Pub. 2 2020 Issue 5

J U L Y / A U G U S T 2 0 2 0 10 nebraska cpas TIME FOR AN EMPLOYEE BENEFITS CHECK UP BY HEATHER C. PANICK, KOLEY JESSEN C O U N S E L O R ’ S C O R N E R Nowthatweare slowly returning to “normal” lifeagain, it’s time to take stock in what updates need to be made to clients’ employee benefit plans to ensure compliance with the various laws and regulations that have been passed while most of us were sheltering in place and scrambling to keep up with changes in the law and the pandemic. The Coronavirus Aid, Relief, and Economic Security Act (CARES Act), signed by President Trump on March 27, 2020, provides for a number of benefits aimed at assisting individuals and businesses through the pandemic. Included in the CARES Act, and notices aimed at implementing and interpreting the legislation, are the following options for sponsors of employee benefit plans to consider. Retirement Plan Options Any amendment adopting any of the provisions in paragraphs 1, 2, or 3 below must be adopted no later than the last day of the first plan year beginning in 2022. 1. Coronavirus-Related Distributions The CARES Act provides that “qualified individuals” may treat a distribution, between January 1, 2020, and December 31, 2020, of up to $100,000 from their eligible retirement plan as a coronavirus- related distribution (CRD). A CRD is not subject to the normal 10% excise tax that is applied to distributions made before an individual is 59½, may be repaid to an eligible retirement plan within a three-year period (resulting in an exclusion from income), and may be included in income over a three-year period. For purposes of this item and item No. 2 below relating to plan loans, a “qualified individual” is defined as an individual: (a) who is diagnosed with COVID-19; (b) whose spouse or dependent is diagnosed with COVID-19; (c) who experiences adverse financial consequences as a result of: (i) being quarantined, furloughed, laid off, or having work hours reduced due to COVID-19, (ii) being unable to work due to lack of childcare due to COVID-19, or (iii) closing or reducing hours of a business owned or operated by the individual due to COVID-19; (d) who has a reduction in pay (or self-employment income) due to COVID-19 or having a job offer rescinded or start date for a job delayed due to COVID-19; or (e) the individual’s spouse or a member of the individual’s household experiences an event described in (c) or (d). Employers may rely on an individual’s certification that the individual is a “qualified individual” for purposes of this item and item No. 2. 2. Plan Loans The Act also provides that plans may increase plan loan limits to the lesser of 100% of the participant’s account balance or $100,000, and may also extend repayment terms for a year. The plan loan limit increase is available for loans made between March 27, 2020, and September 22, 2020. The loan repayment suspension