The Washington Report
October 14, 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
Congress on October Recess
Both chambers of Congress are on recess. The Senate is scheduled to return on October 19, 2020, and the House is prepared to return to the Hill within 24-hours’ notice if an agreement is made on COVID relief legislation.
Social Security Administration Releases 2021 Indexed Figures; Announces 1.3% Benefit Increase
The Social Security Administration (SSA) released the Social Security 2021 indexed figures on October 13, 2020. The SSA announced that there will be a 1.3% Cost-of-Living Adjustment (COLA) for 2021. Some other changes that take effect in January of each year are based on the increase in average wages. Relevant figures are shown below.
COLA: Based on the increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers, Social Security and Supplemental Security Income beneficiaries will receive a 1.3% COLA for 2021. (The 2020 COLA was 1.6%.)
Wage Base: The 2021 Social Security wage base is $142,800. (The 2020 amount was $137,700.)
FICA/Medicare Tax Rate: The FICA tax rate remains at 7.65%: 6.20% for Social Security and 1.45% for Medicare combined.
Beginning in 2013, the Affordable Care Act increased the Medicare tax rate on wages by 0.9% (from 1.45% to 2.35%) for higher-income individuals. The payroll tax increase applies to wages over $200,000 for single tax filers and $250,000 for couples filing jointly ($125,000 for a married individual filing separately). The tax rates above do not include the 0.9%. The Internal Revenue Service has provided frequently asked questions on the Medicare tax increase, available here.
Maximum Monthly Benefit: For someone retiring at full retirement age in 2021, the maximum benefit is $3,148. (The 2020 amount was $3,011.)
Annual Earnings Test Limit: For individuals under full retirement age, the 2021 annual earnings test limit is $18,960. (The 2020 amount was $18,240.) For individuals attaining full retirement age in 2021, the annual earnings test limit for the months prior to attaining full retirement age is $50,520. (The 2020 amount was $48,600.) There is no annual earnings test for individuals who have attained full retirement age.
More information on the SSA COLA is available here.
A fact sheet on the SSA's 2021 Social Security changes is available here.
The October 13, 2020, news release is available here.
A more detailed Aon bulletin on the 2021 SSA indexed numbers is available here.
DOL Issues Interim Final Rule on Wage Methodology Used in Several Foreign Worker Programs
On October 6, 2020, the Department of Labor (DOL) issued an interim final rule amending Employment and Training Administration regulations governing the prevailing wages for employment opportunities that U.S. employers seek to fill with foreign workers on a permanent or temporary basis through certain employment-based immigrant visas or through H-1B, H-1B1, or E-3 nonimmigrant visas. Specifically, the DOL is amending its regulations governing permanent labor certifications at 20 CFR Part 656 and Labor Condition Applications at 20 CFR Part 655, Subpart H, to incorporate changes to the computation of wage levels under the DOL’s four-tiered wage structure based on the Occupational Employment Statistics wage survey administered by the Bureau of Labor Statistics. The primary purpose of these changes is to update the computation of prevailing wage levels under the existing four-tier wage structure to better reflect the actual wages earned by U.S. workers similarly employed to foreign workers. The interim final rule becomes effective when officially published in the Federal Register.
Please note that some government websites are experiencing technological issues due to increased traffic. Readers may have to cut and paste the links below to access the information.
The news release is available at:
The interim final rule is temporarily available at: https://www.dol.gov/sites/dolgov/files/ETA/oflc/pdfs/DOL-Interim-Final-Rule-Strengthening-Wage-Protections-for-the-Temporary-and-Permanent-Employment-of-Certain-Aliens-in-the-United-States.pdf
(Disclaimer from Federal Register: This regulation has been submitted to the Office of the Federal Register (OFR) for publication, and is currently pending placement on public inspection at the OFR and publication in the Federal Register. This version of the regulation may vary slightly from the published document if minor technical or formatting changes are made during the OFR review process. Only the version published in the Federal Register is the official regulation.)
Impact of COVID-19 on Organizations, Financial Markets, and Retirement Programs: Is Hindsight 20/20? Preparing Your Retirement Plan Finances for Year-End Amidst Ongoing Uncertainty
The 2020 COVID-19 pandemic has had significant impacts on organizations, financial markets, and retirement programs. As we approach year-end, it is time to consider how these changes should be reflected in year-end financials and 2021 budgets.
Register for Aon’s webinar on October 28 at 11:30 a.m. CT/12:30 p.m. ET, to receive an update on this quickly evolving environment and insights on:
- Reflecting COVID-19 in year-end corporate financial statements;
- Using accounting strategies to reduce income statement volatility;
- Investing in a prolonged low interest rate environment;
- Settling pension liability; and
- Understanding legislative uncertainty.
Join us as Aon’s experts share their insights on important topics in these unprecedented times.
Register for Aon’s webinar here.
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