Congratulations to Morgan Lewis partner Handy Hevener, who has been honored with a Lifetime Achievement Award by the New York Law Journal as part of its 2020 New York Legal Awards. The Lifetime Achievement Award is given to lawyers who have made a significant impact on the legal community throughout their career. Handy has made significant contributions throughout her 42 years of practice, particularly in relation to critical payroll tax, fringe benefit, executive compensation, and contingent workforce issues. Handy and the other winners are set to be recognized at an October 27 ceremony in New York.

IRS Notice 2020-52 provides welcome relief to plan sponsors considering suspending safe harbor matching contributions or safe harbor nonelective contributions (or who already suspended safe harbor contributions during 2020) in response to the coronavirus (COVID-19) pandemic.

On June 29, the Internal Revenue Service issued guidance providing new COVID-19-related relief and other clarifications for sponsors considering mid-year changes to their safe harbor 401(k) plans. The guidance, set out in Notice 2020-52 (the Notice), provides helpful clarification that sponsors can eliminate safe harbor 401(k) contributions for “highly compensated employees” (HCEs) only and retain the plan’s safe harbor status, provided that the safe harbor 401(k) contributions continue to be made for non-highly compensated employees (NHCEs).

Under IRS Notice 2020-50, employers sponsoring nonqualified deferred compensation plans (NQCD plans) may now allow employees to suspend their deferral elections without having to determine whether the employee has had an unforeseeable emergency for purposes of Section 409A or otherwise qualifies for a hardship under Section 401(k) if the employee received a coronavirus-related distribution from an eligible retirement plan.

The ongoing coronavirus (COVID-19) pandemic has greatly affected many employers and their employees. Employers sponsoring NQCD Plans are seeing an increase in requests from NQDC Plan participants to suspend deferral elections in order to deal with financial hardships resulting from COVID-19.

The US Department of Labor (DOL) published a request for information (RFI) on June 18 in the Federal Register on the subject of pooled employer plans (PEPs). The RFI provides interested parties until July 20 to submit comments to the DOL addressing potential prohibited transaction (PT) issues confronting PEPs, pooled plan providers (PPPs), participating employers, and others. Read our LawFlash for a refresher on PEPs and relevant parties.

US President Donald Trump signed the Paycheck Protection Program Flexibility Act of 2020 (the Act) on June 5, modifying certain provisions related to the forgiveness of loans under the Paycheck Protection Program (PPP). We recently published a LawFlash discussing these modifications.

In a welcome change, the Act permits employers that qualify for PPP loan forgiveness to continue to defer the employer’s share of Social Security taxes under Section 2302 of the Coronavirus Aid, Relief and Economic Security (CARES) Act.

The IRS has again extended the due dates for certain returns and payments because of the ongoing coronavirus (COVID-19) pandemic. Notice 2020-35, which the IRS issued on May 28, 2020, postpones the due date for certain time-sensitive actions related to qualified retirement plans, health savings accounts and Archer medical savings accounts, and employment taxes. With some exceptions, which are noted below, affected filings are due July 15, 2020.

Extensions

Notice 2020-35 amplifies Notices 2020-18, 2020-20, and 2020-23 that postponed the due date for various tax returns and payments to July 15, 2020. The extensions provided in this most recent IRS notice apply to certain time-sensitive actions that would have been due on or after March 30, 2020 (and April 1, 2020 in some cases) and before July 15, 2020.

In a 5-4 decision in Thole v. U.S. Bank N.A., the US Supreme Court has ruled that defined benefit plan participants lack Article III standing to sue for fiduciary breaches that do not harm the individual participants. As the Court noted, “[u]nder ordinary Article III standing analysis, the plaintiffs lack Article III standing for a simple, common-sense reason: They have received all of their vested pension benefits so far, and they are legally entitled to receive the same monthly payments for the rest of their lives. Winning or losing this suit would not change the plaintiffs’ monthly pension benefits.”

In response to the coronavirus (COVID-19) pandemic, the Internal Revenue Service (IRS) has issued new formal guidance that extends the deadline for providers of individual retirement accounts and individual retirement annuities (IRAs) to file Form 5498.

Read our LawFlash for more information on the new guidance.

The US Department of Labor (DOL) announced publication of a final rule expanding the electronic disclosure options available for retirement plan communications on May 21. The final rule creates a new safe harbor that permits retirement plan administrators to satisfy certain ERISA disclosure requirements by providing individuals with electronic notice and access to documents on a website or by sending an email or other electronic communication with the documents as an attachment or in the body of the communication.

The DOL describes the new safe harbor rule as “fundamentally similar to the proposed rule,” which we previously summarized. However, there are a number of important changes to the proposed rule that will be welcomed by the plan sponsor community. A more in-depth review and analysis of the new safe harbor rule is forthcoming, but in the meantime, we wanted to highlight a few key aspects: