News

IRS Issues Deadline Relief for Michigan Storm Victims

The IRS has issued a news release announcing the postponement of certain tax-related deadlines for Michigan victims of severe storms, flooding, and tornadoes. The tax relief postpones various tax filing and payment deadlines that occurred starting June 25. Individuals and households that were affected and reside in the Washtenaw and Wayne counties, as well as taxpayers with records located in the covered area needed to meet covered deadlines qualify for relief.

In addition to extending certain tax filing and tax payment deadlines, the relief includes completion of many time-sensitive, tax-related acts described in IRS Revenue Procedure 2018-58 and Treasury Regulation 301.7508A-1(c)(1).

Affected taxpayers with a covered deadline on or after June 25, 2021, and before November 1, 2021, will have until November 1, 2021, to complete the act(s). This includes the filing of Form 5500 series returns that were required to be filed on or after June 25, 2021, and before November 1, 2021.

“Affected taxpayer” automatically includes any individuals who live, and businesses whose principal place of business is located, in the covered disaster area. Those who reside or have a business located outside the covered disaster area, but have been affected by the disaster, may contact the IRS at 866-562-5227 to request relief.


IRS Proposes Electronic Filing Requirements for Certain Information Returns

The IRS has released a pre-publication version of proposed regulations amending rules intended to increase the filing of electronic returns in accordance with the Taxpayer First Act of 2019. Additionally, the IRS has withdrawn previously proposed regulations regarding electronic filing that were published on May 31, 2018.

The new proposed regulations reduce the threshold by which filers must electronically file from 250 to 100 returns for the 2022 calendar year. For filings required after calendar year 2022, the threshold will be further reduced to 10 returns. Currently, the threshold is determined separately for each type of information return. The proposed regulations would remove this rule, thus, requiring all return types to be aggregated for determining the new thresholds. The regulations further clarify that for purposes of filing amended returns, the amended form must be filed in the same manner (electronic or hardcopy) as the original filing.

Information returns affected by the proposal include, but are not limited to, the following.

  • Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc.
  • Form 1042-S, Foreign Persons’ U.S. Source Income Subject to Withholding
  • Form 945, Annual Return of Withheld Federal Income Tax
  • Form 5498-ESA, Coverdell ESA Contribution Information
  • Form 5498-QA, ABLE Account Contribution Information
  • Form 5498-SA, HSA, Archer MSA, or Medicare Advantage MSA Information
  • Form 8955-SSA, Annual Registration Statement Identifying Separated Participants With Deferred Vested Benefits
  • Form 5500, Annual Return/Report of Employee Benefit Plan
  • Form 5500-SF, Short Form Annual Return/Report of Small Employee Benefit Plan
  • Form 5500-EZ, Annual Return of A One-Participant (Owners/Partners and Their Spouses) Retirement Plan or A Foreign Plan
  • Form 5330, Return of Excise Taxes Related to Employee Benefit Plans

Filers with an inability to file electronically (i.e., lack of Internet service) may file with the IRS to request a waiver.

A period of 60 days for submitting comments on the guidance, or to request a public hearing, will begin upon publication in the Federal Register.


IRS Releases Updated EPCRS Guidance

The IRS has released Revenue Procedure 2021-30, which contains long-awaited guidance updating the Employee Plans Compliance Resolution System (EPCRS). Plan sponsors use EPCRS to correct certain plan qualification failures. EPCRS is composed of the Self-Correction Program (SCP), the Voluntary Correction Program (VCP) and the Audit Closing Agreement Program (Audit CAP), and there are several noteworthy changes.

 

Elective deferral failure—sunset of safe harbor extended

The sunset provisions of safe harbor correction methods for elective deferral failures related to automatic contribution features have been extended from December 31, 2020 to December 31, 2023.

 

Self-correction of certain significant operational failures extended

The last day for self-correction of certain significant operational failures and plan document failures has been extended by one year. The new deadline is the last day of the third plan year (instead of the second plan year) following the plan year for which the failure occurred.

 

Anonymous submissions eliminated

Effective January 1, 2022, the existing anonymous submission procedure is eliminated. But also effective January 1, 2022, the IRS will have the discretion to make anonymous VCP pre-submission conferences available to discuss correction methods not described as safe harbor methods in the Revenue Procedure. The process requires submitting a pre-submission conference request (using Form 8950) and providing sufficient details about the failure so that the IRS can evaluate the request. The conference is advisory only and cannot be relied upon as a basis for obtaining relief under EPCRS.

 

New correction methods for overpayments added

Plan sponsors may now provide overpayment recipients with the option of repaying an overpayment 1) in a single sum payment, 2) through an installment agreement, or 3) through an adjustment in future payments. For defined benefit plans, additional new methods are outlined.

  • Funding exception correction method – This method allows single employer defined benefit plans that are subject to the funding limits in Internal Revenue Code Section 436 to avoid corrective payments so long as the plan’s adjusted funding target attainment percentage (“AFTAP”) is equal to at least 100 percent. Future benefit payments to an overpayment recipient must be reduced to the correct benefit payment amount.
  • Contribution credit correction method – This method allows the overpayments to be reduced by the cumulative increase in the plan’s minimum funding requirements attributable to the overpayment. If overpayments remain after application of the credit, the plan sponsor or another party must reimburse the plan for the remainder of the overpayment.

