Regulatory Updates

IRS Clarifies Partial Plan Termination During Pandemic

The IRS released a five-part Q&A on the temporary partial plan termination rules for qualified retirement plans in accordance with the Taxpayer Certainty and Disaster Tax Relief Act of 2020 (the Act). Generally, there is a presumption that a partial plan termination has taken place when an employer’s turnover rate is at least 20 percent during the plan year. Partial plan termination requires those participants covered under the portion of the plan that is terminated to be fully vested.

The Act codified that a partial plan termination does not occur “during any plan year which includes the period beginning on March 13, 2020, and ending on March 31, 2021, if the number of active participants covered by the plan on March 31, 2021, is at least 80 percent of the number of active participants covered by the plan on March 13, 2020.”

The Q&A clarifies the following points.

  • “Active participant covered by the plan” is determined based upon a reasonable, good-faith interpretation of the term, applied in a consistent manner. When only part of the plan year falls between March 13, 2020, and March 31, 2021, the Act “applies to any partial termination determination for that entire plan year.” The IRS provides this example:  “If a plan has a calendar year plan year, the 80% partial termination in [the Act] applies to both the January 1 to December 31, 2020 plan year and the January 1 to December 31, 2021 plan year because both plan years include a part of the statutory determination period of March 13, 2020, to March 31, 2021.”
  • The Act does not require the same individuals to be covered on the beginning and end dates, only that the number counted on March 31, 2021, include all individuals who are active participants covered by the plan on said date.
  • The reduction in the number of active participants is not solely limited to reductions related to the COVID-19 pandemic.

News

FuturePlan by Ascensus Appoints Aaron McIsaac as Divisional Vice President for Southern California

Experienced Sales Leader Will Continue to Oversee Organization’s Northwest/Central Region

FuturePlan by Ascensus—a leading national retirement third-party administrator (TPA) that specializes in the delivery of customized retirement plan consulting and administration services—announces that Aaron McIsaac will assume divisional vice president (DVP) responsibilities for the organization’s Southern California region as a result of DVP Greg Taylor’s planned retirement. The change is effective June 30, 2021.

Health and Benefits Updates

Several Health Savings Bills Proposed

Several Health Savings Bills Proposed

Senator Ben Sasse (R-NE) recently introduced two bills aimed at providing more flexibility for the use of health savings accounts (HSAs).