Under the CARES Act, required minimum contributions to defined benefit plans that would otherwise be due in 2020 may be made as late as January 1, 2021. But for this CARES Act rule, generally the last date on which a 2019 required contribution could be made for a DB plan would be September 15, 2020. Under CARES, that contribution would now be due by January 1, 2021.
In this article we update our analysis on the effect of 2020 asset and interest rate markets on defined contribution plan retirement income. We begin with a brief review of our methodology.
Pension plans have experienced unprecedented volatility in 2020. While the market volatility has caused the treasury rates to fall dramatically, the spread between treasury bonds and the bonds insurance companies invest in have widened. The widening of this spread would typically tell us that now would be a good time for pension plans to purchase annuities.
We are proud to present our fourth annual report on the PBGC Premium Burden, a comprehensive analysis of the experience of roughly 5,000 US pension plans.
In June IRS published two Notices providing guidance on the treatment of distributions and loans, on required minimum distributions (RMDs), and on the cancellation of deferral options under Tax Code section 409A as a result of CARES Act legislation.
The proposed PTE would condition relief on the fiduciary providing advice in accordance with “Impartial Conduct Standards” and requires that affected financial institutions and investment professionals acknowledge their fiduciary status and describe (in writing) the services they offer and material conflicts of interest.
June was another positive month for pension finance, rounding out a solid quarter during which plans clawed back about one-third of the ‘hole’ created in the first quarter.
On June 22, 2020, the Second Circuit Court of Appeals issued a per curiam decision in Jander v. IBM, reinstating its 2018 decision for plaintiffs in this case, and remanding the case to the district court for further proceedings.
On June 24, 2020, the Department of Labor released a proposed amendment to regulations under ERISA section 404(a) (which describes general fiduciary standards), providing regulatory guidance with respect to fiduciary decisions to invest plan assets based on environmental, social, and corporate governance (ESG) factors or in ESG-themed funds.
In this article we update our analysis of critical defined benefit finance issues in light of interest rate and asset market developments since late May 2020.