Washington Pulse

Employers of all types have expressed interest in learning more about multiple employer plans (MEPs). But the unified plan rule, sometimes known as the “one bad apple rule,” has discouraged some employers from pursuing MEP participation.

The U.S. House of Representatives passed the Securing a Strong Retirement Act of 2022 (SSRA) by a 414-5 vote on March 29, 2022. H.R. 2954 (also commonly referred to as “SECURE 2.0”) contains over 50 retirement plan provisions—nearly double the number as the original Setting Every Community Up for Retirement Enhancement (SECURE) Act of 2019. The U.S. Senate is expected to take up a similar bipartisan bill later this year, which could result in the need for a conference committee to reconcile differences between the two bills.

After a two year wait, we have guidance regarding certain changes brought about by the SECURE Act. On February 23, 2022, the IRS released proposed regulations that revise the existing required minimum distribution (RMD) regulations and other related regulations.

The IRS released a new withholding form on January 4, 2022: Form W-4R, Withholding Certificate for Nonperiodic Payments and Eligible Rollover Distributions. The IRS also issued a revised Form W-4P, Withholding Certificate for Pension or Annuity Payments. As a result, payers and individuals will have a new process for calculating and electing federal income tax withholding on retirement distributions. Although the IRS will not require payers to use the new and revised forms until January 1, 2023, payers may start using them in 2022.

On November 19, 2021, the U.S. House of Representatives passed H.R. 5376, the Build Back Better Act ("BBB Act" or "the Act"). Following quickly on the heels of the Infrastructure Investment and Jobs Act, the BBB Act contains several retirement and benefits provisions that may affect financial organizations, service providers, and consumers. This bill has gone through numerous revisions as it made its journey to the House floor for a vote. It will now go to the Senate, which will likely make further revisions. So the Act’s final version—if passed by both the House and Senate—may be different from the current version.

The Infrastructure Investment and Jobs Act (the Act), signed by President Biden on November 15, 2021, includes extensions to the single employer pension funding relief originally provided in the American Rescue Plan Act of 2021 (ARPA). Other provisions include modifications to the mandatory 60-day postponement period, which grants relief to taxpayers for certain tax-related acts due to federally declared disasters and new reporting requirements for transactions involving digital assets. The effective dates vary—pension funding relief provisions apply to plan years beginning after December 31, 2021; the disaster relief changes are effective for federally declared disasters that occur after November 15, 2021; and the new reporting requirements for digital assets apply to information reports required to be filed after December 31, 2023.

In September 2021, the DOL, IRS, and Pension Benefit Guaranty Corporation (PBGC), collectively referred to as the “Agencies”, released proposed changes to Form 5500, Annual Return/Report of Employee Benefit Plan. The changes are designed to implement certain provisions under the Setting Every Community Up for Retirement Enhancement (SECURE) Act of 2019, which require multiple employer plans (MEPs) to report additional information and allow a group of defined contribution plans to file a consolidated Form 5500. The DOL has also issued a proposed rule that would amend regulations relating to annual reporting requirements under Title I of the Employee Retirement Income Security Act of 1974 (ERISA). Other proposed changes are aimed at improving financial reporting, expanding eligibility for small plan reporting, and encouraging compliance with Internal Revenue Code-based requirements.

The IRS has released Revenue Procedure (Rev. Proc.) 2021-30, which contains significant updates to the Employee Plans Compliance Resolution System (EPCRS). Employers use EPCRS to correct certain retirement plan qualification failures so that they can continue to maintain a tax-favored retirement plan. EPCRS consists of the Self-Correction Program (SCP), the Voluntary Correction Program (VCP), and the Audit Closing Agreement Program (Audit CAP). Rev. Proc. 2021-30 supersedes the previous EPCRS guidance (in Rev. Proc. 2019-19) and affects each of these three programs.

Recent cyberattacks have gotten a lot of attention. Some of these hacks have created turmoil through a broad swath of the business community. But another widespread menace threatens our financial security. In fact, even as you read this, the global threat of cybercrime continues around the clock as criminals try to steal retirement plan assets.

President Biden has signed legislation that funds another round of assistance as the nation copes with the health and economic effects of the coronavirus pandemic. Several previous bills in 2020 provided direct cash benefits to Americans, created a small business lending program to help employers retain employees, and provided enhanced access to tax-favored retirement savings.