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IRS Releases 2022 Inflation-Adjusted Amounts for HSAs and HDHPs

The IRS recently issued Rev. Proc. 2021-25, which sets the 2022 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 2022 limits are as follows: Annual HSA contribution limits: $3,650 for self-only coverage ($50 increase from 2021) and $7,300 for family coverage ($100 increase from 2021); Minimum HDHP deductibles: $1,400 for self-only coverage (no change from 2021) and $2,800 for family coverage (no change from 2021); and HDHP out-of-pocket maximum limits: $7,050 for self-only coverage ($50 increase from 2021) and $14,100 for family coverage ($100 increase from 2021). Rev. Proc. 2021-25 is available here.

HHS Announces Final 2022 Cost-Sharing Maximums under the Affordable Care Act

HHS recently issued its final ?Ç£Notice of Benefit and Payment Parameters for 2022?Ç¥ (the ?Ç£Notice?Ç¥), which includes the maximum annual limitations on cost-sharing that will apply to ?Ç£essential health benefits?Ç¥ in 2022 under non-grandfathered group health plans subject to the Affordable Care Act. For this purpose, cost-sharing generally includes deductibles, coinsurance, copayments, and other required expenditures that are qualified medical expenses with respect to essential health benefits available under the plan. The 2022 limitations are (i) $8,700 for self-only coverage and (ii) $17,400 for other than self-only coverage. The Notice is available here.

IRS Issues Safe Harbor Plan Guidance on Sections 102 and 103 of the SECURE Act

The IRS recently issued Notice 2020-86 (the ?Ç£Notice?Ç¥), which provides guidance through a series of questions and answers with respect to Sections 102 and 103 of the Setting Every Community Up for Retirement Enhancement Act of 2019 (the ?Ç£SECURE Act?Ç¥). Section 102 of the SECURE Act increases the maximum automatic elective deferral percentage for automatic enrollment safe harbor plans from 10% to 15% (provided, however, that the maximum automatic deferral rate remains 10% during the initial period of automatic elective contributions).  Notably, the Notice clarifies that a QACA safe harbor 401(k) plan is not required to increase the maximum percentage, so long as the percentage is (i) applied uniformly, (ii) does not exceed 15% (or 10% during the initial period of automatic elective contributions), and (iii) satisfies certain other minimum percentage requirements as described in Code Section 401(k)(13)(C)(iii).  The Notice also clarifies that, if a plan incorporates the maximum qualified… Continue Reading

Calculating PBGC Variable-Rate Premiums for Delayed Prior Year Contributions

Generally, when determining the value of a defined benefit plan?ÇÖs assets for purposes of calculating PBGC variable-rate premiums (?Ç£VRP?Ç¥), 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 ?Ç£Announcement?Ç¥) 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?ÇÖs tax year or eight and one-half months after the last day of the plan year that ends with or within the filer?ÇÖs 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 ?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

IRS Provides Pandemic Relief to Safe Harbor Plans

Notice 2020-52 (the ?Ç£Notice?Ç¥) provides temporary relief allowing sponsors of ?Ç£safe harbor?Ç¥ 401(k) and 403(b) plans to amend their plans mid-plan year to suspend or reduce safe harbor contributions through the end of the plan year regardless of whether the employer (i) is suffering an economic loss, or (ii) included a statement in its annual safe harbor notice that safe harbor contributions could be reduced or suspended during the plan year. Plans that adopt an amendment to reduce or suspend safe harbor non-elective contributions in accordance with this Notice will not be treated as failing to satisfy the 30 day notice requirement in the regulations, provided that a supplemental notice is provided to the eligible employees no later than August 31, 2020, and the plan amendment that reduces or suspends the non-elective contributions is adopted no later than the effective date of the reduction or suspension. Plans that adopt an… Continue Reading

Sixth Circuit Case Excludes Voluntary Retirement Contributions from a Debtor?ÇÖs Disposable Income

The U.S. Court of Appeals for the Sixth Circuit (the ?Ç£Sixth Circuit?Ç¥), whose jurisdiction includes Michigan, Ohio, Kentucky, and Tennessee, recently held that, under Chapter 13 of the Bankruptcy Code, a debtor?ÇÖs pre-petition and certain post-petition voluntary retirement contributions are excludable from the debtor?ÇÖs disposable income, which is used to satisfy a debtor?ÇÖs obligations to its unsecured creditors. In Davis, a debtor filed for bankruptcy under Chapter 13 of the Bankruptcy Code and sought to satisfy her unsecured debts by paying all of her ?Ç£projected disposable income?Ç¥ to her unsecured creditors. The debtor sought to exclude her voluntary 401(k) contributions from her projected disposable income, but the bankruptcy court upheld an amended bankruptcy plan that included such contributions in her disposable income. The debtor appealed to the Sixth Circuit, which held that, because the debtor?ÇÖs post-petition monthly 401(k) contributions were regularly withheld from the debtor?ÇÖs wages prior to the bankruptcy,… Continue Reading

DOL Issues Relief for Plan Fiduciaries

The DOL’s Employee Benefits Security Administration (?Ç£EBSA?Ç¥) recently issued EBSA Disaster Relief Notice 2020-01. Notice 2020-01 applies to employee benefit plans, employers, labor organizations, and other plan sponsors, plan fiduciaries, participants and beneficiaries, and service providers subject to ERISA. Notice 2020-01 remains in effect from March 1, 2020 until 60 days after the announcement of the end of the presidentially declared national emergency due to COVID-19 (the ?Ç£National Emergency?Ç¥). Untimely Notice Relief Fiduciaries of ERISA plans generally have an obligation to provide notices and disclosures in accordance with the timing requirements of ERISA. However, under Notice 2020-01, the employee benefit plan and the responsible plan fiduciary will not be considered to violate ERISA for failing to timely furnish a notice, disclosure, or document that must be furnished between March 1, 2020 and 60 days after the announced end of the National Emergency, if the plan and responsible fiduciary act in… Continue Reading

Retirement Benefit Expenses Covered under the CARES Act?ÇÖs Paycheck Protection Program

The Paycheck Protection Program (the ?Ç£PPP?Ç¥) under the CARES Act aims to assist small businesses affected by COVID-19 by covering certain operating expenses as an incentive to retain employees during the crisis. Expenses, such as ?Ç£payroll costs,?Ç¥ are used in the calculation of the amount of the available loan and in the amount that may be forgiven under the program. Notably, the PPP does not consider an individual?ÇÖs compensation in excess of $100,000 annualized, prorated for the covered period, to be covered as a payroll cost. The ?Ç£payment of any retirement benefit[s]?Ç¥ are among the payroll costs that are included. However, at this time, it not entirely clear what is intended to be included in the ?Ç£payment of any retirement benefit.?Ç¥ No formal guidance has been issued by the IRS or Treasury, and initial guidance issued by the U.S. Small Business Administration does not shed much light on this question.… Continue Reading

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