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<< Older News  |  December 4, 2020

News

All News > CARES Act

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Year-End Compliance Update for Retirement Plans
Society for Human Resource Management [SHRM]; membership may be required to view article Link to more items from this source
Nov. 24, 2020

"[1] Year-end deadlines ... [2] IRS guidance on birth/adoption withdrawals ... [3] Part-time employee eligibility changes for 401(k) plans ... [4] Pooled Employer Plans ... [5] Coronavirus-related withdrawals ... [6] Coronavirus-related loans from qualified plans ... [7] Waiver of required minimum distributions for 2020 ... [8] Partial plan terminations ... [9] Restatement window for pre-approved defined contribution plans ... [10] Electronic disclosures ... [11] Electronic signatures ... [12] Remote witness of spousal consents."

Tags: CARES Act  •  Coronavirus (COVID-19)  •  Retirement Plan Administration  •  Retirement Plan Amendments

Editor's Pick PBGC to Allow Contributions Made by January 4, 2021 to Count for 2020 PBGC Variable-Rate Premium
October Three Consulting Link to more items from this source
[Guidance Overview]
Nov. 19, 2020

"[This] possibility may be significant for, e.g., employers who want to make a CARES Act contribution that reduces 2020 variable-rate premiums but would like to deduct that contribution in 2021.... [S]ome sponsors can reduce 2020 PBGC variable-rate premiums by accelerating 2021 quarterly contributions to January 4, 2021. Under this strategy, the sponsor, in effect, takes the amount of contributions required to be made for 2021 and contributes it for 2019."

Tags: CARES Act  •  Coronavirus (COVID-19)  •  PBGC  •  Retirement Plan Administration

Do Defaults Limit Consumer Response to Rainy-Day Funds? Evidence from 401(k) Participants During the COVID-19 Pandemic
David Blanchett, Michael S. Finke, and Zhikun Liu, via SSRN Link to more items from this source
Nov. 18, 2020

"Using a large database of 401(k) plan participants, [the authors] estimate the probability that a worker will contact a recordkeeper about initiating a distribution from their retirement account following passage of the [CARES Act]. Self-directed workers in occupations with high subsequent unemployment were more likely to call about withdrawing funds from their account than workers in delegated investment accounts. Workers defaulted into target-date funds and those who chose to delegate investments through a managed account were both less likely to contact the recordkeeper about making a post-CARES Act distribution."

Tags: CARES Act  •  Coronavirus (COVID-19)  •  Retirement Plan Administration

Text of Updated PBGC Technical Update 20-2: Extended Due Date for Inclusion of Prior Year Contributions
Pension Benefit Guaranty Corporation [PBGC] Link to more items from this source
[Official Guidance]
Nov. 17, 2020

Revised Nov. 16, 2020, to conform with IRS Notice 2020-82. "For premium filings due on or after March 1, 2020 and before January 1, 2021, the date by which prior year contributions must be received by the plan to be included in plan assets under Section 4006.4(c) of PBGC's premium rates regulation is extended to January 4, 2021. Because of this relief, the discounted value of a 'prior year contribution' received after the premium is filed and on or before January 4, 2021, may be included in the asset value used to determine the variable-rate premium. Thus, if such a contribution is made, the premium filing may be amended to revise the originally reported asset value and resulting variable-rate premium." [Also see COVID-19-Related Single-Employer Plan Sponsors and Administrators FAQs, updated Nov. 16, 2020]

Tags: CARES Act  •  Coronavirus (COVID-19)  •  PBGC  •  Retirement Plan Administration

Text of IRS Notice 2020-82: Implementation of the CARES Act's Extended Due Date for Contributions to Defined Benefit Plans (PDF)
Internal Revenue Service [IRS] Link to more items from this source
[Official Guidance]
Nov. 16, 2020

"This notice provides that the IRS will treat a contribution to a single-employer defined benefit pension plan with an extended due date of January 1, 2021 pursuant to Section 3608(a)(1) of the [CARES Act], as timely if it is made no later than January 4, 2021 (which is the first business day after January 1, 2021)."

Tags: CARES Act  •  Coronavirus (COVID-19)  •  Funding of DB Plans  •  Retirement Plan Administration

2020 DC Consultant Study: Retirement Environment
T. Rowe Price Link to more items from this source
Nov. 13, 2020

"79% of [consultants] expect retirement income solution services to be the highest investment service growth area in the coming year. 59% of [consultants] expect financial wellness programs to be the highest non-investment service growth area in the coming year.... The majority of both plan sponsors and consultants rank longevity risk as either the #1 or #2 source of concern for participants in retirement planning."

