TSC Translator - Fall 2020

Fall 2020

Welcome to our new TSC Translator format. Expect the same timely retirement plan information, but with a more focused and tailored approach.

This issue of the Translator will shed light on some of the major changes happening in the retirement plan industry—electronic disclosure rules, Cycle 3, and the latest guidance on required minimum distributions (RMDs) under the CARES Act.

As we head into fall, we at TSC hope this edition of the Translator finds you well. As always, thank you for entrusting TSC with your retirement plan administration needs. We look forward to helping you make your plan successful.

Cycle 3 Restatement

Approximately every six years, the IRS requires all qualified, pre-approved retirement plans to update their documents in a process known as a restatement. The restated documents reflect new laws and regulations not included in prior versions of the document.

This restatement period is called “Cycle 3” because it’s the third required restatement cycle under the IRS’s current approach. During Cycle 3, pre-approved defined contribution plans must be restated between August 2020 and July 2022.

For Cycle 3 FAQs click here

eDisclosure Rule Update

On May 21, 2020, the U.S. Department of Labor issued new regulations regarding Electronic Disclosures for retirement plans (“eDisclosures”). While the new regulations do not replace existing eDisclosure regulations, they permit additional options for providing electronic notices. As expected, this development has generated new interest in the prospect of delivering retirement plan disclosures electronically. However, before eDisclosure can be achieved under the new regulations there are certain requirements that must be followed. The specific requirements are fairly detailed and are beyond the scope of this article, but we will summarize the highlights.

Under the new regulations, eDisclosures may be posted on a website or attached to an email or text message. Before the eDisclosure can be made, the person who will be receiving the eDisclosure must first receive a paper notice indicating that the plan sponsor intends to satisfy the disclosure requirement electronically. Once that requirement has been satisfied...... Read more

RMD Suspension - CARES Act

Among other things, the Coronavirus Aid, Relief, and Economic Security (CARES) Act waived required minimum distributions (RMDs) due in 2020 for defined contribution plans (such as 401(k) and 403(b) plans) and IRAs. Included in this waiver are 2019 RMDs for which the required beginning date falls in 2020 and 2020 RMDs that could have been delayed until April 1, 2021.

While the CARES Act provided that this type of distribution is not required for 2020, plan sponsors can decide globally for the plan whether to suspend the RMD requirement or to continue making RMDs. TSC has assumed that its clients will suspend RMDs for 2020. However, we know that some plan sponsors, working with their plan investment providers, have decided to continue the payments. In those cases, the TSC Retirement Plan Administration Consultant can simply be notified of that decision so that we can amend the plan accordingly. Please note, regardless of which global plan option is selected by the plan sponsor, affected participants must be permitted to opt out of that approach and choose whether or not to receive a 2020 RMD.