Revenue Procedure 2021-30 is effective today, July 16, 2021, with the exceptions noted above. The Treasury Department and the IRS invite comments, and they can be submitted electronically or in writing by October 14, 2021.


Ascensus Expands Employee Benefits Administration and Compliance Capabilities with Agreement to Acquire UnifyHR

Fortifies Expertise in ACA Compliance, COBRA Administration, and Eligibility Verification Services Within Health & Benefits Line of Business

Ascensus—whose technology and expertise help millions of people save for retirement, education, and healthcare—has entered into an agreement to acquire UnifyHR, a third-party administrator that provides employee benefits administration and compliance solutions including Affordable Care Act (ACA) compliance, Consolidated Omnibus Budget Reconciliation Act (COBRA) administration, and eligibility verification services. It will immediately become part of Ascensus’ Health & Benefits line of business.

The transaction is expected to close on July 1, 2021. Terms are not being disclosed.

Founded in 2013 and based in Irving, TX, UnifyHR provides flexible and affordable support that helps employers manage complex employee benefits programs so they can focus on their core business. Its suite of offerings, managed through a proprietary system that also supports premium billing services and dependent eligibility audits, covers an employee’s entire lifecycle from new hire to retiree.

“UnifyHR has been highly successful in taking the complexity out of employee benefits administration and compliance obligations,” states David Musto, president and CEO of Ascensus. “By adding their knowledge and expertise to our Health & Benefits line of business, Ascensus reaffirms our commitment to helping employers satisfy their fiduciary and compliance responsibilities by making employee benefits easier to manage.”

“At Unify HR, we take pride in our deep experience in employee benefits administration and compliance services as well as our collaborative and close-knit culture,” says Allen Gehrki, UnifyHR’s president and CEO. “We’re looking forward to becoming part of Ascensus and continuing to deliver high-quality benefit services that are tailored to meet even the most complicated business requirements.”

“The comprehensive array of tech-enabled services offered by UnifyHR spanning ACA and COBRA administration, state health insurance mandate filings, and eligibility verification will expand Ascensus’ Health & Benefits solutions considerably,” says Raghav Nandagopal, Ascensus’ chief corporate development officer. “We’re delighted to welcome UnifyHR’s clients and associates to Ascensus and will continue to pursue opportunities to broaden our consumer-directed healthcare and employee benefits administration offerings.”

 

About Ascensus
Ascensus helps millions of people save for what matters—retirement, education, and healthcare. Our technology, market insights, and business knowledge enhance the growth and success of our partners, their clients, and savers. Ascensus is the largest independent recordkeeping services provider, retirement plan third-party administrator, and government savings facilitator in the United States. For more information, visit ascensus.com. Explore Ascensus’ latest data and insights on savings behaviors at pulse.ascensus.com.


IRS Again Extends Temporary Relief from Physical Presence Requirement for Retirement Plan Consents

The IRS issued Notice 2021-40, extending guidance released under Notice 2020-42 and previously extended by Notice 2021-03, which provided temporary relief from the physical presence requirements for certain elections that are made by participants and beneficiaries in qualified retirement plans and other tax-favored retirement arrangements. The additional extension provides relief through June 30, 2022. This includes signatures of those making an election ordinarily needing to be witnessed in the physical presence of a plan representative or notary public, including spousal consent and certain forms of distribution from retirement plans.

Under this relief, live audio-video technologies may be used to facilitate remote notarization for distributions if meeting other election requirements and if this is consistent with state laws governing notarization. Also, for certain plan elections that must be witnessed by a plan representative, witnessing may be accomplished by live audio-video technology, but only if certain access, security, review, and confirmation conditions are met.

The IRS has received comments from several stakeholders requesting permanent relief from the physical presence requirement, or asking for additional time to comment. The IRS continues to request comments until September 30, 2021, particularly on cost burdens associated with the physical presence requirement, whether there is evidence that the temporary removal has resulted in fraud, how participant elections are being witnessed, and what procedures and guidance should be implemented to provide safeguards in lieu of existing requirements.


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.

McIsaac will offer consultative support to retirement plan clients while expanding relationships with strategic recordkeeping and financial advisor partners in both the Northwest/Central and Southern California regions. He will continue to report to Kasey Price, FuturePlan’s head of sales, while leveraging his two decades of business development and leadership experience to create and implement growth strategies for FuturePlan’s fast-growing sales team.

McIsaac has been a FuturePlan DVP since January 2020. Prior to that, he was a regional sales director at Goldleaf Partners, a Minnesota-based TPA that became part of FuturePlan in 2019. While at Goldleaf Partners, he helped develop the organization into a prominent 3(16) fiduciary services provider. He has also held leadership positions at Benefit Administration Corporation and Partridge River, Inc. McIsaac earned his bachelor’s degree in management from The College of St. Scholastica.

