Pension & Benefits NetNews – July 14, 2020

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Featured This Week

Employee Benefits Management News

  • Proposed regulations address eliminated deduction for qualified transportation fringe expenses
  • FAQS provide additional guidance on group health plan coverage of COVID-19 testing, telehealth, wellness and more under FFCRA and CARES Act
  • DOL guidance clarifies FFCRA leave eligibility for kid’s camp closures
  • Supreme Court ruling allows moral exceptions to ACA contraception coverage mandate

Pension Plan Guide News

  • EBSA issues proposed rules that updates and clarifies investment duties regs
  • IRS proposed regs address default withholding rate for certain periodic retirement payments
  • Private equity investments within professionally managed asset allocation funds may be offered in ERISA-covered individual account plan

Employee Benefits Management News

Proposed regulations address eliminated deduction for qualified transportation fringe expenses

Proposed regulations provide guidance regarding the elimination of the deduction for expenses related to qualified transportation fringe benefits (QTFs) provided to an employee. The Tax Cuts and Jobs Act (P.L. 115-97) eliminated the deduction, effective for amounts paid or incurred after December 31, 2017. For more information, see ¶2134R.

        (Read Cheetah) »

FAQS provide additional guidance on group health plan coverage of COVID-19 testing, telehealth, wellness and more under FFCRA and CARES Act

The Departments of Labor (DOL), Health and Human Services (HHS), and the Treasury (Departments) have issued additional frequently asked questions (FAQs) regarding implementation of the Families First Coronavirus Response Act (the FFCRA), the Coronavirus Aid, Relief, and Economic Security Act (the CARES Act), and other health coverage issues related to COVID-19. For details, see ¶2134T.

        (Read Cheetah) »

DOL guidance clarifies FFCRA leave eligibility for kid’s camp closures

With school and summer activity schedules greatly altered as America continues to re-open in the wake of the coronavirus, the Department of Labor’s Wage and Hour Division on June 26 issued Field Assistance Bulletin (FAB) 2020-4 to address school and camp or summer program closures —and what they mean. For more information, see ¶2134W.

        (Read Cheetah) »

Supreme Court ruling allows moral exceptions to ACA contraception coverage mandate

The U.S. Supreme Court held that government departments had the authority to provide exemptions from the regulatory contraceptive coverage requirements stemming from the Patient Protection and Affordable Care Act (ACA) for employers with religious and conscientious objections. For more information, see ¶2134Z.

        (Read Cheetah) »

Pension Plan Guide News

EBSA issues proposed rules that updates and clarifies investment duties regs

The Department of Labor (DOL) has issued final regulations and a proposed exemption concerning investment advice fiduciaries and conflicts of interest. The final regulations implement the vacatur of the Department’s 2016 final regulations defining who is a “fiduciary” under ERISA and accompanying prohibited transactions by the Fifth Circuit Chamber of Commerce decision. The proposed exemption would allow investment advice fiduciaries to receive compensation, including as a result of advice to roll over assets from a plan to an IRA, and to engage in certain transactions that would otherwise violate the prohibited transaction provisions of ERISA and the Code. The DOL is proposing a class exemption from certain prohibited transaction restrictions of the ERISA and the Code. The prohibited transaction provisions of ERISA and the Code generally prohibit fiduciaries with respect to employee benefit plans and individual retirement accounts and annuities (IRAs) from engaging in self-dealing and receiving compensation from third parties in connection with transactions involving the plans and IRAs. The provisions also prohibit purchasing and selling investments with the plans and IRAs when the fiduciaries are acting on behalf of their own accounts (principal transactions). The proposed exemption would allow investment advice fiduciaries under both ERISA and the Code to receive compensation, including as a result of advice to roll over assets from a plan to an IRA, and to engage in principal transactions, that would otherwise violate the prohibited transaction provisions of ERISA and the Code. The exemption would apply to registered investment advisers, broker-dealers, banks, insurance companies, and their employees, agents, and representatives that are investment advice fiduciaries. The exemption would include protective conditions designed to safeguard the interests of plans, participants and beneficiaries, and IRA owners. For more information, see ¶172S.

        (Read Cheetah) »

IRS proposed regs address default withholding rate for certain periodic retirement payments

The IRS has issued proposed regulations with rules for federal income tax withholding on certain periodic retirement and annuity payments to implement an amendment made to Code Sec. 3405(a)(4) section 11041(c)(2)(G) of the Tax Cuts and Jobs Act (TCJA, P.L. 115-97). The proposed regulation would (1) provide that, if no withholding certificate is in effect, the default withholding rate on periodic payments is determined in the manner described in applicable IRS forms, instructions, publications, and other prescribed guidance; and (2) remove certain provisions that reflect the rule prior to amendments made by the TCJA. The proposed regulations are to apply to periodic payments made after December 31, 2020. Taxpayers may rely on the rules provided in the proposed regulations in their entirety until the date that final regulations are published. For more information, see ¶20265f.

        (Read Cheetah) »

Private equity investments within professionally managed asset allocation funds may be offered in ERISA-covered individual account plan

A plan fiduciary would not violate the fiduciary’s duties under ERISA Secs. 403 and 404 solely because the fiduciary offers private equity investments within professionally managed asset allocation funds that are designated investment alternatives for ERISA-covered individual account plan, including participant-directed individual account plans, according to a Department of Labor (DOL) information letter. However, plan fiduciaries must evaluate whether the investment would be appropriate for the plans and the participants. The DOL stated that, in evaluating whether to include a particular investment vehicle with an allocation of private equity as a designated investment alternative, the responsible plan fiduciary must evaluate the risks and benefits associated with the investment alternative. In making this determination, the fiduciary should consider (i) whether adding the particular asset allocation fund with a private equity component would offer plan participants the opportunity to invest their accounts among more diversified investment options within an appropriate range of expected returns net of fees and diversification of risks over a multi-year period; (ii) whether the asset allocation fund is overseen by plan fiduciaries (using third-party investment experts as necessary) or managed by investment professionals that have the capabilities, experience, and stability to manage an asset allocation fund that includes private equity investments effectively given the nature, size, and complexity of the private equity activity; and (iii) whether the asset allocation fund has limited the allocation of investments to private equity in a way that is designed to address the unique characteristics associated with such an investment, including cost, complexity, disclosures, and liquidity, and has adopted features related to liquidity and valuation designed to permit the asset allocation fund to provide liquidity for participants to take benefits and direct exchanges among the plan’s investment line-up consistent with the plan’s terms. For more information, see ¶19981z88.

        (Read Cheetah) »

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