ERIC Letter to Senate on Employee Benefits Liability & Regulatory Updates

ERIC Letter to Senate on Employee Benefits Liability. On Friday, July 17, ERIC sent a letter to Senate Leadership detailing liability protections that are needed pursuant to employee benefit plans, in order to reopen the economy and avoid abusive lawsuits when member companies bring their workers back on site. ERIC requested the next COVID-19 legislation include preventing “stock drop” lawsuits, “imprudent investment” lawsuits, and ERISA disclosure lawsuits. Senate Leader McConnell is still adamant about including business liability protections in the next coronavirus package, which is expected to be released either later today, July 22 or tomorrow, July 23.
PBGC CARES Act Practitioner FAQs. The PBGC posted an FAQ providing guidance under the CARES Act that extended deadlines for single-employer contributions and premiums. The FAQ clarifies that since the contributions are extended to January 1, reporting to the PBGC is not required unless the required contribution is not made by that date. If the deadline is missed, Form 200 is due on January 11, 2021, if the accumulated value of missed contributions exceeds $1 million. If it does not meet this threshold, Form 10 must be submitted February 1, 2021.
The FAQs clarify that only contributions submitted to the plan by the premium due date can be included in the variable rate premium (VRP) calculations. Moreover, prior year contributions received after the premium cannot be included in an amended filing.
IRS Priority Guidance Plan. ERIC submitted comments to the IRS on items that should be included in its 2020-2021 Priority Guidance Plan on Wednesday, July 22. We used this opportunity to reiterate our requests for relief under the SECURE Act. We specifically requested guidance for:

  • RMDs
    • Requested guidance should clarify a plan should not be disqualified if it makes a distribution in 2020 for someone who turns 70 ½ in 2020 pursuant to the rules prior to the enactment of the SECURE Act
  • Withdrawals in the case of birth or adoption
    • Requested confirmation that the plan provisions are optional and additional guidance on the tax treatment of such distributions
  • Nondiscrimination testing relief for closed plans
    •  Requested guidance should state that the SECURE Act shall not be applied in a way that penalizes plan sponsors who, in good faith, implemented changes to allow their closed plans to satisfy nondiscrimination testing based on pre-SECURE Act requirements

 We look forward to working with the IRS on continued relief and the plan’s release.

Article by Aliya Robinson, Senior Vice President of Retirement and Compensation Policy