The Washington Report
September 2, 2020
Note to subscribers: Due to the current environment, information is changing at a rapid rate. While we do our best to provide timely updates, it is possible that the information shared in the newsletter may change or be revised after our publication deadline. Stay healthy and safe! ~The Washington Report team
Note to Subscribers: September Holiday Publication Schedule
The Washington Report will not be published on September 9, 2020. Look for your next Aon Washington Report on Wednesday, September 16, 2020. Have a safe and enjoyable holiday!
DOL Releases Interim Final Rule on Pension Benefit Statements for Defined Contribution Plans; Lifetime Income Illustrations
On August 18, 2020, the Department of Labor’s (DOL’s) Employee Benefits Security Administration released an interim final rule that will “help workers determine their ability to retire by allowing them to estimate how their current savings in a 401(k)-type plan might translate into lifetime monthly payments.” The rule implements Section 203 of the Setting Every Community Up for Retirement Enhancement (SECURE) Act of 2019. The SECURE Act amended the pension benefit statement requirements under Section 105 of ERISA to require a participant’s accrued benefits to be included on his or her pension benefit statement as a current account balance, and as an estimated lifetime stream of payments. Using assumptions set forth in the rule, plan administrators will show participants equivalents of their retirement savings as monthly income under two potential scenarios—first, as a single life income stream, and second, as an income stream that factors in a survivor benefit.
Under the interim final rule, retirement plans would provide lifetime income illustrations using prescribed assumptions designed to give savers a realistic illustration of how much monthly retirement income they could expect to purchase with their account balance. Retirement plans also will provide explanations about what the lifetime income illustrations mean and the assumptions used to calculate the illustrations. To help ease the administrative burdens on plan administrators, the interim final rule includes model language that may be used for these explanations. Plan fiduciaries that use the regulatory assumptions and the model language prescribed by the rule will qualify for liability relief and will not be held liable in the event participants are unable to purchase equivalent monthly payments.
The interim final rule will be effective 12 months after the date of its publication in the Federal Register and will include a 60-day comment period. The DOL stated it will use comments to improve the rule before its effective date. (At time of publication, the interim final rule was not officially published in the Federal Register.)
The news release is available here.
The interim final rule is temporarily available here.
(From the Federal Register: “This interim final rule (IFR) was submitted to the Office of the Federal Register (OFR) for publication, and will be placed on public inspection at the OFR and published in the Federal Register. This version of the IFR may vary slightly from the published version if the OFR makes minor technical or formatting changes during the review process. Only the version published in the Federal Register is the official IFR.”)
A fact sheet is available here.
IRS Issues Guidance Implementing Presidential Memorandum Deferring Certain Employee Social Security Tax Withholding
On August 28, 2020, the Treasury Department and the Internal Revenue Service (IRS) issued guidance (Notice 2020-65) implementing the Presidential Memorandum issued on August 8, 2020, allowing employers to defer withholding and payment of the employee’s portion of the Social Security tax if the employee’s wages are below a certain amount. Notice 2020-65 makes relief available for employers and generally applies to wages paid starting September 1, 2020, through December 31, 2020.
The employee Social Security tax deferral may apply to payments of taxable wages to an employee that are less than $4,000 during a bi-weekly pay period, with each pay period considered separately. No deferral is available for any payment to an employee of taxable wages of $4,000 or above for a bi-weekly pay period. Notice 2020-65 postpones the time for employers to withhold and pay employee Social Security taxes.
The IRS guidance (Notice 2020-65) is available here.
The news release is available here.
Additional IRS tax relief information related to COVID-19 is available here.
The August 8, 2020, Presidential Memorandum is available here.
DOL Issues Guidance About Paid Leave Eligibility Related to the Reopening of Schools
On August 27, 2020, the Department of Labor’s (DOL’s) Wage and Hour Division (WHD) and the Employment and Training Administration (ETA) both published guidance related to the reopening of schools. WHD has released Frequently Asked Questions (FAQs – Questions 98-100) for workers and employers about qualifying for paid leave under the Families First Coronavirus Response Act (FFCRA). The new FAQs explain eligibility for paid leave relative to the varied formats and schedules schools have announced as they plan to reopen, including blending in-person with distance learning.
The FFCRA entitles certain employees to take up to two weeks of paid sick leave and take up to 12 weeks of expanded family and medical leave, 10 of which are paid for specified reasons related to the coronavirus. An eligible employee may take both types of paid leave “because of a need to care for the employee’s son or daughter whose school or place of care is closed, or whose child care provider is unavailable, due to the coronavirus related reasons.” The latest FAQs address topics about qualifying for paid leave when a child attends a school operating on an alternate day basis; a parent chooses remote learning when in-person instruction is available; and a school begins the year with remote learning but may shift to in-person instruction if conditions change.
On the same day, the ETA also released guidance that provides states with information regarding the eligibility of individuals who are caregivers for Pandemic Unemployment Assistance (PUA) under the Coronavirus Aid, Relief, and Economic Security Act. The PUA is designed to provide benefits to certain individuals who are normally ineligible for or who have exhausted entitlement to regular unemployment compensation (UC) or extended benefits (EB). In particular, an individual may be eligible for PUA if they are ineligible for regular UC, EB, and pandemic emergency unemployment compensation; and self-certify that he or she is unemployed, partially unemployed, or unable or unavailable to work because, among other possible reasons, “a child or other person in the household for whom the individual has primary caregiving responsibility is unable to attend school or another facility that is closed as a direct result of the coronavirus public health emergency and such school or facility care is required for the individual to work.”
The DOL news release is available here.
The WHD FAQs are available here.
If you elect to comment or engage with our content via third-party social media websites, you authorize Aon to have access to certain social media profile information. Please click here to learn more about information that may be collected when using these tools on Aon.com