Legislative Language on Final Stimulus Package

[rocknrolls2]

Does anyone have access to legislative language on the final stimulus package? If you do, could you please send a link to it?

Thank you.

[Peter Gulia]

If you're willing to begin work with a few-days-old placeholder rather than the legislation likelier to emerge, here's a link to the McConnell bill.

https://www.congress.gov/bill/116th-congress/senate-bill/3548/text

 

 

[Peter Gulia]

The Senate now is readying to act on H.R. 748, into which the coronavirus stimulus legislation would go.

 

[Peter Gulia]

Two hours in, they're still speechifying.

 

[Larry Starr]

3 hours ago, rocknrolls2 said:

Does anyone have access to legislative language on the final stimulus package? If you do, could you please send a link to it?

Thank you.

The Senate bill (which has not been acted on by the Senate yet) was not available to anyone as of this morning.  They agreed on the items but were still crafting the language today.

[RatherBeGolfing]

Senate Takes Up Coronavirus Stimulus Bill with Retirement Relief

BY TED GODBOUT MARCH 25, 2020
LEGISLATION
After five days of intense negotiations, the Senate was set to vote Wednesday on an unprecedented $2 trillion stimulus bill covering every aspect of the U.S. economy, including retirement relief provisions supported by the American Retirement Association.  

Earlier today (March 25), the Senate leadership released the final Coronavirus, Aid, Relief and Economic Security (CARES) Act (H.R. 748 as amended), as negotiated by Senate Republicans and Democrats and the Trump administration. Once the legislation is approved by the Senate—which is expected—the legislation will move to the House of Representatives, where it may also be approved today under “unanimous consent,” though it could be held up if a member objects to that approval process. Assuming it is approved, the bill would be sent to the the White House for President Trump's signature; Treasury Secretary Steve Mnuchin has previusly indicated that President Trump would sign the bill. 

As for the retirement-based provisions, the final bill sticks closely to what was initially proposed by Senate Majority Leader Mitch McConnell (R-KY), including provisions to ease retirement plan hardship and loan rules to free up funds for individuals impacted by the pandemic and to provide relief from the required minimum distribution (RMD) rules. The final bill also adds funding relief for single-employer defined benefit plans. 

Below are the key provisions affecting retirement plans. 

Hardship Distributions (Section 2202): The CARES Act waives the 10% early withdrawal penalty tax under Internal Revenue Code Section 72(t) on early withdrawals up to $100,000 from a retirement plan or IRA for an individual who:

is diagnosed with COVID-19;
whose spouse or dependent is diagnosed with COVID-19; 
who experiences adverse financial consequences as a result of being quarantined, furloughed, laid off, having work hours reduced, being unable to work due to lack of child care due to COVID-19, closing or reducing hours of a business owned or operated by the individual due to COVID-19; or
other factors as determined by the Treasury Secretary.
The legislation also permits those individuals to pay tax on the income from the distribution ratably over a three-year period and allows individuals to repay that amount tax-free back into the plan over the next three years. Those repayments would not be subject to the retirement plan contribution limits.

Plan Loans (Section 2202): H.R. 748 also doubles the current retirement plan loan limits to the lesser of $100,000 or 100% of the participant’s vested account balance in the plan. Individuals with an outstanding loan from their plan with a repayment due from the date of enactment of the CARES Act through Dec. 31, 2020, can delay their loan repayment(s) for up to one year. 

Plan Amendments (Section 2202): The legislation further permits retirement plans to adopt these rules immediately, even if the plan does not currently allow for hardship distributions or loans, provided the plan is amended on or before the last day of the first plan year beginning on or after Jan. 1, 2020, or later if prescribed by the Treasury Secretary. 

Temporary Waiver of Required Minimum Distribution Rules (Section 2203): H.R. 748 waives RMDs for calendar year 2020 for DC plans, including 401(k), 403(b), 457(b) and IRA plans, allowing individuals to keep funds in their retirement plans. Under current law, individuals generally at age 72 must take an RMD from their DC plans and IRAs. The legislation also includes special rules regarding the waiver period to, in essence, hold harmless those individuals (and plans) who took advantage of the RMD waiver for 2020.

