The Washington Report
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June 3, 2020
Note to subscribers: Due to the current environment, information is changing at a rapid rate. While we do our best to provide timely updates, it is possible that the information shared in the newsletter may change or be revised after our publication deadline. Stay healthy and safe! ~The Washington Report team
Legislative
House-Passed Bill Would Ease Paycheck Protection Program Loan Rules
On May 28, 2020, the House passed H.R. 7010, the Paycheck Protection Program Flexibility Act of 2020, which would assist businesses by easing restrictions on emergency government-backed loans. The bill would give borrowers more flexibility with respect to loans taken under the Paycheck Protection Program by extending the expense forgiveness period from eight weeks to 24 weeks, decreasing the percentage required to be spent on payroll from 75% to 60%, and making numerous other changes that would provide more options to loan recipients. The bill was passed by a 417–1 vote.
H.R. 7010 (116) is available here.
Health and Retirement
IRS Announces 2021 HSA Limits
On May 20, 2020, the Internal Revenue Service (IRS) announced in Revenue Procedure 2020-32 the 2021 inflation-adjusted amounts for Health Savings Accounts (HSAs). For calendar year 2021, the annual limitation on deductions for an individual with self-only coverage under a high-deductible health plan is $3,600. The annual limitation on deductions for an individual with family coverage under a high-deductible health plan is $7,200.
For calendar year 2021, a “high-deductible health plan” is a health plan with an annual deductible that is not less than $1,400 for self-only coverage or $2,800 for family coverage. The annual out-of-pocket expenses (deductibles, copayments, and other amounts, but not premiums) cannot exceed $7,000 for self-only coverage or $14,000 for family coverage.
For additional information, see the Aon bulletin titled IRS Issues 2021 HSA Limits in the Publications section of the newsletter.
Revenue Procedure 2020-32 is available here.
DOL Releases Final Rule on Electronic Delivery of ERISA Required Disclosure by Employee Retirement Plans
On May 21, 2020, the Department of Labor’s (DOL) Employee Benefits Security Administration released a final rule that expands the ability of private sector employers to provide required retirement plan information online or by email. The rule allows employers to deliver disclosures to plan participants and other individuals either through a “notice-and-access” delivery process or by a direct delivery via email. The rule may reduce printing, mailing, and related plan costs as well as make disclosures more readily accessible and useful for participants. However, it preserves each individual’s ability to choose to receive paper disclosures.
Under the final rule, plan administrators must notify plan participants about the online disclosures, provide information on how to access the disclosures, and inform participants of their rights to request paper or opt out completely. Unlike existing regulations, which remain in effect, employers can use any employer-assigned work-related email addresses for electronic notifications (but not an address assigned exclusively for this purpose). The new rule also includes accessibility and readability standards for online disclosures and required monitoring for invalid electronic addresses.
According to the DOL, the final rule also may help some employers and the retirement plan industry in their economic recovery from the disruption caused by COVID-19. Retirement plan representatives and their service providers have indicated that they are experiencing increased difficulties and, in some cases, a present inability to furnish ERISA disclosures in paper form. Enhanced electronic delivery may offer an immediate solution to some of these problems for situations where electronic addresses are available.
The final rule becomes effective on July 27, 2020; however, plan sponsors can apply the rules immediately
The news release is available here.
The final rule is available here.
IRS Postpones Deadlines for Time-Sensitive Actions Due to COVID-19
On May 28, 2020, the IRS issued a notice (Notice 2020-35) postponing deadlines for certain time-sensitive actions on account of the COVID-19 emergency. This relief, with certain exceptions, applies to actions that are due to be performed on or after March 30, 2020, and before July 15, 2020, and is provided with respect to:
- Certain employment taxes;
- Employee benefit plans;
- Exempt organizations;
- Individual retirement arrangements;
- HSAs; and
- Archer and Medicare Advantage medical saving accounts.
Notice 2020-35 is available here.
Other HR/Employment
DOL Issues Final Rule Simplifying Retail or Service Establishment Exemption
On May 18, 2020, the Department of Labor (DOL) issued a final rule providing “greater simplicity and flexibility to retail industry employers.” Provisions in the Fair Labor Standards Act allow employers in retail and service industries to exempt certain employees paid primarily on a commission basis from overtime. The final rule withdraws two provisions from the DOL’s Wage and Hour Division regulations. The first listed industries that the DOL previously viewed as having “no retail concept,” which made them ineligible to claim the exemption. The second listed industries that, in the DOL’s view, “may be recognized as retail,” and were potentially eligible for the exemption. As the rule explains, some courts have questioned whether these lists lack any rational basis.
The news release is available here.
The final rule is available here.
Aon Publications
2020 Defined Contribution Employer Survey Report Now Available
Aon is pleased to announce that the U.S. 2020 Defined Contribution (DC) Employer Survey report is now available. Although there are many topics requiring attention during this uncertain time, the future of retirement remains an important issue for both employers and employees.
Survey Overview: In the 2020 survey, Aon explored U.S. employers’ priorities and governance efforts, as well as their plans to improve employee retirement outcomes. HR managers, fiduciaries, finance officers, and other professionals from 142 companies —across a wide range of industries and plan sizes—provided us with their views on top objectives, future challenges, and employee financial wellbeing.
Findings: Employers revealed what they perceive as the keys to DC plan success—now and in the future. They also offered insight into how they are currently managing their plans and where they see their greatest opportunities. Through the lens of this survey, a story emerges of the importance of retirement readiness.
The Aon DC Employer Survey Report is available here.
IRS Issues 2021 HSA Limits
On May 20, 2020, the Internal Revenue Service (IRS) issued inflation-adjusted limits for contributions to a health savings account (HSA) for calendar year 2021 (Revenue Procedure 2020-32). In addition, the IRS provided revised minimum deductible amounts and maximum out-of-pocket limits.
The Aon bulletin, which contains a chart providing the limits for calendar years 2019 through 2021, is available here.