Dear Clients and Friends,
Welcome to our Spring/Summer issue of the GJC Advisor, Employee Benefit Plans edition.
As we all continue to deal with the impact of the novel coronavirus COVID-19 and this rapidly-changing situation, there continues to to be new developments. Rest assured that GJC will continue to keep you updated with how these developments may impact you and your business, whether accounting and reporting related, or otherwise.
Recent content we have shared related to this pandemic include the following:
- GJC’s Response to COVID-19 – Office Update
- CARES Act and Employee Benefit Plans
- Coronavirus Strikes Nonprofits
- COVID-19 Federal Aid Package
We hope you enjoy this edition of the GJC Advisor. As always, if you have any questions, feel free to contact us.
Stay healthy, stay positive!
GJC
Employers Can Immediately Provide Tax-Free Qualified Disaster Payments to Employees in Connection With COVID-19
Employers are scrambling to find ways to help their employees who are impacted by the novel coronavirus (COVID-19). Help is available. Now that the COVID-19 has been declared a national emergency, Internal Revenue Code Section 139 can be used to allow employers to make tax-free payments or reimbursements to employees as “qualified disaster payments.” Below are some frequently asked questions about how employers can use Section 139 immediately to help employees cope with COVID-19.
Q1: What is a “qualified disaster payment”?
A1: Qualified disaster payments are payments that are not otherwise reimbursed by insurance made by an employer to an employee that are reasonably expected by the employer to:
SEC Provides Conditional Relief and Assistance For Companies Affected by the Coronavirus
Filing Relief for Registrants Impacted by the Coronavirus
The SEC issued an exemptive order (the Order) on March 4, 2020 providing conditional relief for registrants that are impacted by the coronavirus (COVID-19) and are unable to file on a timely basis. The Order provides companies with an extension of the due date of 45 days to file certain SEC disclosure reports that would have been due between March 1 and April 30, 2020. If a registrant intends to take advantage of this relief, the filing must disclose why it was unable to file on a timely basis.
SECURE Act: Educating Employees About What It Means For Them
The recently passed Setting Every Community Up for Retirement Enhancement (SECURE) Act includes many changes designed to help strengthen employees’ retirement security. For the law to achieve its intended goal of helping workers prepare for retirement, employees need to understand how the wide-ranging changes affect them. Plan sponsors can play an important role by developing a communications strategy for educating employees about what the SECURE Act means for their retirement planning.
Background on the SECURE Act
The SECURE Act became law in December 2019 as part of a broader $1.4 trillion spending bill. The SECURE Act, which is the first significant retirement legislation since the 2006 Pension Protection Act, contains many wide-ranging provisions that amend the Internal Revenue Code (IRC) and Employee Retirement Income Security Act (ERISA). BDO’s National Tax Office issued an alert detailing the actions that plan sponsors need to take immediately to comply with the SECURE Act.
COVID-19 ALERT FOR PLAN SPONSORS: Deadline Extensions For 403(b) and Defined Benefit Plans
The Coronavirus Aid, Relief, and Economic Security (CARES) Act, signed into law on March 27, 2020, extends several key deadlines for 403(b) and defined benefit plan sponsors.
- 403(b) remedial amendment period extended to June 30, 2020: The law extends the initial remedial amendment period for 403(b) plans from March 31, 2020 to June 30, 2020. This gives plan sponsors three additional months to update or restate their pre-approved and individually designed 403(b) plan documents. Original instructions for the program, which give plan sponsors the opportunity to fix mistakes in their plan document retroactive to Jan. 1, 2010, can be found here. In keeping with the original provision, the new law doesn’t extend to operational failures.
Health Savings Accounts: Tools For Creating A Healthy Retirement
When employees hear that their company offers a Health Savings Account (HSA), many fail to make the connection to how these tax-advantaged accounts for qualified medical expenses can help them prepare for a successful retirement. But with healthcare being one of the biggest expenses people face in retirement, HSAs can play an important role in creating a healthy retirement plan.A couple retiring in 2019 is expected to spend $285,000 in health and medical expenses throughout retirement, according to Fidelity Investments. For most Americans, it will take years of planning and investing to reach that savings goal. Fortunately, HSAs can significantly accelerate those efforts by offering myriad tax advantages.
IRS Expands COVID-19 Postponement Relief Under Notice 2020-23
On April 9, 2020, the IRS issued Notice 2020-23, which contains expanded relief for those tax forms and other filings that are postponed as was originally announced last month. See the IRS Coronavirus website for more details.
First, the payments and returns eligible for relief are expanded. Any tax return or payment due on or after April 1, 2020, and before July 15, 2020, is now automatically postponed to July 15, 2020-no extension forms, letters, or other forms of documentation or communication are required to make use of this relief. This will now cover, for example, calendar-year 2020 second quarter estimated tax payments, among other things.
