CARES Act Signed into Law as Largest Economic Stimulus Bill in U.S. History

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CARES Act Signed into Law as Largest Economic Stimulus Bill in U.S. History

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (H.R. 748), also known as the CARES Act, passed the Senate and was signed into law by President Trump.  Marking the largest stimulus package in U.S. history, the Act provides $2.2 trillion in emergency relief intended to address the economic fallout of the 2020 coronavirus pandemic.  The legislation is aimed to provide unprecedented aid to individuals and businesses across the U.S. economy in response to the Coronavirus (COVID-19) pandemic. 

The CARES Act contains many provisions that impact employee benefit plans and employers.  Among others, the Act contains a number of provisions that affect retirement plans, health care and paid leave.  Under the Act, the required minimum distribution (RMD) rules were delayed for qualified retirement plans, 403(b) arrangements, or individual retirement accounts that rely on the RMD rules under Internal Revenue Code section 401(a)(9).  It permits a temporary waiver of the RMD that should be paid in 2020 until 2021.

H.R. 748 is available here.

Ice Miller Publishes FAQs on Governmental Retirement Plans and COVID-19

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Ice Miller Publishes FAQs on Governmental Retirement Plans and COVID-19

On March 24, 2020, the law firm of Ice Miller published its alert, FAQs Regarding COVID-19 and Governmental Retirement Plans.  This alert provides an overview of the frequently asked questions (FAQs) regarding governmental retirement plans and the Coronavirus (COVID-19).  Some of the topics addressed include: 1) reemployment of retirees; 2) in-service distributions; and 3) paid/unpaid leave.

The FAQs are available here.

Groom Law Group Releases Brief on the Coronavirus Impact on Retirement Plans

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Groom Law Group Releases Brief on the Coronavirus Impact on Retirement Plans

On March 19, 2020, Groom Law Group released its brief, Coronavirus Check-Up for Retirement Plans.  The brief discusses issues that employers should consider related to the potential impact of the Coronavirus (COVID-19) on their retirement plans.  The brief covers defined contribution (DC) plans, defined benefit (DB) plans, executive compensation, and other considerations for retirement plans.

Specifically, plan sponsors of DB plans should review their plans to understand the earlier distribution options after the passage of the SECURE Act previously this year.  Under the Act, a DB plan is permitted to offer participants the option to elect commencement of their benefit as early as age 59-1/2 while still working.  In addition, plan sponsors may want to review pension plan investments, expected funding levels and contributions required for their DB plans.  The brief also addresses other considerations and administrative issues for retirement plans.

The brief is available here.

President Trump Signs the Families First Coronavirus Response Act

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President Trump Signs the Families First Coronavirus Response Act

On March 18, 2020, President Trump signed into law the Families First Coronavirus Response Act (H.R. 6201, “FFCRA”).  Among other provisions, the Act requires that private employers with less than 500 employees and almost all public employers provide essentially two weeks of emergency paid sick leave and the Family and Medical Leave Act (FMLA) leave for certain absences related to Coronavirus (COVID-19).  The FMLA leave is unpaid for the first 10 days and paid at a rate of 2/3 of the employee’s wages after that period.  The FFCRA’s paid leave provisions will become effective on April 1, 2020, and will apply to leave taken between April 1, 2020, and December 31, 2020.  The Act also provides that “covered employers” (i.e., private employers and self-employed individuals under the new law) will have access to tax credits related to this additional paid leave. 

H.R. 6201 is available here

In addition, on March 19, 2020, the law firm of Ice Miller summarized the Act’s provisions which provides that employers will need to: 1) prepare for the Act’s effective date by updating their current FMLA and/or medical leave policies; 2) consider how the Act will affect their financial status; and 3) create a method of tracking any payments made under the Act to best take advantage of the available tax credits.  The summary is available here

The Department of Labor (DOL) also provided guidance information in its question and answer document about the leaves required under the Families First Coronavirus Response Act (FFCRA).  The DOL document is available here

EBRI Releases Brief on Debt Among Older Americans

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EBRI Releases Brief on Debt Among Older Americans

On March 12, 2020, the Employee Benefit Research Institute (EBRI) released its issue brief, The Impact of Rising Household Debt Among Older Americans.  The report examines the debt status of older Americans both preretirement and postretirement over the period from 1992 to 2016.  According to EBRI, “carrying high levels of debt at older ages has implications for retirees’ financial security and pre-retirees’ decision to retire and claim Social Security.  Staying in the labor market longer and delaying the receipt of Social Security benefits are potential ways older Americans choose to deal with increasing levels of debt.”

