
  • PBGC is not required to seek court adjudication of whether to involuntarily terminate a plan under ERISA §4042 [Citation: Black, et al. v. Pension Benefit Guaranty Corp., No. 19-1419, ___ F.3d ___ (6th Cir. September 1, 2020; amended December 31, 2020, without modifying holding)]
    Text available at https://www.opn.ca6.uscourts.gov/opinions.pdf/20a0389p-06.pdf (link to amended opinion)
  • Plan has equitable lien against accounts of beneficiary who commingled overpayment with other invested assets [Citation: Zirbel v. Ford Motor Company, No. 20-1149, ___ F.3d ___ (6th Cir. November 16, 2020)]
    Text available at https://www.opn.ca6.uscourts.gov/opinions.pdf/20a0359p-06.pdf
  • Continuation of pension plan to pay out benefit after dissolution of company in bankruptcy resulted in former owner being a default sponsor whose related companies could be held liable for PBGC's liability to pay benefits [Citation: PBGC v. 50509 Marine LLC, No. 19-14968, ___ F.3d ___ (11th Cir. November 24, 2020)]
    Text available at https://www.opn.ca6.uscourts.gov/opinions.pdf/20a0389p-06.pdf (link to amended opinion)
  • Supreme Court holds that Alabama law (Act 900), requiring pharmacy benefit managers to update MAC reimbursement rates when drug wholesale prices increase, is not preempted by ERISA because State rate regulations that merely increase costs or alter incentives for ERISA plans without forcing plans to adopt any particular scheme of substan-tive coverage do not impermissibly interfere with the administration of ERISA plans [Citation: Rutledge v. Pharmaceutical Care Management Association, No. 18-540, ___ S.Ct. ___ (December 10, 2020)] [This case is not summarized in eRISA Update]
    Text available at https://www.irs.gov/pub/irs-drop/n-20-83

Miscellaneous Guidance

  • None

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