The Washington Report
October 2, 2019
President Signs Short-Term Spending Bill Into Law; Government Shutdown Avoided
On September 27, 2019, President Trump signed into law a short-term spending bill (H.R. 4378) that will continue funding for the government and various departments and agencies. The law provides funding through November 21, 2019.
The full text of H.R. 4378 is available here.
IRS Publishes Proposed Regulations on Employer Shared Responsibility Provisions and HRAs
On September 30, 2019, the Internal Revenue Service (IRS) published proposed regulations to clarify the application of the employer shared responsibility provisions and certain nondiscrimination rules under the Internal Revenue Code (Code) to health reimbursement arrangements (HRAs) and other account-based group health plans integrated with individual health insurance coverage or Medicare (individual coverage HRAs), and to provide certain safe harbors with respect to the application of those provisions to individual coverage HRAs. The proposed regulations are intended to facilitate the adoption of individual coverage HRAs by employers, and taxpayers generally are permitted to rely on the proposed regulations. The proposed regulations would affect employers, employees and their family members, and plan sponsors. Comments and requests for a public hearing must be received by December 30, 2019.
The proposed regulations are available here.
PBGC Releases Two Proposed Rules on Section 4022 Benefits Payment Regulation
On September 27, 2019, the Pension Benefit Guaranty Corporation (PBGC) released two proposed rules related to its ERISA Section 4022 benefits payment regulation. The first proposed rule would modernize the assumptions used to determine de minimis lump sum benefits in PBGC-trusteed terminated single-employer plans by reflecting the interest rate and mortality table assumptions under Section 417(e) of the Internal Revenue Code. With this change, the PBGC would discontinue monthly publication of PBGC’s lump sum interest rate assumptions for use by private-sector plans. However, PBGC would provide a fixed set of interest rates for all future computations for the relatively few private-sector plans that use the current PBGC lump sum interest rates to determine lump sums. These rates would be determined as the average “immediate and deferred” rates for the 120-month period ending in July 2019, resulting in an immediate rate of 1.50% and deferred rates of 4.0%. The second proposed rule would further increase transparency of PBGC benefits administration by codifying policies involving benefit payments and valuation of plan assets. Comments on both proposed rules are due by November 29, 2019.
The proposed rule on lump sum payment assumptions is available here.
The proposed rule on benefit payments and allocation of assets is available here.
IRS Releases Final Regulations on 401(k) Hardship Distributions
On September 19, 2019, the Internal Revenue Service (IRS) and Treasury Department released final regulations that amend the rules relating to hardship distributions from Section 401(k) plans. The final regulations reflect statutory changes affecting Section 401(k) plans, including changes made by the Bipartisan Budget Act of 2018. The regulations affect participants in, beneficiaries of, employers maintaining, and administrators of plans that include cash or deferred arrangements or provide for employee or matching contributions. The final regulations became effective on September 23, 2019. The Treasury and IRS expect that plan sponsors will need to amend their plans' hardship distribution provisions to reflect the final regulations and any such amendment must be effective for distributions beginning no later than January 1, 2020.
The final regulations are available here.
IRS Publishes Special Per Diem Rates
On September 25, 2019, the Internal Revenue Service (IRS) published Notice 2019-55, which provides the 2019–2020 special per diem rates for taxpayers to use in substantiating the amount of ordinary and necessary business expenses incurred while traveling away from home, specifically: 1) the special transportation industry meal and incidental expenses (M&IE) rates; 2) the rate for the incidental expenses only deduction; and 3) the rates and list of high-cost localities for purposes of the high-low substantiation method. The special M&IE rates for taxpayers in the transportation industry are $66 for any locality of travel in the continental United States and $71 for any locality of travel outside the continental United States. Please refer to the Notice for specifics on other per diem rate provisions.
IRS Notice 2019-55 is available here.
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