The Washington Report
September 16, 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
IRS Postpones Due Date for Reporting and Payment of Excise Taxes Relating to Minimum Required Contributions Delayed Under Section 3608(a) of CARES Act
On September 10, 2020, the Internal Revenue Service (IRS) released Announcement 2020-17, which postpones until January 15, 2021, the due dates for reporting and paying the excise taxes under Sections 4971(a)(1) and 4971(f)(1) of the Internal Revenue Code with respect to certain delayed minimum required contributions to a single-employer defined benefit plan. This postponement applies with respect to a required contribution to which the extended due date under Section 3608(a) of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) applies.
IRS Announcement 2020-17 is available here.
PBGC Publishes Final Rule on Lump Sum Payment Assumptions
On September 9, 2020, the Pension Benefit Guaranty Corporation (PBGC) published a final rule updating the assumptions the PBGC uses to determine de minimis lump sum benefits in PBGC-trusteed terminated single-employer defined benefit pension plans to the Internal Revenue Code Section 417(e) interest rates and mortality assumptions. The PBGC will discontinue monthly publication of PBGC’s lump sum interest rate assumptions; however, the PBGC has provided a methodology to determine rates in a similar manner as in the past for use by defined benefit plans that refer to these rates. The final rule becomes effective January 1, 2021.
The final rule is available here.
Additional information is available on the PBGC’s Employers and Practitioners page, available here.
IRS Releases Guidance on Miscellaneous Changes Under SECURE Act
On September 3, 2020, the IRS released Notice 2020-68, which provides guidance on certain provisions under the Setting Every Community Up for Retirement Enhancement Act (SECURE Act). Among other items, the Notice addresses:
- The small employer automatic enrollment credit;
- The repeal of maximum age for traditional individual retirement account contributions;
- Participation of long-term, part-time employees in Section 401(k) plans; and
- Qualified birth or adoption distributions.
Please refer to the guidance for specifics and additional information.
The Notice also addresses the reduction in minimum age for in-service distributions from age 62 to age 59½ under Section 104 of the Miners Act and provides guidance on deadlines for plan amendments related to the SECURE Act and Miners Act.
IRS Notice 2020-68 is available here.
DOL Releases Proposed Rule on Registration Requirements for Pooled Plan Providers
On August 20, 2020, the Department of Labor (DOL) released a proposed rule on pooled plan provider registration requirements. The proposed rule seeks to implement the registration requirements for “pooled plan providers” pursuant to the SECURE Act of 2019. The SECURE Act amended ERISA and the Internal Revenue Code to establish a new type of multiple employer plan called a “pooled employer plan” (PEP) that must be administered by an organization called a “pooled plan provider.” The SECURE Act allows pooled plan providers to start operating PEPs beginning on January 1, 2021, but requires pooled plan providers to register with the Secretary of Labor and the Secretary of the Treasury before they begin operations.
The proposed rule would establish straightforward requirements for pooled plan providers to register with the DOL. Additionally, the registration process would involve an initial registration, supplemental filings regarding specific reportable events, and a final filing after the provider’s last PEP has been terminated and ceased operations. Consistent with the current trend toward electronic filing, the proposed rule also requires electronic filing of the new Form PR. The proposed guidance explains that the DOL believes that the most efficient approach is to integrate the Form PR registration filing process into the current electronic filing system that employee benefit plans use to file their Form 5500 Annual Return/Report.
Comments on the proposed rule are due 30 days after publication in the Federal Register. Aon will be providing comments on the proposed rules and will register the Aon PEP under the finalized rules upon issuance. As expected, the Aon PEP will operate in compliance with all applicable requirements for participating employers joining Aon’s PEP at January 1, 2021, and beyond.
The news release is available here.
The proposed rule is temporarily available here.
DOL Revises Regulations to Clarify Paid Leave Requirements Under FFCRA; Updates Q&A Guidance
On September 11, 2020, the Department of Labor’s (DOL’s) Wage and Hour Division posted revisions to regulations that implemented the paid sick leave and expanded family and medical leave provisions of the Families First Coronavirus Response Act (FFCRA). The revisions made by the new rule clarify employees’ rights and employers’ responsibilities under the FFCRA’s paid leave provisions, in light of the U.S. District Court for the Southern District of New York in an August 3, 2020, decision that found portions of the regulations invalid.
The revisions do the following:
- Reaffirm and provide additional explanation for the requirement that employees may take FFCRA leave only if work would otherwise be available to them.
- Reaffirm and provide additional explanation for the requirement that an employee have employer approval to take FFCRA leave intermittently.
- Revise the definition of “health care provider” to include only employees who meet the definition of that term under the Family and Medical Leave Act regulations or who are employed to provide diagnostic services, preventative services, treatment services, or other services that are integrated with and necessary to the provision of patient care which, if not provided, would adversely impact patient care.
