Retirement Plans Newsletter

March 30, 2020

BenefitsLink.com logo
EmployeeBenefitsJobs.com logo
Get Health & Welfare News   ·   Get Message Boards Digest   ·   Past Issues   ·   Search

Job Openings

View job as Benefits/COBRA Specialist Benefits/COBRA Specialist  View details

Ascensus
Champaign IL

View job as Defined Benefit Consultant Defined Benefit Consultant  View details

Ascensus
Telecommute

View job as Healthcare Actuarial Analyst Healthcare Actuarial Analyst  View details

Ascensus
San Diego CA

View job as Healthcare Actuary Healthcare Actuary  View details

Ascensus
Indianapolis IN / Atlanta GA / Deerfield IL / Telecommute

View job as 401(k) Plan Administrator 401(k) Plan Administrator  View details

Ascensus
CA / MO / Telecommute

►View More Jobs

►Post a Job

►Get Instant Job Alerts


Webcasts, Conferences


Discussions

New Topics on the BenefitsLink Message Boards

New Comments and Topics

All Topics, Grouped by Forum


This Newsletter:
Subscribe Now

BenefitsLink Health & Welfare Plans Newsletter:
Subscribe Now

Message Boards Digest:
Subscribe Now

View Coronavirus (COVID-19) News and Resources
View Coronavirus (COVID-19) Webcasts

[Official Guidance]

Text of Circular Letter 2020-23: Special Distributions from Qualified Retirement Plans and Individual Retirement Accounts

"The [Puerto Rico Department of the Treasury] determines that, for the purposes of the Special Disaster Distributions established in CC RI 20-09, any expenses incurred to correct losses or damages suffered and extraordinary and unforeseen expenses to cover basic needs as a consequence of the emergency declared by COVID-19 including the loss of income due to the curfew declared by the Governor, will be considered as Eligible Expenses. Therefore, a distribution that meets the requirements established in CC RI 20-09 and that is used to defray the expenses indicated above related to the Coronavirus emergency, will be considered a Special Disaster Distribution. This determination, like CC RI 20-09, applies to residents of the 78 municipalities of Puerto Rico." [Unofficial English translation]

Puerto Rico Departamento De Hacienda

[Sponsored]

SPARK Global Public Policy Forum -- June 23-24, Washington DC

Sponsored by SPARK

The retirement services industry's leading event: comprehensive agenda designed to meet the needs of 401(k) Plan Providers, Financial Advisors and Record Keepers -- focus on global retirement public policy and expansion of pension reform occurring worldwide. Learn more


[Guidance Overview]

IRS Provides Additional COVID-19 Relief: Plan Adoption Deadlines Extended

"[T]he IRS also granted a three month extension of the remedial amendment period applicable to 403(b) plans that was due to close on March 31, 2020. The deadline for making these amendments to or restatements of 403(b) plans, or the adoption of an IRS pre-approved 403(b) plan document, is now June 30, 2020."

Seyfarth

[Guidance Overview]

Congress Delivers 'CARES Package' to Employers

"It is not clear how a participant who previously treated a distribution as taxable would recapture the tax payments if the participant re-contributes the amount. The participant may be required to amend his or her tax return, but a deduction or other adjustment to the participant's current tax return would likely be a more straightforward methodology.... If an individual has already received a required minimum distribution in 2020, it appears that amount is now eligible to be rolled into an IRA or another qualified plan. Additional IRS guidance on this issue may be forthcoming."

Eversheds Sutherland

[Guidance Overview]

CARES Act Requires Immediate Decisions by Retirement Plan Sponsors

"The CARES Act creates a new form of in-service distribution for participants who are affected by COVID-19.... Some of the nation's largest record keepers are forcing employers to decide within days whether to offer this new form of distribution.... Fidelity Investments notified some of its plan sponsor clients by e-mail that they must affirmatively opt out of the new form of distribution by March 31, 2020, if they do not want to make it available.... As the ink on this new legislation is not yet dry, there are a number of unanswered questions about coronavirus-related distributions."

Spencer Fane

[Guidance Overview]

Coronavirus Relief from Congress: The CARES Act

"The bill permits 'coronavirus-related' distributions of up to $100,000 without the application of the additional 10% premature distribution tax to a 'qualified individual' who meets [certain] tests ... Affected participants may spread the taxes over a three-year period, and may repay all or part of the distribution to the affected plan or any plan that can accept rollovers within such period.... Because of the uncertainty about how repayment of coronavirus-related distributions will be handled, and the tax impact of such repayment, it may be advisable for participants to take loans first."

