The Washington Report

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October 28, 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/Judicial

Senate Confirms Amy Coney Barrett to Supreme Court
On October 26, 2020, the Senate in a 52–48 vote confirmed Judge Amy Coney Barrett to the Supreme Court. Judge Barrett was sworn in at the White House the same day and could begin hearing cases as early as next week.

Health

EBSA Updates Self-Compliance Tool to Determine if Health Plans or Insurers Comply with MHPAEA
On October 26, 2020, the Department of Labor’s Employee Benefits Security Administration (EBSA) released an updated tool to help employers comply with the Mental Health Parity and Addiction Equity Act (MHPAEA) and related requirements under ERISA. According to EBSA, the improved tool will help group health plans, plan sponsors, plan administrators, health insurance issuers, and other parties determine if a group health plan or a health insurance issuer complies with provisions of both laws relating to mental health and substance-use disorder benefits.

The MHPAEA Self-Compliance Tool was last updated by EBSA in 2018. On June 19, 2020, in coordination with the Departments of Health and Human Services and the Treasury, EBSA proposed an updated 2020 MHPAEA Self-Compliance Tool along with a request for comments from stakeholders, and EBSA is now issuing the final 2020 MHPAEA Self-Compliance Tool with modifications in response to these comments. In general, under the MHPAEA, a group health plan or health insurance issuer that imposes financial requirements and treatment limitations on mental health and substance use disorder benefits must ensure those limitations are comparable to and applied no more stringently than those that apply to medical and surgical benefits. Financial requirements include cost-sharing requirements such as copays, and treatment limitations include quantitative and non-quantitative limits on the scope or duration of treatment, such as visit limits or prior authorization.

Please note that some government websites are experiencing technological issues due to increased traffic. Readers may have to cut and paste the links below to access the information.

The news release is available at: https://www.dol.gov/newsroom/releases/ebsa/ebsa20201023

The latest self-compliance tool is available at: https://www.dol.gov/sites/dolgov/files/EBSA/laws-and-regulations/laws/mental-health-parity/self-compliance-tool.pdf

Retirement

IRS 2021 Official Indexed Figures for Retirement Plans and Other Employee Benefit Plans; 401(k) Contribution Limit Remains $19,500 for 2021
The Internal Revenue Service (IRS) issued Information Release 2020-244 on October 26, 2020, providing the 2021 official indexed figures for retirement plans and other employee benefit plans. The IRS issued technical guidance detailing these items in Notice 2020-79. Following are the official limits of most interest to large and medium employers, as well as the official 2021 key employee pay thresholds for top-heavy plans.

Section 402(g) annual dollar limit for pretax contributions to Section 401(k), 403(b), and 457 plans: $19,500 (unchanged from 2020 limit)
Section 414(v) annual dollar limit on catch-up contributions for age 50 and over: $6,500 (unchanged from 2020 limit)
Section 414(q) pay threshold for highly compensated employees: $130,000 (unchanged from 2020 limit)
Section 415 limit for defined benefit plans: $230,000 (unchanged from 2020 limit)
Section 415 limit for defined contribution plans: $58,000 (up from 2020 limit of $57,000)
Section 401(a)(17) recognizable pay limit: $290,000 (up from 2020 limit of $285,000)
Section 416 pay threshold for key employees in a top-heavy plan: $185,000 (unchanged from 2020 limit)

IRS Information Release 2020-244 is available here.

IRS Notice 2020-79 is available here.

For an Aon bulletin on the 2021 indexed figures, please see IRS 2021 Official Indexed Figures for Retirement Plans and Other Employee Benefit Plans in the Publications section of this newsletter.

PBGC Posts 2021 Applicable Present Values Table
On October 26, 2020, the Pension Benefit Guaranty Corporation (PBGC) posted a table showing the applicable present values for 2021 plan years. A two-column spreadsheet version of the table is also available. For more information please refer to Technical Update 07-04. Additional information for practitioners is available on the PBGC’s What's New for Employers & Practitioners website.

The PBGC table is available here.

The two-column spreadsheet of the table is available here.

Technical Update 07-04 is available here.