Tags: CARES Act  •  Retirement Plan Administration  •  SECURE Act

What We Learned About 401(k) Participant Behavior Amid COVID-19 and the CARES Act
401(k) Specialist Link to more items from this source
Nov. 11, 2020

"Participation and deferral rates remained largely unchanged year-to-date through September when compared with the same period in 2019.... 12% of participants increased their payroll deferral percentage, vs. 14% last year. 7% of participants decreased their payroll deferral percentage, vs. 6% in 2019. 3% of participants stopped contributing, the same as last year. 24% of participants saw deferral rates rise because of automatic increases, compared with 23% in 2019."

Tags: 401(k) Plans  •  CARES Act  •  Coronavirus (COVID-19)

Americans Were Given the Coronavirus Option to Raid Their 401(k); Most Didn’t.
The Wall Street Journal; subscription may be required Link to more items from this source
Nov. 5, 2020

"Fidelity Investments, the largest 401(k) provider in the country, has seen 4.6% of eligible people take some money out through Sept. 30 due to the virus. An additional 1% have taken a so-called hardship distribution that allows withdrawals for reasons including buying a home, preventing foreclosure or paying medical bills. That is compared with about 2% a year that typically take a hardship distribution."

Tags: 401(k) Plans  •  CARES Act  •  Coronavirus (COVID-19)  •  Retirement Plan Administration

Editor's Pick Loans and Distributions Under the CARES Act: Questions and Concerns
Ferenczy Benefits Law Center Link to more items from this source
[Guidance Overview]
Oct. 30, 2020

"Several sections of the [CARES] Act relate to retirement plans, specifically those relating to distributions and loans to qualified individuals, which provide relatively ready access to money for those suffering financially from the pandemic and the related quarantine.... This article reviews these provisions of the CARES Act, as well as the questions and concerns that have arisen in its wake."

Tags: 401(k) Plans  •  CARES Act  •  Coronavirus (COVID-19)  •  Misc. Distribution Issues  •  Retirement Plan Administration

Text of 2020 Instructions for IRS Form 5329: Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts (PDF)
Internal Revenue Service [IRS] Link to more items from this source
[Official Guidance]
Oct. 20, 2020

Oct. 13, 2020. "[1] Qualified disaster or coronavirus-related distributions.... [2] Maximum age for traditional IRA contributions.... [3] Withdrawals in the case of a birth or adoption of a child.... [4] Increase in age for mandatory distributions.... [5] Temporary waiver of minimum required distributions." [Also available: 2020 IRS Form 5329]

Tags: CARES Act  •  Coronavirus (COVID-19)  •  IRAs  •  Misc. Distribution Issues  •  Required Minimum Distributions (RMDs)

Text of Draft Instructions for 2020 IRS Form 8606: Nondeductible IRAs (PDF)
Internal Revenue Service [IRS] Link to more items from this source
[Official Guidance]
Oct. 20, 2020

Oct. 19, 2020. "What's new ... [1] Coronavirus-related distributions.... [2] Tax relief for qualified 2018, 2019, and 2020 disaster distributions.... [3] Form 1040-NR.... [4] Modified AGI limit for Roth IRA contributions increased.... [5] Due date for contributions. " [Also available: Draft 2020 IRS Form 8606]

Tags: CARES Act  •  Coronavirus (COVID-19)  •  IRAs

How COVID-19 Rules Changes Affect Benefits Compliance Strategy
HUB International Link to more items from this source
[Guidance Overview]
Oct. 12, 2020

"[1] CARES Act: coverage of COVID-19 testing and COVID-19 antibody testing and preventative care (mandated) ... [2] CARES Act: telehealth and high deductible health plans (optional) ... [3] CARES Act and reimbursements for over-the-counter drugs and women's products (optional) ... [4] COBRA changes may have significant impact on employers (mandated) ... [5] HIPAA Special enrollment rights -- Expanded timeframes (mandated change) ... [6] ERISA claims procedures and COVID-19 (mandated change) ... [7] Mid-year election year changes expanded (optional)."

Tags: CARES Act  •  COBRA  •  Coronavirus (COVID-19)  •  HIPAA  •  Health Plan Administration  •  Health Plan Design

Defined Benefit Pension Plan Contributions: To 2021 and Beyond
Findley Link to more items from this source
Oct. 9, 2020

"Some plan sponsors may choose to defer required 2020 plan contributions to January, 2021, while those companies having a good financial year may opt to contribute on the normal schedule, and may also contribute more than the required amount. The decision to defer 2020 plan contributions, effectively at least doubling their contribution requirements in 2021, should be made only after weighing the pros and cons."