Ferenczy Benefits Law Center

[Guidance Overview]

How the Coronavirus Relief Bill Affects Defined Contribution Plans

"The extension of loan due dates could be more problematic to administer, as plan sponsors and recordkeepers would need to identify those participants who would be considered a qualified individual. They would also need to identify loans for these participants due in 2020, and reamortize those loans, communicate with employees, and update loan procedures. Adjusting the loan maximum will require manual intervention as these limits are hard coded into loan modeling tools and recordkeeping systems."

Callan

[Guidance Overview]

Stimulus Package Includes Financial Relief for Retirement Plan Participants Affected by COVID-19 (PDF)

"The CARES Act leaves open significant questions as to the tax treatment of CRD repayments which are made after all or a portion of the CRD has already been included as taxable income to the participant.... The CARES Act waives RMDs that are due in 2020.... In contrast to the other retirement plan provisions in the CARES Act, this provision is not limited to those participants impacted by the coronavirus."

Roberts & Holland LLP

[Guidance Overview]

Retirement Plan Provisions in the Coronavirus Stimulus Bill

"The CARES Act adds 'a public health emergency declared by the Secretary of Health and Human Services' to the list of events that allow the Secretary of Labor to delay for up to one year deadlines imposed by ERISA. Such a delay would seem necessary for pension plan sponsors to take advantage of ... contribution timing relief ... [O]therwise, PBGC premium and 5500 filings would be due before the (extended) due date for contributions that would be reportable on those filings. This provision would also appear to grant the DOL Secretary with the authority to push back deadlines for requirements such as the Annual Funding Notice and PBGC 4010 filings[.]"

River and Mercantile Solutions

[Guidance Overview]

Employer Responses to COVID-19: CARES Act Includes New Relief for 401(k) Plans and IRAs

"These options are available now, even without the need to immediately adopt authorizing plan amendments. Even plans that do not currently authorize participant loans or in-service distributions will be able to use these tools and adopt plan amendments by the end of the first plan year beginning on or after January 1, 2022. These provisions are similar to those contained in previous disaster relief legislation."

Cohen & Buckmann, P.C.

COVID-19 Impact on Single Employer Defined Benefit Plans

"Plans with March 31 or April 30 plan year ends will be the first to include the market losses in their valuation results. A calendar year plan has more time to recover if the COVID-19 economic impact is short term. Relief in the form of longer amortization periods, higher interest rates, and adjusting the actuarial value of assets have been available in the past and may again become tools to defer recognizing asset losses."

Bolton

COVID-19-Related Layoffs May Create More Liabilities for Pension Plans

"When downsizing or laying off employees who are participating in a company's qualified retirement plan, employers need to be aware that they may be triggering a 'partial termination' of the retirement plan, and/or liability under 4062(e) of ERISA due to a 'substantial cessation of operations.' ... Employers should closely monitor their employee turnover and take appropriate actions if either a partial plan termination or a 'substantial cessation of operations' is triggered."

Morgan Lewis

Retirement Investors Holding the Line During Market Correction

"Market confidence is higher among those with investments in a defined contribution plan, indicating a level of calm among long-term investors.... 73% have no plan to sell investments or cash out. 62% of respondents plan to save more money or have already done so. 49% of Millennials have made new investments or plan to make additional investments. 66% do not plan to adjust their retirement plan horizon because of recent market events."

Empower Retirement

Benefits in General

[Guidance Overview]

Editor's Pick Impact of the CARES Act on Employee Benefit Plans

"The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was enacted on March 27, 2020 and contains many provisions that affect employee benefit plans. The chart [in this article] summarizes these features and provides some preliminary comments regarding how they will affect employers."

Vorys

[Guidance Overview]

Employee Benefits-Related Provisions in the CARES Act

"The minimum funding contribution that was due for calendar year 2020 will now be due on January 1, 2021, but ... the amount of such minimum required contribution must be increased by the interest accruing between the original due date of the contribution and the actual payment date  ... The CARES Act requires group health plans and health insurance issuers to cover without cost sharing any qualifying coronavirus preventive service."

Jackson Walker

[Guidance Overview]

Employee Benefits Provisions of the CARES Act

"Key employee benefit plan-related provisions of the [CARES Act] include: [1] Temporary changes for retirement plans: including waiver of 10% penalty for early withdrawals and increase in loan limits for individuals affected by COVID-19; waiver of required minimum distributions in 2020; and extension of the contribution deadline for defined benefit plans. [2] Changes for group health plans: including flexible spending account plan coverage of over-the-counter medications; clarifications regarding high-deductible health plan (HDHP) deductibles and telehealth services; and coverage mandates for diagnostic testing and preventive services for COVID-19-related conditions. [3] Employer contributions of up to $5,250 toward repayment of an employee's student loan (for higher education) tax-free to the employee."

