After months of partisan bickering and Senate inaction, Congress finally passed another round of COVID-19 relief legislation as part of the Consolidated Appropriations Act, 2021, P.L. 116-260, (“CAA”), which was signed into law on December 27, 2020. We provide a summary of the tax-related CAA provisions and key modifications to the Paycheck Protection Program (“PPP”), before discussing President Biden’s tax agenda for 2021. The CAA’s tax provisions focus primarily on providing economic relief to taxpayers…
With the COVID-19 pandemic impacting all facets of business, this webcast focuses on the implications for employers and their pension arrangements. Increased economic pressure, new legislation and recent government guidance is impacting how employers are navigating these changes across the globe. With a spotlight on the UK, US and Australia, we discuss key pension issues and practical steps employers should be taking moving forward. Click here to watch the podcast.
On June 19, 2020, the IRS released Notice 2020-50 (the Notice) which provides additional guidance on tax-favored distributions from retirement plans and expanded plan loan relief under the “Coronavirus Aid, Relief, and Economic Security Act” (the CARES Act). As noted in our prior alert, the CARES Act provides that during the period January 1, 2020 to December 30, 2020, “qualified individuals” may take coronavirus-related distributions of up to $100,000 from their eligible retirement plans. A…
Department of Labor (DOL) issued final regulations establishing new safe harbors for the electronic delivery of required retirement plan disclosures under ERISA. As background, retirement plan administrators must deliver required disclosures using methods that are reasonably calculated to ensure actual receipt of documents by plan participants. Under prior guidance from 2002, the DOL created a safe harbor electronic delivery method for required disclosures. But the 2002 safe harbor is only available with respect to employees…
Employers considering COVID-19-related layoffs and RIFs right now should add one more item to their checklist of considerations: the possibility of inadvertently triggering a “partial termination” of their tax-qualified retirement plan. Where plan participant numbers decrease substantially, the plan may incur what’s known as a “partial termination.” This is significant because, once triggered, the IRS requires the benefits of all “affected employees” be fully vested. Failure to provide such vesting could put the plan’s tax-qualified…
The financial fallout from the outbreak of COVID-19 has unfortunately forced employers to turn to layoffs and furloughs. Many employers facing these decisions are looking for cost effective ways to mitigate the financial impact on affected employees. A supplemental unemployment benefit plan (“SUB Plan”) may be one way to assist employees while generating some cost savings for the company. A SUB Plan is a unique type of severance benefit plan that permits employers to supplement…
The Coronavirus Aid, Relief, and Economic Security Act (the “Act”) was passed by the US House of Representatives by a voice vote today after being passed by the US Senate on Wednesday. The bill now heads to the White House, where President Trump is expected to sign it very soon. Below are some key retirement plan features of the Act: Coronavirus-Related Distributions. The Act would allow participants in eligible retirement plans to take distributions in 2020 of…
On September 24, 2018, the IRS issued Notice 2018-71 (Notice) on the temporary employer tax credit introduced by the Tax Cuts and Jobs Act for wages paid to Qualifying Employees while on covered family or medical leave under new Section 45S of the Internal Revenue Code (Code). In brief: Where the requirements of the Notice are met, the new credit may be claimed during tax years 2018 and 2019 for paid family and medical leave…
In a Private Letter Ruling released on August 17, 2018 (PLR 201833012) (“Ruling”), the IRS approved an employer’s proposed amendment to its 401(k) plan (“Plan”), under which it would make an employer non-elective contribution on behalf of an employee conditioned on the employee making student loan repayments (“SLR non-elective contribution”). As described in the Ruling, the proposed student loan repayment benefit program (the “program”), is a voluntary program under which the employee must elect to…
Almost all plan documents contain some level of administrative provisions outlining how the plan is intended to operate (e.g., number of committee members, quorum, etc.). Plan sponsors often view these provisions as “boilerplate” with little or no meaning. In actuality, these are substantive provisions of the plan and failure to follow those provisions can have substantial consequences. The Consequences Failure to follow the terms of the plan document is a potential qualification issue under IRS…