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American Rescue Plan Enhancements to Employee Retention Credit

The American Rescue Plan Act of 2021 (“ARPA”) extended the employee retention credit through the end of 2021 and enhanced the scope of employers eligible to claim the credit by adding two new employer categories: (i) “recovery startup businesses” and (ii) “severely financially distressed employers”.  A “recovery startup business” is a business that was created after February 15, 2020 and has annual gross receipts of no more than $1,000,000. Recovery startup businesses may claim the employee retention credit (capped at $50,000 per quarter) even if they do not otherwise qualify for the credit (i.e., they neither experienced a complete or partial shutdown due to a COVID-19 governmental shutdown order nor had a decrease in gross receipts of at least 20% for the applicable quarter). A “severely financially distressed employer” is an employer who had a decrease in gross receipts of at least 90% for the applicable quarter, and such employers… Continue Reading

IRS Issues New FAQs on Claiming the Employee Retention Credit

The IRS recently issued Notice 2021-20, which contains 71 new FAQs related to the employee retention credit (the “ERT”) available on qualified wages paid between March 13, 2020 and December 31, 2020. The new FAQs do not address changes to the ERT enacted as part of the Consolidated Appropriations Act, 2021 on qualified wages paid between January 1, 2021 and June 30, 2021, which the IRS says will be addressed in future guidance. The FAQs provide numerous, helpful examples of how to apply key definitions and other provisions applicable to the ERT, such as who is an eligible employer; what constitutes a full or partial suspension of a trade or business, a significant decline in gross receipts, qualified wages, and allocable qualified health plan expenses; and the interaction of the ERT and Paycheck Protection Program loan recipients, among other topics. For additional information on the ERT, please see our prior… Continue Reading

Required Minimum Distributions: A Tragedy in Three Acts

The SECURE Act and CARES Act made significant changes to required minimum distributions (“RMDs”). What should you be doing to ensure your retirement plans are administered correctly? The first step is to understand your options. SECURE Act Shifts the Start Before the SECURE Act, RMDs had to begin by April 1st of the calendar year following the later of (i) the calendar year during which the participant retires or (ii) the calendar year in which the participant turns age 70½.  Following the passage of the SECURE Act, the age cutoff in that rule changed from age 70½ to age 72, but only for individuals who turned age 70½ on or after January 1, 2020 (i.e., individuals born on or after July 1, 1949). In short, those terminated vested participants born before July 1, 1949 had to start their RMDs by April 1 of the year after turning 70½, while those… Continue Reading

IRS Issues Updated FAQs on Certain COVID-Related Employer Tax Credits

The IRS recently issued updated FAQs related to the expanded paid sick and family leave tax credits authorized under the Consolidated Appropriations Act of 2021 (the “CAA”). Specifically, the CAA extends through March 31, 2021, the availability of paid sick and family leave credits, which were first adopted in the Families First Coronavirus Response Act in March 2020. The extended paid leave tax credits are not new benefits and simply extend the period of time during which eligible employers may claim the credits. Consequently, if an employer has already claimed the maximum amount of these tax credits, they will not be eligible to claim additional paid leave tax credits. For additional information on the paid sick and family leave tax credits, please see our prior blog posts here and here.  The IRS has yet to update its FAQs for changes made in the CAA to the terms and conditions of… Continue Reading

IRS Issues Additional Guidance on Certain Coronavirus-Related Tax Credits

In a new series of FAQs, the IRS issued additional guidance on tax credits for qualified family leave wages and qualified sick leave wages provided under the Families First Coronavirus Response Act (the “FFCRA”). The first set of FAQs explains what amounts can be counted as qualified family leave wages for purposes of the tax credit granted for such amounts. The second set of FAQs explains how to determine the amount of qualified health plan expenses for purposes of the tax credits for qualified family leave wages and qualified sick leave wages, including how health plan expenses may be calculated for self-funded and fully insured plans, as well as how to calculate health plan expenses when an employer offers more than one health plan or other health-related benefits, such as health flexible spending accounts and health savings accounts. Links to the guidance are below, and more detailed information on the… Continue Reading

