Coronavirus Pandemic & IRS Relief

[CuseFan]

Does anyone know if any of the ARA bodies have advocated to the IRS or if the IRS is considering filing deadline extensions due to the pandemic?

DB plans in particular have a 4/30 PPA restatement adoption due date and, if required, determination letter application filing due date.

Just curious, as an unexpected prolonged sickness hitting service providers or their client plan sponsors could derail the timing necessary to complete the process.

[RatherBeGolfing]

59 minutes ago, CuseFan said:

Does anyone know if any of the ARA bodies have advocated to the IRS or if the IRS is considering filing deadline extensions due to the pandemic?

DB plans in particular have a 4/30 PPA restatement adoption due date and, if required, determination letter application filing due date.

Just curious, as an unexpected prolonged sickness hitting service providers or their client plan sponsors could derail the timing necessary to complete the process.

Yes, it is in the works but too early to say what will come of it.  

[BK55]

Another possible issue if there is no extension - what do you do with the Notice to Interested Parties posting if there is no one in the workplace to see it or mail it?

[Belgarath]

Maybe I shouldn't, but I do have some faith that even if there isn't "official" published relief, that IRS/DOL auditors will be reasonable and not bring enforcement action if Notices are late due to bona fide issues with this situation.

[Peter Gulia]

Other due dates in the next three weeks include March 15 (?) for some corrective distributions, March 30 for an investment adviser's updates with the Securities and Exchange Commission and States' securities regulators, and March 31 for 403(b) plan restatements.

[david rigby]

Many more items could be affected, and it's not just the IRS: 

60-day rollover requirement, ability to get a document notarized (eg, spousal consent), distribution of SPDs to new participants, distributions of SMM's, due dates for 5500's, due dates for PBGC filings/payments, Annual Funding Notice, quarterly deposit dates, benefit restriction notice (eg, DB plans that fall under IRC 436 restrictions), reporting of PBGC events, etc.

[CuseFan]

Not to mention tax return due dates of 3/15, 4/15, .....

It's the zombie apocalypse - where is Rick Grimes when you need him?

[k man]

just posted on the db board before i saw this. looking for information on whether there is a db extension.  doesn't seem to be a big deal for the IRS. 

[RatherBeGolfing]

AICPA is expecting relief announcement from IRS this week.  I'm not sure if we will get plan related relief  as well or if that will come later

[Lisa.Q]

ARA hard at work!

IRS DOL Coronavirus 3-16-20.pdf

[CuseFan]

Yes, saw this, hopefully this kind of relief will be granted. Thanks

[k man]

nothing in the ARA proposal looks to be directed to relief for participants. 

[RestAssured]

Don't forget the April 1st RMD due date for some....

[RatherBeGolfing]

3 hours ago, k man said:

nothing in the ARA proposal looks to be directed to relief for participants. 

IRS can only do so much under regulatory authority, other relief has to be legislative

[RatherBeGolfing]

https://www.asppa-net.org/news/ara-presses-retirement-plan-relief-coronavirus-stimulus-bill#.XnJuXbaftSs.link

ARA Presses for Retirement Plan Relief in Coronavirus Stimulus Bill

The American Retirement Association has been working with key lawmakers to include legislation that would provide tax relief to individuals and employers that suffer a sustained economic loss from the COVID-19 outbreak.

The relief would be patterned after the disaster relief that was provided in the Further Consolidated Appropriations Act, 2020 (which contained the SECURE Act) and the 2008 economic recovery legislation.

More specifically, the ARA has pressed for relief that would:

• waive the Section 72(t) additional 10% penalty tax on early withdrawals from retirement plans for individuals who have a principal residence in a declared health emergency area and suffered economic loss; 
• permit individuals three years to repay distributions;
• increase retirement plan loan limits to the lesser of $100,000 or 100% of the participant’s vested account balance in a plan (doubling current loan limits);
• allow individuals unable to repay loans to pay the income tax associated with a loan default over three years rather than all in the year of default;
• allow individuals who borrowed from their plan and have a repayment due to delay their loan repayment for up to a year;
• provide a wage credit for employee retention for employers impacted by the virus outbreak;
• provide an automatic 60-day extension of tax-filing deadlines; and
• provide a temporary waiver for 2020 RMDs from DC plans and IRAs.

Considering the fast-changing health and economic situation concerning the COVID-19 outbreak, lawmakers appear set to consider a third, more expansive stimulus bill that includes retirement plan relief.