- Clarify that employees must provide required documentation supporting their need for FFCRA leave to their employers as soon as practicable.
- Correct an inconsistency regarding when employees may be required to provide notice of a need to take expanded family and medical leave to their employers.
The regulations are effective September 16, 2020, through December 31, 2020.
On the same day, the DOL also updated its Questions and Answers (Q&As) guidance on the FFCRA. The update adds questions 101–103, in response to the District Court’s decision:
- 101. When were the invalidated provisions of the Department's FFCRA paid leave regulations vacated?
- 102. Where did the District Court's order vacating certain provisions of the FFCRA paid leave regulations apply?
- 103. When do the revisions to the Department's FFCRA paid leave regulations become effective?
The revised regulations are available here.
The updated DOL FFCRA: Q&As page is available here.
EEOC Updates COVID Technical Assistance Publication
On September 8, 2020, the Equal Employment Opportunity Commission (EEOC) posted an updated technical assistance document, What You Should Know About COVID-19 and the ADA, Rehabilitation Act, and Other EEO Laws (WYSK), which incorporates information from other agency resources and modifies two existing Q&As in order to create a user-friendly comprehensive guide that addresses common questions about COVID and federal equal employment opportunity (EEO) laws for employers, advocates, and workers.
The updated WYSK adds 18 Q&As that have been adapted from two other EEOC technical assistance resources: Pandemic Preparedness in the Workplace and the Americans with Disabilities Act and a March 27, 2020, publicly available EEOC webinar. These newly incorporated Q&As are identified on the WYSK with a parenthetical that lists the date and previous source material.
Additionally, the EEOC updated two existing WYSK Q&As in order to provide helpful clarifications that reinforce prior EEOC statements about COVID-19 and the EEO laws. First, in the updated A.6., the EEOC more fully explains its existing position about employers administering COVID-19 tests before permitting employees to enter the workplace. Second, in the updated D.8., the EEOC clarifies its existing position on employers’ authority to invite employees not currently in the workplace to request disability accommodation in advance of their expected return if they choose to do so.
The most recently updated EEOC WYSK is available here.
IRS Releases Fourth Quarter Update to 2019–2020 Priority Guidance Plan
On September 8, 2020, the Internal Revenue Service (IRS) released the fourth quarter update to its 2019–2020 Priority Guidance Plan. The 2019–2020 Priority Guidance Plan sets forth guidance priorities for the Treasury and IRS based on public input and takes into account the deregulatory policies and reforms described in Section 1 of Executive Order 13789 (April 2017) and Executive Order 13771 (January 2017). Starting with the second quarter update, the 2017–2018 Priority Guidance Plan also included various guidance projects related to the initial implementation of the Tax Cuts and Jobs Act. This Priority Guidance Plan also prioritizes implementation of the Taxpayer First Act.
The 2019–2020 Priority Guidance Plan contains guidance projects that the IRS hoped to complete during the 12-month period from July 1, 2019, through June 30, 2020 (the plan year). Most of these projects do not involve the issuance of new regulations. Rather, these projects provide guidance on a variety of tax issues important to individuals and businesses in the form of: 1) revocations of final, temporary, or proposed regulations; 2) Notices, Revenue Rulings, and Revenue Procedures; 3) simplifying and burden reducing amendments to existing regulations; 4) proposed regulations; or 5) final regulations adopting proposed regulations.
The 2019–2020 Priority Guidance Plan contains 203 guidance projects, 31 of which had been completed on or before September 30, 2019. In addition to the projects on the 2019–2020 plan, the Appendix lists routine or ministerial guidance that is generally published each year. The fourth quarter update to the 2019–2020 plan reflects 53 additional projects which have been published (or released) during the period from April 1, 2020, through June 30, 2020. This update also includes one additional project which was released on March 31, 2020.
The IRS fourth quarter update to the 2019–2020 Priority Guidance Plan is available here.
New Aon White Paper on the DC Plan of the Future
For the past 40 years, plan sponsors have focused on making defined contribution (DC) plans reliable vehicles for their employees to build a nest egg. As DC plans have replaced defined benefit plans for many employers, they have evolved from an option to help employees make it to retirement to one that will take them through retirement. This means that plan sponsors need to rethink their approach to employee needs, retirement income, and plan design. This new Aon white paper (The DC Plan of the Future—Improving Outcomes Through Retirement Income Options) highlights how Aon believes DC plans will transform over the next decade, and how sponsors can best embrace change in a financially efficient way that improves the retirement futures of their employees.
The Aon white paper, The Defined Contribution Plan of the Future—Improving Outcomes Through Retirement Income Options, is available at this link (readers may have to cut and paste the link to access the publication): https://insights-north-america.aon.com/white-paper/aon-the-defined-contribution-dc-plan-of-the-future-whitepaper
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