Tags: CARES Act  •  Coronavirus (COVID-19)  •  Funding of DB Plans

HHS Renews COVID-19 Public Health Emergency Determination Affecting Group Health Plans
Thomson Reuters / EBIA Link to more items from this source
Oct. 8, 2020

"HHS has renewed its determination that a public health emergency exists nationwide as a result of the COVID-19 pandemic, effective October 23, 2020.... The [FFCRA] and [CARES Act] require group health plans to cover -- without cost-sharing, preauthorization, or other medical management requirements -- certain COVID-19-related diagnostic and preventive health services."

Tags: CARES Act  •  Coronavirus (COVID-19)  •  FFCRA  •  Health Plan Costs  •  Health Plan Design

Protecting 401(k) Participants from Fraud in Turbulent Times
401(k) Specialist Link to more items from this source
Oct. 8, 2020

"The combination of the work-from-home model most workers are experiencing, coupled with the anxiety and emotional distress retirement plan participants could be feeling given market volatility and job losses related to the pandemic, provides a ripe target.... Here are several tips plan sponsors can share with participants to promote fraud prevention."

Tags: CARES Act  •  Coronavirus (COVID-19)  •  Cybersecurity  •  Retirement Plan Administration

Puerto Rico-Qualified Retirement Plans: 2020 Year-End Amendments Deadline Coming Soon
Ogletree Deakins Link to more items from this source
[Guidance Overview]
Oct. 6, 2020

"[If] during 2020, a Puerto Rico-qualified plan allowed participants to receive in-service hardship withdrawals on account of either the COVID-19 pandemic or the earthquakes that affected the island at the beginning of the year (collectively, 'disaster-relief distributions' or 'DRDs'), the official plan document must be amended accordingly by December 31, 2020."

Tags: CARES Act  •  Coronavirus (COVID-19)  •  Local Regulation  •  Retirement Plan Amendments

PBGC Provides Temporary Flexibility for Variable-Rate Premium Calculations
Proskauer Link to more items from this source
[Guidance Overview]
Oct. 6, 2020

"Under the PBGC's new guidance, the deadline to receive 'prior year contributions' that are taken into account is extended to January 1, 2021 for premium filings due on or after March 1, 2020 and before January 1, 2021. Importantly, the PBGC's guidance does not extend the deadline for premium filings, and filings cannot reflect contributions that have not been made. Plan sponsors that want to take advantage of the guidance must instead amend their filings by February 1, 2021 to revise the variable-rate premium calculation data after the eligible 'prior year contributions' are paid to the plan."

Tags: CARES Act  •  Coronavirus (COVID-19)  •  PBGC  •  Retirement Plan Administration

Recovering Retirements and Making Sense of Employer-Provided Retirement Benefits in a Changing World (PDF)
Epstein Becker Green Link to more items from this source
Oct. 6, 2020

12 pages. "As employers execute their Return-to-Work plans and re-open their businesses, they will have numerous compliance issues ... Plan sponsors will re-group and determine how their programs can be enhanced or re-designed in response to the near-term workforce changes.... This article seeks to identify key considerations for the long-view with regard to defined contribution retirement plans and the related programs which will enable employees to more effectively save for their retirement years."

Tags: CARES Act  •  Coronavirus (COVID-19)  •  Retirement Plan Design

Text of PBGC Technical Update 20-2: Extended Due Date for Inclusion of Prior Year Contributions
Pension Benefit Guaranty Corporation [PBGC] Link to more items from this source
[Official Guidance]
Sept. 23, 2020

"This Technical Update provides [PBGC] guidance and relief related to the timing of contribution receipts includable in the asset value used to determine variable rate premiums due in 2020. The CARES Act extended the due date for certain pension contributions. The relief in this Technical Update will generally enable plan sponsors to take advantage of the CARES Act extension and still ultimately pay the same variable-rate premium they would have owed had the plan received all prior year contributions by the regular contribution due date....

"For premium filings due on or after March 1, 2020 and before January 1, 2021, the date by which prior year contributions must be received by the plan to be included in plan assets under Section  4006.4(c) of PBGC's premium rates regulation is extended to January 1, 2021.

"Because of this relief, the discounted value of a 'prior year contribution' received after the premium is filed and on or before January 1, 2021, may be included in the asset value used to determine the variable-rate premium. Thus, if such a contribution is made, the premium filing may be amended to revise the originally reported asset value and resulting variable-rate premium.

