Filing a Form 5558 for Retroactively Adopted Plans Does Not Establish a 2020 Form 5500 Filing Requirement
In August 2021, the IRS issued guidance clarifying that certain plans retroactively adopted after the end of the plan year would not have to file a 2020 Form 5500 series return, which we previously discussed in our blog post here. Recently, the IRS further clarified that if a plan sponsor already submitted a Form 5558 (Application for Extension of Time to File Certain Employee Plan Returns) for a retroactively adopted plan, the submission of such Form 5558 would not require such plan to file a 2020 Form 5500. The IRS stated that the filing of the Form 5558 will not result in an IRS delinquency notice if no 2020 Form 5500 is ever filed for the plan specified in the Form 5558. The delinquency notices are based on when the Form 5500 is filed and not the filing of aForm 5558. IRS newsletters are available here.
The IRS recently issued Notice 2020-61 (the ?Ç£Notice?Ç¥) containing 18 questions and answers that provide helpful guidance for sponsors of single-employer defined benefit pension plans regarding Section 3608 of the Coronavirus Aid, Relief, and Economic Security Act (the ?Ç£CARES Act?Ç¥). Section 3608 of the CARES Act delays the due date for ?Ç£minimum required contributions?Ç¥ otherwise due during calendar year 2020 until January 1, 2021. In addition, it allows plan sponsors to use the plan?ÇÖs adjusted funding target attainment percentage (?Ç£AFTAP?Ç¥) for the last plan year ending before January 1, 2020, for plan years that include calendar year 2020. The Notice addresses issues related to the deadline extension for minimum required contributions under the CARES Act, including how the contributions are to be adjusted for interest. The Notice also discusses issues related to the use of the prior year AFTAP for benefit limitations. Plan sponsors should consult with their benefits counsel… Continue Reading
The IRS recently announced the following inflation-adjusted limits for 2020 for certain health and welfare plans: ?Çó Health flexible spending account limit: increased to $2,750. ?Çó Qualified transportation fringe benefit limits for parking and transit: each increased to $270. ?Çó Adoption assistance program limit: increased to $14,300. ?Çó Qualified Small Employer Health Reimbursement Arrangement limit: increased to $5,250 for individual coverage and $10,600 for family coverage. These, and certain other, 2020 plan limits are available in Notice 2019-44 here.
Generally, the Affordable Care Act (?Ç£ACA?Ç¥) requires group health plan coverage sponsored by large employers to be ?Ç£affordable?Ç¥ in order to avoid certain penalties. ?Ç£Affordability?Ç¥ is based on whether the premium for employee-only coverage is less than a certain percentage of an employee?ÇÖs household income or an applicable safe harbor amount. In Notice 2019-29, the IRS announced that the affordability percentage for 2020 would decrease to 9.78% from 9.86% in 2019. Employers should note this change as they set premiums for 2020. Notice 2019-29 is available here.
The IRS recently issued Revenue Procedure 2019-25, which sets the 2020 calendar year limits on (i) annual contributions that can be made to a health savings account (?Ç£HSA?Ç¥) and (ii) annual deductibles and out-of-pocket maximums under a high deductible health plan (?Ç£HDHP?Ç¥). The 2020 limits are as follows: Annual HSA contribution limits: $3,550 for self-only coverage ($50 increase from 2019); $7,100 for family coverage ($100 increase from 2019) Minimum HDHP deductibles: $1,400 for self-only coverage ($50 increase from 2019); $2,800 for family coverage ($100 increase from 2019) HDHP out-of-pocket maximum limits: $6,900 for self-only coverage ($150 increase from 2019); $13,800 for family coverage ($300 increase from 2019) View Rev. Proc. 2019-25.