The IRS recently issued Notice 2021-40, providing a one-year extension through June 30, 2022, of the temporary relief from the physical presence requirement for certain plan elections (including spousal consents) required to be witnessed by a plan representative or notary public. Issued in response to the COVID-19 pandemic, the IRS provided initial relief from the physical presence requirement for the period beginning January 1, 2020 and ending December 1, 2020, and then provided initial extended relief through June 30, 2021.
The $1.9 trillion COVID stimulus package recently signed into law by President Biden includes significant assistance for pension plans. The financial assistance provisions will have a large bearing on shoring up the ongoing multiemployer pension crisis. The pension assistance has not received as much press as have other provisions of the American Rescue Plan Act of 2021 (ARPA) but it is no less impactful. The stimulus package provides direct financial support for certain underfunded multiemployer pension plans and relief from several minimum funding rules for both multiemployer and single-employer plans.
The pension provisions of ARPA are a modified version of the Butch Lewis Act, a pension rescue bill that has passed in the House but never in the Senate in years past. ARPA should allow over 100 severely underfunded multiemployer pension plans to return to relative financial health; however, ARPA does not provide for any long-term funding reform that would prevent another pension crisis. It also will have little or no effect for contributing employers.
Continue reading “$1.9 Trillion American Rescue Package Includes Major Relief for Single and Multiemployer Pension Plans”
The Setting Every Community Up for Retirement Enhancement (“SECURE”) Act made a number of changes designed to increase the availability of lifetime income options in defined contribution retirement plans, such as 401(k) plans. Among those changes was a new fiduciary safe harbor for choosing an annuity provider, including an “in-plan” annuity-type product. Although this provision may not have received as much attention due to the COVID-19 pandemic, plan sponsors and committees should be aware of the new safe harbor option, particularly in light of the upcoming requirement to provide lifetime income disclosures to participants, which is set to become effective later this year (discussed here).
On February 26, 2021, the Departments of Labor (DOL), Health and Human Services (HHS), and the Treasury collectively issued new frequently asked questions (FAQs) regarding the implementation of the Families First Coronavirus Response Act (FFCRA) and the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), and other health coverage issues related to COVID-19. Previous blogs posts reviewed the FAQs on COVID-19 group health plan coverage implementation and preventative care mandates. The FAQs expand upon prior guidance related to the requirement under the FFCRA that group health plans and health insurance issuers (health plans) cover COVID-19 diagnostic testing and vaccinations, and certain related issues.
As the pandemic continues, employers are increasingly faced with compliance challenges in response to new and pending legislation. Click here to view our webinar recording as members of Faegre Drinker’s benefits and executive compensation group discussed various welfare benefits provisions in the Consolidated Appropriations Act, 2021 and the new provisions employers will need to navigate. Specifically, our team explored:
Continue reading “Recent Webinar Regarding Health Plan Provisions in Consolidated Appropriations Act: New Legislation Brings COVID-19 Relief and Shines a Light on Health Plan Price Transparency”
As described in a prior blog post, last spring the Department of Labor and the Department of the Treasury (Agencies) issued COVID-19 pandemic relief that extended numerous deadlines under ERISA and the Internal Revenue Code (Code) applicable to group health plans, retirement plans, and other ERISA benefit plans, as well as participants in those plans (Extension Relief). Specifically, the Extension Relief stated that, subject to a one-year statutory limitation imposed by ERISA Section 518 and Code Section 7508A, all deadlines for benefit plan actions identified in the Extension Relief (Deadlines) would be put on hold for the period beginning March 1, 2020 and ending 60 days after the announced end of the COVID-19 National Emergency (Outbreak Period). President Biden extended the National Emergency on February 24, 2021 and the end date is, at this time, unknown.
The Consolidated Appropriations Act, 2021, enacted on December 27, 2020 (the CAA), includes limited relief pertaining to the partial termination of a qualified retirement plan that may have been inadvertently triggered by employer-initiated severances during the COVID-19 pandemic. Generally, as discussed further in our May 2020 post, the determination as to whether a partial plan termination has occurred depends on the facts and circumstances; however, there is a rebuttable presumption of a partial plan termination if, during the applicable period, the employee turnover rate is at least 20 percent. The employee turnover rate is the number of participating employees who had an employer-initiated severance divided by the total number of participating employees. A partial plan termination triggers 100% vesting for affected participants.
An Illinois district court issued a split decision in a case involving the cybertheft of retirement plan assets, allowing the plan administrator and plan sponsor to be dismissed, but requiring the recordkeeper to defend allegations that it breached its fiduciary duties under the Employee Retirement Income Security Act (ERISA). Bartnett v. Abbott Laboratories, et. al. (N.D. Illinois, Case No. 1:20-cv-02127) is one of several recent lawsuits filed against plan sponsors and recordkeepers for allowing cyber-thieves to pilfer large distributions from participants’ retirement plan accounts.
Heide Bartnett, a former employee of Abbott Laboratories (Abbott) and participant in Abbott’s 401(k) plan, alleges that a hacker accessed her 401(k) account online, changed the password, added a new bank account and requested a $245,000 distribution from the 401(k) plan’s recordkeeper, Alight Solutions LLC (Alight) to be deposited into the newly added account. The imposter also called Alight several times to ask questions about the distribution.
Each year, retirement plans’ fiduciaries have a lot of responsibilities as they prepare for year-end. This year, fiduciaries and plan sponsors have a few extra “to do’s” on their list, with the passage of the CARES and SECURE Acts within the past year. Join Summer Conley, partner at Faegre Drinker, and Bonnie Treichel, co-founder and COO of ZUNA, on Thursday, October 22, 2020, at 1:00 p.m. ET for an actionable audiocast that will cover the tasks that are most critical to preparing for a successful year-end and start to 2021.
On June 29, 2020, the IRS issued Notice 2020-52 addressing mid-year reductions and suspensions of contributions to Safe Harbor 401(k) and 403(b) plans. In response to the COVID-19 pandemic, the Notice provides some temporary relief for plan sponsors that wish to reduce or eliminate safe harbor contributions mid-year.