Single-employer DB Plan Funding Rules (Section 3608): New to the bill is a provision to provide single-employer defined benefit plan funding relief by giving companies more time to meet their funding obligations by delaying the due date for any contribution otherwise due during 2020 until Jan. 1, 2021. At that time, contributions due earlier would be due with interest. The provision also provides that a plan’s status for benefit restrictions as of Dec. 31, 2019 will apply throughout 2020, such that a plan sponsor may elect to treat the plan’s adjusted funding target attainment percentage for the last plan year ending before Jan. 1, 2020, as the adjusted funding target attainment percentage for plan years which include calendar year 2020.

Expansion of DOL Authority to Postpone Certain Deadlines (Section 3607): The legislation provides the Department of Labor with expanded authority to postpone certain deadlines under ERISA. In general, the legislation increases the circumstances to go beyond a terroristic or military action to also include a public health emergency declared by the Secretary of Health and Human Services under the Public Health Service Act. 

ARA Presses for DC Funding Relief

In a March 16 letter to the DOL and Treasury Department, the ARA pressed the agencies to provide relief from various filing requirements, including an automatic extension of the Form 5500 series for retirement plans, an extension to the deadline for correcting a failed ADP or ACP test and an extension of the period for distributing excess contributions and excess aggregate contributions under a plan, among others. 

Moving beyond the CARES Act, the ARA continues to push for additional assistance, including defined contribution funding relief. Most recently, the ARA called on the Treasury Department to provide relief to help employers facing significant financial burdens relating to the Coronavirus, especially for retirement plans sponsored by small businesses. “The financial crisis facing employers might force them to terminate their plans rather than keeping them intact, but partially frozen, until the business recovers,” the ARA warned in a March 24 letter to Carol Weiser, Benefits Tax Counsel with the Department of Treasury. 

What’s Next?

We will post updates once the Senate votes—first on cloture, a procedure for ending debate, which would require the support of 60 senators, and then on the bill itself, which would only require a majority vote.  We’ll post updates on those votes as things progress—so please stay tuned.

[ratherbereading]

Written today and shared on ASPPA --   not passed yet. 

https://www.asppa.org/news/browse-topics/senate-takes-coronavirus-stimulus-bill-retirement-relief

[rocknrolls2]

Thank you all, especially ratherbereading for getting the actual legislative text and ratherbegolfing for providing the summary.

[Peter Gulia]

Here's a text of the draft bill.

But there is still haggling over some provisions.

 

Coronavirus-Stimulus-Bill.pdf

[rocknrolls2]

Thank you, Peter! Now I see that there is a dispute over the unemployment provisionsl                                                                                                                                                                                

[Peter Gulia]

Further, there might be opposition from a Member of the House of Representatives.

[rocknrolls2]

Granted. Perhaps that is why those with weak stomachs should not watch sausage manufacturing nor the path of proposed lehislation through Congress.

[k man]

https://news.bloomberglaw.com/employee-benefits/hardship-401k-withdrawal-penalties-waived-in-u-s-relief-bill

 

does anyone know what made the final package (sausage)?

[Peter Gulia]

It is not yet final because the Senate-passed bill now needs action in the House of Representatives.

 

That H.R. 748 includes:

 

a participant loan up to 100% or $100,000, for 180 days from enactment [§ 2202(b)];

 

a repayment delay for one year for a loan with a due date from enactment to December 31, 2020 [§ 2202(b)];

 

a coronavirus-related distribution, with a choice to spread income over three years, and a three-year opportunity for a recontribution or rollover [§ 2202(a)];

 

no direction for a change in the Treasury department’s hardship rule;

 

a waiver of a 2020 minimum distribution from an individual-account (defined-contribution) retirement plan [§ 2203(a)]

 

an update of IRC § 402(c)(4):  “If all or any portion of a distribution during 2020 is treated as an eligible rollover distribution but would not be so treated if the minimum distribution requirements under section 401(a)(9) had applied during 2020, such distribution shall not be treated as an eligible rollover distribution for purposes of section 401(a)(31) or 3405(c) or subsection (f) of this section.” [§ 2203(b)]

 

As with most law changes, a plan may (but need not) provide relaxed provisions.

