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?ÇÖs 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and technical requirements for any such electronic submissions and is effective April 30, 2020, until modified or superseded.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 ?Ç£Departments?Ç¥) issued a notice (the ?Ç£Notice?Ç¥) 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 ?Ç£Outbreak Period?Ç¥) 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?ÇÖs 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 ?Ç£snail?Ç¥ 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?ÇÖs Summary of Benefits and Coverage (?Ç£SBC?Ç¥), the plan administrator must provide participants with 60 days?ÇÖ 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.?á 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. ?áIn 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:?áhttps://www.dol.gov/sites/dolgov/files/ebsa/temporary-postings/covid-19-final-rule.pdf. Disaster Relief Notice 2020-01 is available here:?áhttps://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 (?Ç£PPP?Ç¥) are eligible for forgiveness of that loan if, among other things, the loan proceeds are used to cover ?Ç£payroll costs?Ç¥ 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?ÇÖs 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?ÇÖs current physical presence notarization requirements.
Health and Welfare Issues and COVID-19: Reminder: Decrease in Pay/Hours Does Not Permit Dropping Health Plan Coverage If There is No Loss of Eligibility
As many employers reduce employees?ÇÖ work hours, employers should consider that employees will remain responsible for their health plan contributions even though their pay is decreasing. As long as eligibility for coverage does not change, an employee is not permitted to change his or her health plan elections due solely to the decrease in pay or hours. One exception to this general rule is a change in status event created in connection with the Affordable Care Act, which provides that, in certain circumstances, an employee with reduced work hours may drop health plan coverage if the employee enrolls in other health plan coverage. Because the reduced pay may not cover all payroll deductions, employers should consider adopting a priority order for payroll deductions (e.g., health plan deductions are made before 401(k) plan deductions). In addition, an employer may want to consider a waiver of premiums, which is permitted if done… Continue Reading
The IRS issued Notice 2020-23 (the ?Ç£Notice?Ç¥), postponing various employee benefit related deadlines under the Internal Revenue Code. Under the Notice, the due dates of many tax payments and filings that would ordinarily fall on or after April 1, 2020 through July 14, 2020 were automatically extended to July 15, 2020. For example, Forms 990 that would have been due for calendar year filers on May 15, 2020 and Form 990-T that would have been due for calendar year filers on April 15, 2020 are now not due until July 15, 2020. Note that this relief will not apply to Forms 5500 for plans with calendar year plan years since those Forms 5500 are due July 30, 2020, which is currently outside of the relief period. The Notice also provides relief to any plan performing one of 44 time-sensitive actions that are listed under Revenue Procedure 2018-58. To the extent… Continue Reading
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