As we noted in a post last year at this time, pension plans that are not fully funded for PBGC purposes have two parts to their PBGC premium. One part is a flat rate premium of $83 per participant in 2020 ($86 for 2021, as just announced by the PBGC). The other is a variable rate premium that looks to the value of the plan’s “unfunded vested benefits,” which is the excess, if any, of the plan’s Premium Funding Target over the fair market value of plan assets.
Recent LawFlash publications include:
- IRS Notice 2020-68 Provides Secure Act And Miners Act Guidance. Notice 2020-68 from the IRS provides clarifications for sponsors and administrators of 401(k) plans and other qualified retirement plans, 403(b) plans, and 457(b) governmental plans on certain provisions in the SECURE Act of 2019 and the Bipartisan American Miners Act of 2019. The notice also provides valuable guidance for sponsors of multiple employer plans and pooled employer plans. Read more in our LawFlash.
- SECURE Act: IRS Sets Amendment Deadline For IRA Providers and Addresses Other IRA Issues. The IRS recently released new guidance in IRS Notice 2020-68 to assist owners of individual retirement accounts and annuities and IRA providers implement certain provisions of the SECURE Act. Read our LawFlash for further discussion and guidance.
Congratulations to Elizabeth (Liz) Goldberg and Erin Randolph-Williams on their election to the Morgan Lewis partnership in our employee benefits and executive compensation practice! Effective today, Liz (resident in Pittsburgh) and Erin (resident in Philadelphia) will join 23 other newly elected partners from 10 offices and eight practices. For more information about all of the firm’s newly elected partners, please see our press release, Morgan Lewis Elects 25 Partners.
Congratulations to our employee benefits and executive compensation partner Bob Abramowitz, who has been recognized as a Distinguished Leader by The Legal Intelligencer. In giving Bob this award, The Legal Intelligencer noted that as “a trailblazer in the ERISA and employee benefits field since the passage of ERISA in 1974, Abramowitz has impacted the Philadelphia workplace by helping numerous hospitals, educational institutions, and companies of all sizes throughout the United States shape their retirement benefits, health and welfare benefits, and executive compensation programs.”
Amid the current climate of individuals engaging in protests for racial justice and other causes, some employers are looking for ways to help employees arrested in connection with exercising their first amendment rights to speech and assembly. One way to do so is an ERISA plan for prepaid legal services.
The IRS issued proposed regulations and new frequently asked questions regarding the extension of the normal 60-day rollover period to roll over a qualified plan loan offset (QPLO), which was provided for under the Tax Cuts and Jobs Act of 2017 (TCJA). While the proposed regulations will primarily affect the recordkeepers of qualified plans (which will need to administer the extension), plan sponsors should be aware of the proposed regulations and discuss compliance with their recordkeepers and other paying agents for their qualified retirement plans that allow loans.
As background, when a qualified retirement plan loan becomes immediately due and payable—which most often occurs upon default, but could also happen if the plan’s terms require immediate repayment upon a termination of employment—and the loan is not repaid, the loan is either treated as a “deemed distribution” or a “loan offset,” depending on whether the participant has had a distributable event. If the participant has had a distributable event—for example, a termination of employment or reaching age 59½ where the plan allows for an in-service distribution at that age—then failure to repay the loan is treated as a loan offset. Otherwise, it is treated as a deemed distribution.
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.
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 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.
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.
A CARES Act provision offers some relief to employee stock ownership plans by allowing the suspension of required minimum distributions for 2020.
In addition to providing individual stimulus payments and other individual-oriented assistance, the CARES Act contains some provisions aimed at retirement plans, some of which are of particular interest to companies that maintain employee stock ownership plans (ESOPs).