PBGC Releases New Pension Plan Studies and Data Tables
On October 19, 2020, the PBGC released two new studies. The first is a supplement to PBGC’s data tables previously released providing a detailed review of plan provisions for active workers in multiemployer defined benefit pension plans. The second is a study of pension risk transfers, through lump sum window offers or annuity buyouts, reported by single-employer pension plans on PBGC premium filings. This study includes information on pension risk transfers by year, plan size, industry, and whether or not the plan is frozen for benefit accruals or participation.

The announcement of these studies on the PBGC’s What's New for Employers & Practitioners website is available here.

Other HR/Employment

IRS Provides Tax Inflation Adjustments for 2021
On October 26, 2020, the Internal Revenue Service (IRS) announced in Revenue Procedure 2020-45 the tax year 2021 annual inflation adjustments for more than 60 tax provisions, including the tax rate schedules and other tax changes. Revenue Procedure 2020-45 provides details about all these annual adjustments. Items that may be of interest to employers are provided below. Please refer to the actual Revenue Procedure for all tax information.

Qualified Transportation Fringe Benefit: For tax year 2021, the monthly limitation for the qualified transportation fringe benefit is $270, as is the monthly limitation for qualified parking. This amount is unchanged from tax year 2020.
Health Flexible Spending Arrangements: For the taxable years beginning in 2021, the dollar limitation for employee salary reductions for contributions to health flexible spending arrangements is $2,750, unchanged from 2020. For cafeteria plans that permit the carryover of unused amounts, the maximum carryover amount is $550, an increase of $50 from taxable years beginning in 2020.
Medical Savings Accounts: For tax year 2021, participants who have self-only coverage in a Medical Savings Account, the plan must have an annual deductible that is not less than $2,400, up $50 from tax year 2020; but not more than $3,600, an increase of $50 from tax year 2020. For self-only coverage, the maximum out-of-pocket expense amount is $4,800, up $50 from 2020. For tax year 2021, participants with family coverage, the floor for the annual deductible is $4,800, up from $4,750 in 2020; however, the deductible cannot be more than $7,150, up $50 from the limit for tax year 2020. For family coverage, the out-of-pocket expense limit is $8,750 for tax year 2021, an increase of $100 from tax year 2020.
Qualified Adoption Expenses: The maximum credit allowed for adoptions is the amount of qualified adoption expenses up to $14,440 for taxable years beginning in 2021, up from $14,300 for 2020.

Please note that some government websites are experiencing technological issues due to increased traffic. Readers may have to cut and paste the links below to access the information.

IRS Information Release 2020-245 is available at: https://www.irs.gov/newsroom/irs-provides-tax-inflation-adjustments-for-tax-year-2021

IRS Revenue Procedure 2020-45 is available at: https://www.irs.gov/pub/irs-drop/rp-20-45.pdf

Aon Publications

IRS 2021 Official Indexed Figures for Retirement Plans and Other Employee Benefit Plans
The Internal Revenue Service (IRS) issued Information Release 2020-244 on October 26, 2020, providing the 2021 official indexed figures for retirement plans and other employee benefit plans. The IRS issued technical guidance detailing these items in Notice 2020-79.

The Aon bulletin, which provides the official limits of most interest to large and medium employers, as well as the official 2021 key employee pay thresholds for top-heavy plans, is available here.

Now Available: Retirement Legal Consulting & Compliance Quarterly Update
The Retirement Legal Consulting & Compliance practice is pleased to present its Quarterly Update of recent legal developments for the fourth quarter of 2020. In this issue you will find the following articles:

Pooled Employer Plans: As We Learn More
Proxy Voting under ERISA—New Developments for Plan Fiduciaries
Everything Old Is New Again: “New” Fiduciary Rules
Two Actuarial Equivalence Lawsuits Dismissed, One Added
Court Allows Non-Diversified Stock Fund Case to Proceed
Anonymous Correction of Qualified Plan Issues—With IRS Approval!
Lifetime Income Illustration Guidance Issued
IRS Provides Guidance on SECURE Act and Miners Act
IRS Relief for Midyear Safe Harbor Changes
New PBGC Rule Updates Assumptions Used to Pay Lump Sums
Proposed Plan Loan Rollover Regulations Provide Relief
Quarterly Roundup of Other New Developments