Treasury Secretary Steven Mnuchin, who worked closely with congressional leaders on a second bill that is nearing approval, reportedly is working on an $850 billion stimulus package to present to Congress.

This potential third bill is still in the discussion stage, with many ideas being floated from lawmakers in both the House and Senate and from both parties, including payroll tax relief, loan packages for small businesses and various other tax incentives for hard-hit industries. It may also include delay of tax deadlines and relief for student loan interest payments. A temporary cut in payroll taxes has, so far, been resisted by members from both parties but some type of relief seems to remain in the mix. 

It’s possible that the provisions pursued by ARA could be added to a bill currently under development. The ARA, in a March 16 letter to the Treasury and Labor departments, has also requested relief from various retirement plan filing deadlines under the Internal Revenue Code and ERISA due to the impact of the Coronavirus. 

What’s Next

Phase one of this three-part series of bills was the March 6 approval of an $8.3 billion research and vaccine development funding bill to combat the Coronavirus. A second, amended bill approved by the House on March 16 and moving toward approval in the Senate addresses some of the health and economic-related aspects, including reimbursements for COVID-19 testing, an expansion of FMLA and unemployment insurance, and new emergency paid sick leave for employers with fewer than 500 employees, as well as tax credits for such emergency paid sick leave.

Senate Majority Leader Mitch McConnell (R-KY) in a March 15 statement noted that the earlier legislation was only the beginning steps in providing relief and that he has spoken with the chairmen of the various senate committees about next steps, including:

• helping Americans overcome financial challenges in the weeks and months ahead;
• securing the nation’s economy, particularly for small businesses; and
• readying the health care system and supporting medical professionals.

In response to McConnell’s statement, Sen. Charles Grassley (R-IA), who is Chairman of the Senate Finance Committee, stated that, “We are actively working on a phase three economic stimulus package, which should include help for everyday Americans, as well as small businesses and major industries, so they can keep their doors open and workers on the job.”
“I’m currently looking at what we can do to relieve the strain on workers, the burdens on businesses small and large and the capacity deficits at rural hospitals,” Grassley noted, adding, “at this point, all options remain on the table.”

Of course, the timing of this third bill is uncertain, as many House and Senate offices remain closed over concerns about spreading the virus. Additionally, the Capitol complex itself is currently closed to visitors.   

But the phones and email still work—and the ARA is pursuing all reasonable avenues to make this relief a reality.

 

[coleboy]

One thing that i see happening is that some of my safe harbor match clients want to suspend the match for the year. Of course, it will subject them to the discrimination and top heavy testing which they fail. The top heavy contribution alone will be a lot to come up with. How are other TPA's handling this?

[Peter Gulia]

Some business owners might not fear an obligation for a top-heavy minimum contribution.  Along with other reasons, they anticipate every owner (and every other key employee, if any) will have no contribution for 2020.

 

I.R.C. § 416(c)(2)(B)(i):  The percentage referred to in subparagraph (A) for any year shall not exceed the percentage at which contributions are made (or required to be made) under the plan for the year for the key employee for whom such percentage is the highest for the year.

[RatherBeGolfing]

1 hour ago, coleboy said:

One thing that i see happening is that some of my safe harbor match clients want to suspend the match for the year. Of course, it will subject them to the discrimination and top heavy testing which they fail. The top heavy contribution alone will be a lot to come up with. How are other TPA's handling this?

Just as an FYI, This is one issue where ARA is looking for legislative relief. 

ARA Crafts Proposal to Provide Retirement Plan Funding Relief for Small Businesses

[shERPA]

46 minutes ago, Peter Gulia said:

Some business owners might not fear an obligation for a top-heavy minimum contribution.  Along with other reasons, they anticipate every owner (and every other key employee, if any) will have no contribution for 2020.

 

I.R.C. § 416(c)(2)(B)(i):  The percentage referred to in subparagraph (A) for any year shall not exceed the percentage at which contributions are made (or required to be made) under the plan for the year for the key employee for whom such percentage is the highest for the year.

Problem is that deferrals count in determining they key ees’ contribution percentage. Likely in many such plans key ees have already deferred, this can’t be undone.  Legislative relief would be welcome.

[Peter Gulia]

Yes, elective deferrals count.  But many business owners have not yet made any for 2020.

 

Some do no elective deferral until December 31.

 

Some defer on a quarter-yearly draw, which might be determined or declared to be zero.

 

If an elective deferral was made regarding an advance payment (grounded on a then reasonable estimate of an owner’s earned income for the year), one might consider how such a payment might be adjusted if the owner gets negative income for the year and has compensation of zero.