"This relief has no effect on premium due dates (e.g., for calendar year plans, the 2020 premium is due October 15, 2020) and does not permit a premium filing to reflect a contribution that has not yet been made....

"Plan administrators that want to take advantage of this relief must amend their premium filing by February 1, 2021, to revise the variable-rate premium data accordingly after eligible prior year contributions are received by the plan."

[BenefitsLink note:  This link provides the Technical Update as originally published on Sep. 23, 2020; PBGC subsequently revised this Update to reflect IRS Notice 2020-82]

Tags: CARES Act  •  Coronavirus (COVID-19)  •  PBGC

PBGC Takes a U-Turn on CARES Act Contribution Delay
Mercer Link to more items from this source
[Guidance Overview]
Sept. 23, 2020

"The agency will now let sponsors amend their 2020 PBGC premium filings to reflect all contributions made by the CARES Act's extended contribution deadline -- even contributions made after the premium filing due date -- and request a refund of any excess variable-rate premium."

Tags: CARES Act  •  Coronavirus (COVID-19)  •  Retirement Plan Administration

Family 'SECURity': Early Withdrawal Tax Exception for Qualified Births and Adoptions
Hall Benefits Law Link to more items from this source
[Guidance Overview]
Sept. 21, 2020

"[Notice 2020-68] clarifies that if a retirement plan is amended to allow qualified birth or adoption distributions, the plan is required to accept recontributions if the individual received such a distribution from that plan and the individual is eligible to make a rollover distribution to that plan at the time of recontribution. This suggests that an employee who receives a qualified birth or adoption distribution and then separates from service will not be able to make a recontribution to that plan. Presumably, however, these individuals would be able to recontribute the amount to an IRA."

Tags: 401(k) Plans  •  CARES Act  •  Coronavirus (COVID-19)  •  Retirement Plan Administration

September 22 is Last Chance for COVID-19-Related 401(k) Loans
Forbes Link to more items from this source
Sept. 21, 2020

"Congress loosened the rules for taking money out of retirement accounts for those adversely affected by COVID-19, but ... there's a deadline coming up for taking enhanced loans: It's September 22. The deadline for taking 401(k) or IRA distributions under the special rules is December 31."

Tags: 401(k) Plans  •  CARES Act  •  Coronavirus (COVID-19)  •  Retirement Plan Administration

Employee Benefits in M&A Transactions: CARES Act Considerations
Hall Benefits Law Link to more items from this source
Sept. 17, 2020

"The CARES Act [allows] employers to defer the required minimum contributions to defined benefit plans for 2020 until January 1, 2021.... If an M&A target has taken advantage of these CARES Act provisions, buyers should consider whether any warranties and representations should mandate that all taxes and requisite contributions to qualified plans have been paid since deferrals can stretch into 2022."

Tags: CARES Act  •  Coronavirus (COVID-19)  •  Funding of DB Plans

Can a Former Employee Roll a Coronavirus-Related Distribution Back Into Our Plan?
DWC Link to more items from this source
Sept. 15, 2020

"The short answer: no, your former employee's only options are to rollover her CRD into an IRA or a new employer's plan (if permitted by that plan).... [C]ompany-sponsored plans ... can only accept rollovers from participants or, in some cases ... new hires who haven't yet met the plan's eligibility requirements ... A former employee who has taken a full distribution is neither a participant nor an eligible employee ... What about a situation in which the former employee still has an account balance in your plan? That is a bit trickier, as there isn't much in the way of clear guidance."

Tags: 401(k) Plans  •  CARES Act  •  Coronavirus (COVID-19)  •  Retirement Plan Administration

IRS Postpones Deadline for Paying and Reporting of Excise Taxes Related to Unpaid Minimum Required Contributions for Single-Employer Defined Benefit Plans
Thomson Reuters Practical Law Link to more items from this source
[Guidance Overview]
Sept. 14, 2020

"Announcement 2020-17 ... postpones until January 15, 2021, the deadline for reporting and paying excises taxes related to unpaid minimum required contributions (MRCs) to single-employer defined benefit plans.... Under the CARES Act, the deadline for making MRCs, including quarterly contributions, for single-employer defined benefit plans during the 2020 calendar year is postponed to January 1, 2021 "

Tags: CARES Act  •  Coronavirus (COVID-19)  •  Funding of DB Plans  •  Retirement Plan Administration


<< Older News  |  December 4, 2020

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