Products October 24, 2016

PNC Offering Fiduciary Services

The firm’s Fiduciary Investment Services will add on to the firm’s PNC Retirement Solutions offering and provide 3(38) investment services.
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PNC will now offer investment fiduciary services to its defined contribution (DC) clients.

“With the Department of Labor’s continued focus on fee transparency and fiduciary responsibilities, we are helping our retirement plan sponsor clients mitigate their risk by taking on the fiduciary role of advising on or managing investment lineups and providing fund options and services suitable for the particular needs and abilities of their workforce,” says Bonnie Fawcett, managing director for PNC Retirement Solutions.

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PNC will offer two services.

A non-discretionary 3(21) investment advisory service and a discretionary 3(38) investment management service. The first will provide assistance with selecting and monitoring the investment options to be offered to plan participants, while allowing the plan sponsor to maintain discretion over the plan’s investment lineup. The 3(38) investment management service built for different plan demographic profiles will be assume full discretion over fund selection, monitoring, and replacement.

Fiduciary Investment Services is aimed at clients using the firm’s Vested Interest bundled DC solution and not working with independent fiduciarys. These services will also be offered on a stand-alone basis to plan sponsors that do not wish to change their current plan recordkeeper at this time. Vested Interest will continue to offer bundled DC plan services without Fiduciary Investment Services to plan sponsors who have appointed a third party investment advisor. 

“We have introduced a refined level of fund screening and monitoring that will assist plan sponsors in meeting their obligations under ERISA and ensure that their employees are well served as they invest and plan for retirement,” says Fawcett. 

Compliance October 24, 2016

IRS Eases Hardship Withdrawals for Hurricane Victims

Retirement plans can provide this relief to employees and certain members in disaster area localities affected by Hurricane Matthew and designated for individual assistance by the FEMA. 
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The Internal Revenue Service (IRS) announced that defined contribution (DC) employer-sponsored retirement plans can make loans and hardship distributions to victims of Hurricane Matthew and members of their families. This is similar to relief provided this summer to Louisiana flood victims.

Participants in 401(k) plans, employees of public schools and tax-exempt organizations with 403(b) tax-sheltered annuities, as well as state and local government employees with 457(b) deferred-compensation plans, may be eligible to take advantage of these streamlined loan procedures and liberalized hardship distribution rules. Though IRA participants are barred from taking out loans, they may be eligible to receive distributions under liberalized procedures.

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Retirement plans can provide this relief to employees and certain members of their families who live or work in disaster area localities affected by Hurricane Matthew and designated for individual assistance by the Federal Emergency Management Agency (FEMA). Currently, parts of North Carolina, South Carolina, Georgia and Florida qualify for individual assistance. For a complete list of eligible counties, visit https://www.fema.gov/disasters. To qualify for this relief, hardship withdrawals must be made by March 15, 2017.

The IRS is also relaxing procedural and administrative rules that normally apply to retirement plan loans and hardship distributions. As a result, eligible retirement plan participants will be able to access their money more quickly with a minimum of red tape. In addition, the six-month ban on 401(k) and 403(b) contributions that normally affects employees who take hardship distributions will not apply.

This broad-based relief means that a retirement plan can allow a victim of Hurricane Matthew to take a hardship distribution or borrow up to the specified statutory limits from the victim’s retirement plan. It also means that a person who lives outside the disaster area can take out a retirement plan loan or hardship distribution and use it to assist a son, daughter, parent, grandparent or other dependent who lived or worked in the disaster area.

Plans will be allowed to make loans or hardship distributions before the plan is formally amended to provide for such features. In addition, the plan can ignore the reasons that normally apply to hardship distributions, thus allowing them, for example, to be used for food and shelter. If a plan requires certain documentation before a distribution is made, the plan can relax this requirement as described in the announcement.

Ordinarily, retirement plan loan proceeds are tax-free if they are repaid over a period of five years or less.  Under current law, hardship distributions are generally taxable. Also, a 10% early-withdrawal tax usually applies.

Further details are in Announcement 2016-39. More information about other relief related to Hurricane Matthew can be found on the IRS disaster relief page.

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