Practice Management
In a July 30 webcast, ARA Director of Legislative Affairs Andrew Remo provided an overview of the rules affecting retirement plans that have been put in place as a result of the pandemic and the effects it has had on the economy and plan participants.
In “Pandemic Pandemonium: Navigating the new COVID-19 Retirement Plan Rules,” an NTSA webcast, Remo looked at legislation and some regulatory developments in the last four months.
CARES Act. The Coronavirus Aid, Relief, and Economic Security (CARES) Act, Public Law No: 116-136, enacted March 27, 2020, touches retirement plans through a variety of provisions. Those include:
- Section 2202—Retirement Distribution and Loan Rules;
- Section 2203—Waiver of Required Minimum Distributions for 2020;
- Section 3607—Expansion of DOL Authority to Postpone Deadlines; and
- Section 3608—Single-employer Plan Funding Rules.
And Remo reminded attendees that the CARES Act applies to non-ERISA plans. Specifically, he said, the distribution and loan rules addressed in Section 2202) and the 2020 required minimum distribution (RMD) waiver contained in Section 2203) apply to non-ERISA plans.
HEROES Act. The Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act (H.R. 6800) passed in the House of Representatives on May 15 by a 208-199 margin just three days after it was introduced. It is now pending before the Senate; the Committee on Small Business and Entrepreneurship held hearings on July 23.
Division D of the HEROES Act, Remo noted, contains the measure’s provisions that would affect retirement plans. These include:
Division D of the HEROES Act, Remo noted, contains the measure’s provisions that would affect retirement plans. These include:
- Emergency Pension Plan Relief Act (EPPRA)—Multiemployer Pension Plan Relief (Title I), Single Employer Pension Plan Relief (Title II) and Other Retirement Related Provisions (Title III);
- Section 40301—RMD Waiver for 2019;
- Section 40302—Waiver of 60-Day and Once-Per-Year Limitation Rules in Case of Rollovers of Otherwise RMDs for 2019 and 2020, which clears up some of the gaps in the rule for RMDs, Remo observed;
- Section 40303—Employee Eligibility Certification for Increased CARES Act Loan Limits from Employer Plan; and
- Section 40305—Application of CARES Act Special Rules to Money Purchase Plans.
American Workers, Families, and Employers Assistance Act. Senate Finance Committee Chairman Chuck Grassley (R-IA) introduced S. 4318 on July 27; it was referred to that committee. Remo pointed out that the measure has three sections that are particularly important for retirement plans:
- Section 221—Application of CARES Act Special Rules to Money Purchase Plans;
- Section 222—Clarification of delay in payment of single-employer pension plan minimum required contributions; and
- Section 223—Employee Eligibility Certification for Increased CARES Act Loan Limits from Employer Plan.
Remo expressed confidence that there is interest in those three provisions. He remarked to attendees that “If we’re taking bets about what’s in the next round of COVID relief, it’s a safe bet that money purchase plans will be in it.” He added that there is “not a guarantee that there will be another COVID relief package, but money purchase plans will be in if there is,” as well as provisions concerning clarifications of delays in payment of single-employer pension plan minimum required contributions and employee eligibility certification for increased CARES Act loan limits from employer plans.
The Regulatory Front
Remo also outlined the plentiful IRS activity of recent months related to the pandemic, including:
- IRS Notice 2020-50—issued June 19, 2020, which provides guidance on CARES Act coronavirus-related loans and distributions;
- IRS Notice 2020-51—issued June 23, 2020, which provides guidance on how defined contribution plans (including 403(b) and 457(b) plans) implement the CARES Act 2020 required minimum distribution waiver;
- IRS Notice 2020-52—issued June 29, 2020, which provide guidance and temporary relief for employers that choose to reduce 2020 contributions to their safe harbor 401(k) or 403(b) plan; and
- 403(b) Plan Restatement Deadline—deadline pushed back from March 31, 2020 to June 30, 2020.
What’s Next?
“Activity has certainly picked up in the last couple of weeks,” Remo said. Nonetheless, he indicated that there are challenges in securing passage of new legislation. “There’s going to be a lot of pressure to do something further to get us through the election,” he told attendees, but added that “the reporting out of Washington this week has been one of stalemate.”
But “there is going to be other action in the fall,” Remo remarked, noting that there are continuing negotiations on comprehensive retirement legislation. And he said that “a lot of progress has been made” on SECURE Act 2.0.
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