The DOL’s Employee Benefits Security Administration (“EBSA”) 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 “National Emergency”). 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
Under the CARES Act, employers are eligible to claim an employee retention credit if certain conditions are met (see our prior blog post on the employee retention credit, as well as other employee benefits and executive compensation changes made by the CARES Act, here). The tax credit is equal to 50% of “qualified wages” paid to employees of up to $10,000. Qualified wages include (i) wages actually paid to covered employees (other than qualified paid sick and family leave wages for which a credit is allowed under the Families First Coronavirus Response Act) and (ii) the “qualified health plan expenses” allocable to such employees. On May 11, 2020, the IRS published new FAQs clarifying how qualified health plan expenses should be calculated for purposes of the employee retention credit. Notably, the FAQs provide guidance on how to calculate such expenses when an employer sponsors more than one health plan (e.g.,… Continue Reading
The IRS released Rev. Proc. 2020-29, which modifies Rev. Proc. 2020-1, to temporarily allow taxpayers to electronically submit requests for letter rulings, closing agreements, determination letters (including those issued by the IRS Large Business and International Division), and information letters, which are under the jurisdiction of the IRS Office of Chief Counsel. The procedures for determination letters issued by the IRS’s Small Business/Self Employed Division, Wage and Investment Division, or Tax Exempt and Government Entities Division remain unchanged. Rev. Proc. 2020-29 describes the procedural, formatting, and technical requirements for any such electronic submissions and is effective April 30, 2020, until modified or superseded. Rev. Proc. 2020-29 is available here.
On April 29, 2020, the U.S. Departments of Labor and the Treasury (together, the “Departments”) issued a notice (the “Notice”) requiring that all group health plans, disability and other types of employee welfare benefit plans, and employee pension benefit plans, subject to ERISA and the Internal Revenue Code, must disregard the period from March 1, 2020 until 60 days after the announced end of the COVID-19 National Emergency or such other date as announced by the Departments in a future notice (the “Outbreak Period”) for the following periods and dates: The 30-day period (or 60-day period, if applicable) to request HIPAA special enrollment; The 60-day election period for COBRA continuation coverage; The date for making COBRA premium payments; The date for individuals to notify the plan of a COBRA qualifying event or determination of disability; The date within which individuals may file a benefit claim under the plan’s claims procedures;… Continue Reading
In light of the COVID-19 pandemic and the fact that most offices are closed, with employees largely working remotely, it may be easy to imagine that the whole world functions online. This is not true. Many governmental agencies, including the IRS and DOL, continue to rely heavily, if not nearly exclusively, on the United States Postal Service for delivering plan-related communications. For this reason, it is important that someone within your organization continues to check your “snail” mail during this time of pandemic, particularly if you have a plan that is subject to an ongoing audit or investigation or a pending determination letter or Voluntary Correction Program application. The IRS and DOL frequently request additional information in these contexts, providing a limited time period (normally, fourteen days) to respond. While the agencies are typically generous in granting extensions to respond, such extensions must be requested.
Generally, if an employer-sponsored group health plan makes a material modification to coverage midyear that would affect the content of the plan’s Summary of Benefits and Coverage (“SBC”), the plan administrator must provide participants with 60 days’ prior notice of the modification. The U.S. Departments of Labor, Treasury, and Health and Human Services have issued a FAQ stating that they will not take any enforcement action against any plan for not providing such notice when the modification is to provide greater coverage related to the diagnosis and/or treatment of COVID-19 or to add benefits or reduce or eliminate cost sharing for telehealth and other remote care services. However, the plan administrator must still provide notice of the changes to participants as soon as reasonably practicable. This non-enforcement policy only applies while there is a public health emergency declaration or national emergency declaration related to COVID-19 in effect. The FAQs are… Continue Reading
The DOL and the IRS Jointly Provide Relief from Certain Timeframes Applicable to Health and Welfare and Pension Plans
On April 28, 2020, the IRS and DOL issued a Final Rule extending certain timeframes under ERISA and the Internal Revenue Code for group health, disability and other welfare plans, pension plans, and the participants and beneficiaries under those plans. The timeframe extensions include, among other things, the time to elect COBRA and pay premiums, special enrollment timeframes under HIPPA and CHIPs, claims procedure timeframes, and certain external review process timeframes. Applicable plans must disregard the period from March 1, 2020 until 60 days after the announced end of the COVID-19 National Emergency for all plan participants, beneficiaries, qualified beneficiaries, or claimants wherever located in determining the enumerated time periods and dates and for providing COBRA election notices. In addition, Disaster Relief Notice 2020-01 was issued addressing the timeframe relief and addressing certain other COVID-19 relief. The Final Rule is available here: https://www.dol.gov/sites/dolgov/files/ebsa/temporary-postings/covid-19-final-rule.pdf. Disaster Relief Notice 2020-01 is available here: https://www.dol.gov/agencies/ebsa/employers-and-advisers/plan-administration-and-compliance/disaster-relief/ebsa-disaster-relief-notice-2020-01.
Businesses that received a loan under the Paycheck Protection Program (“PPP”) are eligible for forgiveness of that loan if, among other things, the loan proceeds are used to cover “payroll costs” incurred over the eight-week period after the loan is made. Payroll costs, capped at $100,000 on an annualized basis for each employee (i.e., $15,384 over the eight-week period), are broadly defined to include, among other things: Salary, wages, commissions, or tips; Employee benefits costs, such as for vacation or paid family or medical leave (other than wages for which a credit is received under the Families First Coronavirus Response Act), group health care costs, retirement plan contributions, and severance benefits; and State and local taxes assessed on employee compensation. As of the date of this posting, no guidance has been issued by the IRS or the Department of Treasury to further clarify what specific items qualify as payroll costs.… Continue Reading
Generally, a spouse must consent to a retirement plan participant’s waiver of a qualified joint and survivor annuity or the designation of an optional form of benefit or an alternate beneficiary. The applicable regulations require this consent, even if signed electronically, to be witnessed in the physical presence of a plan representative or a notary public. Neither the IRS nor the DOL has issued guidance permitting the physical presence requirement to be satisfied by electronic means (for example, via webcam) even though numerous states now permit electronic notarizations. Employers should use care and consult with legal counsel when determining how to handle participants who are unable to satisfy the plan’s current physical presence notarization requirements.
CARES Act: Additional Guidance on the Interplay Between Social Security Tax Deferrals and Forgiveness of PPP Loans
In a new set of FAQs, the IRS clarifies that an employer who receives a loan under the Paycheck Protection Program (“PPP”) may also defer payment of the employer portion of Social Security taxes due on eligible wages until the employer receives notice from its PPP lender that the loan has been forgiven. Under the CARES Act, employers of all sizes may defer payment of their portion of Social Security taxes due on wages earned between March 27, 2020 and December 31, 2020, until December 31, 2021 (50% of the deferred taxes are due) and December 31, 2022 (the remaining deferred taxes are due), subject to certain restrictions. One of those restrictions is that an employer may not defer its Social Security taxes if it has taken out a PPP loan and all or any portion of the loan is forgiven. The new FAQs clarify that, once an employer receives… Continue Reading