Calculating PBGC Variable-Rate Premiums for Delayed Prior Year Contributions

Generally, when determining the value of a defined benefit plan’s assets for purposes of calculating PBGC variable-rate premiums (“VRP”), prior year contributions are included only if received by the plan by the date the premium is filed. The premium filing deadline for a calendar year plan is October 15th. The CARES Act, together with IRS Notice 2020-61, extended the deadline for minimum required contributions and contributions in excess of the minimum during calendar year 2020 until January 1, 2021. On September 23, 2020, the PBGC issued Technical Update 20-2 permitting contributions made in accordance with these extensions to be included for purposes of calculating the VRP. Specifically, for premium filings due on or after March 1, 2020 and before January 1, 2021 (including those due on October 15, 2020 for calendar year plans), contributions received by the plan by January 1, 2021 can be included in plan assets for determining… Continue Reading

Postponed Deadline for Reporting and Payment of Excise Taxes

The IRS recently released Announcement 2020-17 (the “Announcement”) postponing the due dates for reporting and paying excise taxes related to certain delayed minimum required contributions to single employer defined benefit plans. The Announcement only applies to excise taxes under Internal Revenue Code Sections 4971(a)(1) (failure to meet minimum funding standards) and 4971(f)(1) (failure to pay liquidity shortfall). Generally, these taxes must be reported and paid by the last day of the seventh month after the end of the employer’s tax year or eight and one-half months after the last day of the plan year that ends with or within the filer’s tax year. However, because the CARES Act postpones the deadline to make minimum required contributions that are otherwise due in 2020 until January 1, 2021, the Department of Treasury and the IRS are extending the deadline to report and pay the excise taxes under Sections 4971(a)(1) and 4971(f)(1) with… Continue Reading

IRS Issues Guidance on Special Funding and Benefit Limitation Rules under the CARES Act

The IRS recently issued Notice 2020-61 (the “Notice”) 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 “CARES Act”). Section 3608 of the CARES Act delays the due date for “minimum required contributions” otherwise due during calendar year 2020 until January 1, 2021. In addition, it allows plan sponsors to use the plan’s adjusted funding target attainment percentage (“AFTAP”) 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

IRS Extends Deadline to Roll Over Waived RMD Distributions / Provides Model Amendment

The IRS issued Notice 2020-51 which provides additional guidance and relief relating to the required minimum distribution (“RMD”) waiver provisions in Section 2203 of the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). The CARES Act waived the requirement to make RMDs in 2020. Distributed amounts that—but for the CARES Act waiver—would have been RMDs are instead treated as eligible rollover distributions. Generally, the deadline to roll over an eligible rollover distribution into an IRA or another qualified plan is 60 days from the distribution date. However, for those eligible rollover distributions made in 2020 that otherwise would have been RMDs and for which the 60-day rollover period expires before August 31, 2020, the IRS extended the rollover deadline to August 31, 2020. Additionally, Notice 2020-51 includes a Q&A relating to the waiver of RMDs in 2020 and a model amendment that plan sponsors can adopt to provide… Continue Reading

Additional Federal Guidance Regarding COVID-19 and Telehealth Coverage: Some Employer Take-Aways

The U.S. Departments of Labor, Treasury, and Health and Human Services (the “Departments”) recently issued FAQs regarding the Families First Coronavirus Response Act, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), and COVID-19. A number of these FAQs address a group health plan’s required coverage of COVID-19 tests, including which tests must be covered, related facility fees, reimbursement rates, and balance billing to patients. Employers should ensure that the third party administrators of their group health plans have incorporated this guidance for plan administration purposes. In addition, some of the other FAQs may be of interest to employers. For example, the FAQs provide that, if a group health plan reverses the increased coverage of COVID-19 or telehealth after the COVID-19 public health emergency period is over, the Departments will consider the plan to have satisfied the requirement to provide advance notice of changes to the Summary of Benefits… Continue Reading

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