Retirement Plans Newsletter

December 28, 2020

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[Guidance Overview]

New Law Includes Retirement Plan Relief

"Within [the Consolidated Appropriations Act, 2021] is The Taxpayer Certainty and Disaster Tax Relief Act ... [which] provides that the 10% early withdrawal penalty does not apply to qualified disaster distributions; that special rules apply to retirement plan distributions used for qualified disaster area home purchases; and for increases in the limit for retirement plan loans made because of a disaster." Icon to read more

Graydon

[Guidance Overview]

Consolidated Appropriations Act, 2021: Effects on Employer-Sponsored Retirement Plans

"[A] plan will not be treated as having had a partial termination during any plan year which includes the period beginning March 13, 2020, and ending March 31, 2021, if the number of active participants in the plan covered on March 31, 2021, is at least 80% of the number on March 13, 2020.... [In]-service distributions from money purchase pension plans can qualify as CRDs. This change is effective as if made part of the CARES Act.... In response to recent wildfires and hurricanes, Congress included its go-to disaster relief distribution, loan, and recontribution rules[.]" Icon to read more

Jackson Lewis P.C.

[Guidance Overview]

IRS Guidance on SECURE Act Provides More Detail on Changes to Safe Harbor Plans

"Notice 2020-86 addresses some open questions regarding the expanded cap on QACA automatic deferrals, the mid-year adoption of a safe harbor plan with nonelective contributions, and the elimination of the safe harbor notice for these types of plans." Icon to read more

Groom Law Group

IRS Reduces Minimum Withdrawal Amounts for IRAs and 401(k) Plans

"The age at which the required minimum distribution (RMD) rules first apply depend on your date of birth. [1] If you were born on or after July 1, 1949, then the rules first apply for the calendar year during which you reach age 72. [2] If you were born on or before June 30, 1949, then the rules first apply for the calendar year during which you attain age 70-1/2.... Under the new RMD rules, the minimum amounts that will be required to be withdrawn will reduce by about 6.5% to 7.5% each year compared to the current rules." Icon to read more

Forbes

This Retirement Rule Will Be Back in 2021

"Thanks to the CARES Act ... RMDs were waived for 2020. That allowed many seniors to reap tax savings at a difficult time. But RMDs will be back on the table in 2021. Now's the time to prepare for them to avoid getting caught off-guard." Icon to read more

Fox Business

Retirement Mistakes to Avoid in 2021

"If you're hoping to retire in the coming year, you may be very excited to kick off that new stage of life. But the wrong moves on your part could turn an otherwise happy period into a miserable one.... [H]ere are a few big retirement mistakes to avoid in 2021. [1] Not going in with a budget.... [2] Not planning for taxes.... [3] Not securing a [home equity line of credit] if you're able to get one." Icon to read more

Motley Fool

If I Could Do It All Again: Retirees' Investing Advice for Their Younger Selves

"[1] Start planning for retirement early ... [2] Keep educating yourself about finances ... [3] Stay healthy ... [4] Balance saving for the future with living for today ... [5] Take advantage of employer 401(k) matching funds." Icon to read more

Motley Fool

[Opinion]

On the Bailouts That Didn't Happen, Part 2: State and Local Governments

"[T]he deep, structural fiscal problems of some states can't be fixed by the federal government. It has to be done within the states themselves. If the Republicans hold onto their sliver of a majority in the Senate, nothing is going to happen re: state/local bailouts." Icon to read more

STUMP

Benefits in General

[Guidance Overview]

Exceptional Usefulness and Quality iconYear-End COVID-19 Stimulus Legislation Becomes Law, Includes Numerous Employee Benefit and Executive Compensation Provisions

"The Act includes numerous provisions affecting health and welfare plans -- including, most notably, extensive group health plan requirements on surprise medical billing ... The Act requires plans and insurers to provide price comparison tools by telephone and through the plan's website.... Under the Act, for plan years ending in 2020, health flexible spending arrangements (health FSAs) and dependent care FSAs may permit participants to carry over any unused amounts or contributions from the 2020 plan year to the plan year ending in 2021.... The Act expands the ERISA Section 408(b)(2) service provider compensation disclosure rules to group health plans....

"The Act includes the following retirement plan-related provisions: [1] Permits distributions to individuals in certain industries during working retirement. [2] Provides temporary relief from the partial plan termination rules. [3] Provides special disaster relief for distributions and loans from qualified retirement plans. [4] Clarifies the applicability of coronavirus-related distributions and loans to money purchase pension plans. [5] Provides relief for defined benefit plans relating to certain 'qualified future transfers." Icon to read more

Thomson Reuters Practical Law

Selected Discussions
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Revoke 2021 SH Match Notice and Contribution

"A Safe Harbor Match plan distributed a SH notice for 2021 but now (12/23/20) would like to rescind the notice, and NOT to make a SH Match in 2021. Does the plan need to follow the 30 day notice rules and actually begin SH Match January 2021, or does it make a difference that the year for which the SH Match was promised has not yet started?" Icon to read more

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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.

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