 The key findings include:

  • For those ages 50-64, the average total debt increased significantly from $80,000 in 1992 to $120,000 in 2016 and reached its highest of $140,000 in 2010.
  • For those ages 65-74, the amount of debt increased from 47% in 1998 to 57% in 2016 and reached its highest in 2010 and slightly decreased afterward.
  • For those ages 75 and older, the percentage having debt as well as the average and median debt remained relatively unchanged from 1992 to 2016.

The findings are based on the Health and Retirement Study (HRS) and the Consumption and Activities Mail Survey (CAMS) of the spending behavior of older Americans for the age groups 50-64, 65-74 and 75 or older between 2005 and 2017, biennially.

The summary is available here.

Federal Reserve Reports Public Pension Assets Reach Record $4.82 Trillion in the Fourth Quarter of 2019

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Federal Reserve Reports Public Pension Assets Reach Record $4.82 Trillion in the Fourth Quarter of 2019

On March 12, 2020, the Board of Governors of the Federal Reserve released its Financial Accounts of the United States statistical report for the fourth quarter of 2019.  On page 99, the report shows that state and local government employee retirement fund assets totaled a record $4.82 trillion on December 31, 2019, up from $4.17 trillion on December 31, 2018, an increase of about $650 billion (or 15.6% based on the unrounded asset values).  Moreover, state and local retirement funds’ holdings of corporate equities totaled nearly $3.00 trillion (62.2% of total assets) on December 31, 2019, up from $2.53 trillion (60.7% of total assets) on December 31, 2018. 

The report is available here.

IRS and DOL Issue New COVID-19 Guidance for High Deductible Health Plans and FMLA

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IRS and DOL Issue New COVID-19 Guidance for High Deductible Health Plans and FMLA

On March 11, 2020, the Internal Revenue Service (IRS) issued Notice 2020-15 to address the status requirements for a high deductible health plan (HDHP) related to the Coronavirus (COVID-19) testing and treatment.  Until further guidance is issued, the Notice provides relief for all HDHPs confirming that they will not fail to maintain HDHP status if they provide medical care services and items purchased related to testing for and treatment of COVID-19 prior to the satisfaction of the applicable minimum statutory deductible.

IRS Notice 2020-15 is available here

In addition, the U.S. Department of Labor (DOL) issued guidance addressing how and when the Family and Medical Leave Act (FMLA) applies to protect a leave of absence for employees who may miss work related to COVID-19, the flu, or any other public health emergency or pandemic.  This information was published on the DOL’s website in its “COVID-19 and the Family and Medical Leave Act Questions and Answers” available here

SLGE Releases Report on Using Individual Medicare Marketplaces for Public Sector Retiree Health Care

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SLGE Releases Report on Using Individual Medicare Marketplaces for Public Sector Retiree Health Care

On March 2, 2020, the Center for State and Local Government Excellence (SLGE) released its report, Use of Individual Medicare Marketplaces for Public Sector Retiree Health Care: A Guide for Elected Officials.  According to the report, many state and local governments face inadequate funding levels for retiree health care obligations.  SLGE suggests that individual Medicare marketplaces may be an option for public employers and retirement systems to consider for containing health care costs and possibly offer a better value for retirees.

The report includes:

  • An overview of individual Medicare marketplaces;
  • A discussion about why state and local government plan sponsors are using them to deliver retiree health care;
  • Considerations for elected and appointed officials about the marketplaces;
  • Key implementation considerations (such as the transition and selection of a vendor, communicating with various stakeholders and measuring outcomes); and
  • Challenges and opportunities for state and local governments in using an individual Medicare marketplace.

The report is available here.