McCarter & English

Executive Compensation
and Nonqualified Plans

[Guidance Overview]

Editor's Pick Questions Raised by Executive Compensation Limits in CARES Act

"[The CARES Act] includes a provision intended to prevent federal loans or loan guarantees from being used to enhance senior executive compensation.... The interpretation of 'total compensation' and 'severance pay or other benefits upon termination' will be crucial.... If total compensation is measured when taxable, there may be different outcomes for similarly paid executives ... [and] there will be opportunities for planning.... The rolling 12-month compensation limitation also creates an opportunity for planning."

Troutman Sanders and Pepper Hamilton

[Guidance Overview]

Executive Compensation and Other Restrictions Under the CARES Act

"[C]ompanies receiving assistance under the Act will need to quickly identify which of their employees are subject to the compensation limits in the CARES Act and then determine the aggregate 2019 compensation for each such employee to serve as the baseline. The CARES Act is silent as to whether the value of non-cash benefits like stock awards should be assessed for purposes of the limits at the time of grant or at the time of vesting[.]"

Winston & Strawn LLP

Selected Discussions
on the BenefitsLink Message Boards

Spousal Consent in the Time of Social Distancing

"Has anyone yet come up with a creative solution to the problem of obtaining spousal consent for a distribution when our offices are shut down for the foreseeable future and participants and spouses are reluctant to leave their homes to see a Notary? Zoom-witnessed signatures with identification, for example?"

BenefitsLink Message Boards

► Subscribe to the BenefitsLink Message Boards Digest -- a free daily email of all new discussions (not just the selected few shown above). View a sample issue.

Press Releases

Upcoming Events About Retirement Plans or Executive Compensation

Mar. 31
Webcast
Free
What Employers Need to Know About the Families First Coronavirus Response Act (FFCRA)
Davis Wright Tremaine
Mar. 31
Webcast
Free
Helping Your 401(k) Participants Weather the Economic Storm
Groom Law Group
Apr. 1
Webcast
The SECURE Act: Key Issues for Benefits Lawyers and Their Clients
American Law Institute Continuing Legal Education Group [ALI CLE]
Apr. 1
Webcast
Plan Mergers & Terminations: When We Need to Say Goodbye to a Plan
American Society of Pension Professionals & Actuaries [ASPPA]
Apr. 1
Webcast
Free
What the CARES Act Means for Employers
Ogletree Deakins
Apr. 2
Webcast
Basics of Qualified Retirement Plans: Session 5
ASC
Apr. 2
Webcast
Free
Plans in Times of COVID-19: Our FAQs
ERISApedia.com
Apr. 2
Webcast
Free
Benefit Plans and COVID-19 - Legislative and Regulatory Update
Groom Law Group
Apr. 2
Webcast
Free
Washington Update Briefing
Mercer
Apr. 2
Webcast
Free
Washington update briefing
Mercer
Apr. 2
Webcast
Free
Going Viral: COVID-19's Impact to Employee Benefits Plans
Southeast Benefits Education Network [SBEN]

Most Popular Items in the Previous Issue

BenefitsLink.com, Inc.
1298 Minnesota Avenue, Suite H
Winter Park, Florida 32789
(407) 644-4146

Lois Baker, J.D., President  loisbaker@benefitslink.com
David Rhett Baker, J.D., Editor and Publisher  davebaker@benefitslink.com
Holly Horton, Business Manager  hollyhorton@benefitslink.com

Article submission: Online form, or email to news.editor@benefitslink.com

BenefitsLink Retirement Plans Newsletter, ISSN no. 1536-9587. Copyright 2020 BenefitsLink.com, Inc. All materials contained in this newsletter are protected by United States copyright law and may not be reproduced, distributed, transmitted, displayed, published or broadcast without the prior written permission of BenefitsLink.com, Inc., or in the case of third party materials, the owner of those materials. You may not alter or remove any trademark, copyright or other notices from copies of the content.

Links to web sites other than BenefitsLink.com and EmployeeBenefitsJobs.com are offered as a service to our readers; we were not involved in their production and are not responsible for their content.

Unsubscribe  |   Change Email Address  |   Privacy Policy