 

For tax law, the legislation would set delayed remedial-amendment periods [§ 2202(c); § 2203(c)].

 

ERISA § 518 grants the Secretary of Labor some authority to delay a due date by up to one year.  CARES § 3607 would allow this not only for “a terroristic or military action” but also for “a public health emergency[.]”

 

For a minimum required contribution under ERISA § 303(a) and IRC § 430(a) that otherwise would be due in 2020, the due date would be January 1, 2021, and the amount would be increased with interest.  [§ 3608(a)]

 

For ERISA § 206(g) and IRC § 436, a plan sponsor may treat the plan’s adjusted funding target attainment percentage for the last plan year ending before January 1, 2020 as the AFTAP for plan years that include calendar 2020.  [§ 3608(b)]

 

What’s not in the bill?

 

The bill does not change pension funding requirements (for most employers), Pension Benefit Guaranty Corporation premiums, or anything about multiemployer pension plans.

 

There is no Federal provision about remote notarial acts.  (This might matter if a participant’s election against a survivor annuity requires the spouse’s consent.  For some States’ efforts, see https://benefitslink.com/boards/index.php?/topic/65731-spousal-consent-in-the-time-of-social-distancing/&tab=comments#comment-301951)

[Lois Baker]

This seems to be the bill as passed by the Senate:

https://assets.documentcloud.org/documents/6819239/FINAL-FINAL-CARES-ACT.pdf#page=157

Of course, the House still needs to act, which is scheduled for Friday. 

The official full text will appear here (hopefully later today): https://www.congress.gov/bill/116th-congress/house-bill/748

[Benefits Vet]

The act defines eligibility in part based on a diagnosis of COVID-19 using a test approved by the CDC. 

Aren't some states and hospitals developing their own tests? Any thoughts on whether this will be an issue if the language in the Bill is left as it is? 

 

[Larry Starr]

1 hour ago, chibenefits said:

The act defines eligibility in part based on a diagnosis of COVID-19 using a test approved by the CDC. 

Aren't some states and hospitals developing their own tests? Any thoughts on whether this will be an issue if the language in the Bill is left as it is? 

 

I don't understand your question. Regardless of which corona virus TEST is used, they are all determining whether it is COVID-19.  They might be developing their own tests; they aren't developing a different disease! And the are ALL being approved by CDC as far as I can tell.

[Belgarath]

Just FWIW - Perhaps I'm just naive, or foolishly optimistic. I would like to think that on this and a myriad of "situations" where plans, plan administrators, etc. take "reasonable" actions that might not ultimately turn out to fit within the precise parameters of the regulations, that when audits eventually occur 2 or 3 years down the road, the auditors will let a lot of things slide. I have found the majority of IRS plan auditors to be pretty reasonable people who aren't out to stick it to people.

[RatherBeGolfing]

And diagnosis is just one out of four right?  There is:

1. Diagnosis
2. Spouse diagnosis
3. Adverse financial consequences as a result of being quarantined, furloughed, laid off, having work hours reduced, being unable to work due to lack of child care due to COVID-19, closing or reducing hours of a business owned or operated by the individual due to COVID-19; or
4. Other factors as determined by the Treasury Secretary

I think there is a lot of room under #3 for most people

[Bird]

5 minutes ago, RatherBeGolfing said:

I think there is a lot of room under #3 for most people

Exactly.  That's going to cover most of the "claims" and I don't think anyone will be looking for proof 3 years from now.

[Peter Gulia]

Further, the soon-to-be statute's text includes this:  "The administrator of an eligible retirement plan may rely on an employee's certification that the employee satisfies the conditions of subparagraph (A)(ii) in determining whether any distribution is a coronavirus-related distribution."