Taylor joined FuturePlan’s sales leadership team as a DVP in August 2019. Before that, he was the founder and president of QBI, a California-based TPA recognized for its broad expertise in human capital management and integrated benefits that became part of FuturePlan in 2018. He has been an active member in industry organizations—including the American Society of Pension Professionals & Actuaries (ASPPA) and the National Institute of Pension Administrators (NIPA)—throughout his career. Taylor received a Bachelor of Arts degree in Economics from UCLA.

“Greg has been well known and respected in the TPA industry for more than 40 years, and regularly inspires clients and associates with his remarkable work ethic, business acumen, and talent for making meaningful connections on a personal level,” said Price. “FuturePlan is extraordinarily grateful for his years of service and wishes him all the best in retirement.”

“Aaron’s ability to lead and mentor during both positive and challenging times will ensure that our clients in the Southern California region remain in good hands,” continued Price. “He will provide them with the same exceptional level of support needed to help them meet their objectives.”

About FuturePlan by Ascensus
FuturePlan is a leading national retirement TPA dedicated to helping advisors, recordkeepers, and plan sponsors deliver better outcomes for savers. Our highly responsive, personalized service is backed by the strength and security of a national leader in Ascensus. As of March 31, 2021, FuturePlan’s experienced team of experts supports more than 51,000 plan sponsors with more than 2.2 million participants and more than $109 billion in assets under administration. For more information, visit futureplan.com (https://www.futureplan.com/).
About Ascensus
Ascensus helps millions of people save for what matters—retirement, education, and healthcare. Our technology, market insights, and business knowledge enhance the growth and success of our partners, their clients, and savers. Ascensus is the largest independent recordkeeping services provider, retirement plan third-party administrator, and government savings facilitator in the United States. For more information, visit ascensus.com (http://www.ascensus.com/). Explore Ascensus’ latest data and insights on savings behaviors at pulse.ascensus.com.

FuturePlan by Ascensus Expands Sales Team

Jay Hollis, John Krzeminski, and Lou DePonte Join Organization to Facilitate Continued Institutional Growth and Offer Enhanced Regional Support

FuturePlan by Ascensusa leading national retirement third-party administrator (TPA) that specializes in the delivery of customized retirement plan consulting and administration services—is pleased to announce that the following individuals have been appointed to sales leadership roles: Jay Hollis, vice president, sales consultant for the Tennessee and Southern Kentucky regions; John Krzeminski, institutional sales support & business development relationship manager; and Lou DePonte, sales effectiveness principal.

The FuturePlan sales team’s expansion is intended to grow relationships with strategic institutional recordkeeping and financial advisor partners while enhancing regional and consultative support for retirement plan clients.

Hollis will drive sales with financial advisors and strategic alliance platforms while also coordinating sales activities for key employer relationships. With more than 10 years of retirement industry experience from roles with Seven Hills Group and Taylor Wealth Solutions, Hollis fills the role vacated by Mark Wiggins, who was recently appointed as FuturePlan’s divisional vice president for the Southeast and Southwest regions.

Krzeminski will cultivate institutional relationships to explore new opportunities and deepen FuturePlan’s relationships with existing partners. His sales, relationship management, and project leadership skills have been honed during his more than 13 years of retirement plan industry experience at Vanguard, Lincoln Financial, and Quantum Strategies.

DePonte will participate in the development of—and ultimately be responsible for—the implementation and ongoing monitoring of FuturePlan’s sales operations strategy. He brings more than 30 years of experience to his new position and previously held leadership roles at Prudential, The Phoenix Companies, and Hartford Life Insurance.

“In welcoming Jay, John, and Lou to the FuturePlan sales team, we’re giving our key institutional partners, financial advisors, and business-owner clients access to more than 50 combined years of industry experience and expertise,” states Kasey Price, FuturePlan’s head of sales. “I look forward to working with them to develop and execute strategies to take FuturePlan’s sales efforts to the next level and cement our organization’s standing as a leading national retirement TPA.”

About FuturePlan by Ascensus
FuturePlan is a leading national retirement TPA dedicated to helping advisors, recordkeepers, and plan sponsors deliver better outcomes for savers. Our highly responsive, personalized service is backed by the strength and security of a national leader in Ascensus. As of March 31, 2021, FuturePlan’s experienced team of experts supports more than 51,000 plan sponsors with more than 2.2 million participants and more than $109 billion in assets under administration. For more information, visit futureplan.com (https://www.futureplan.com/).

About Ascensus
Ascensus helps millions of people save for what matters—retirement, education, and healthcare. Our technology, market insights, and business knowledge enhance the growth and success of our partners, their clients, and savers. Ascensus is the largest independent recordkeeping services provider, retirement plan third-party administrator, and government savings facilitator in the United States. For more information, visit ascensus.com (http://www.ascensus.com/). Explore Ascensus’ latest data and insights on savings behaviors at pulse.ascensus.com.


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). Senate bill 2113 proposes to expand permissible distributions from an employee’s health flexible spending arrangement or health reimbursement arrangement to the employee’s HSA. Senate bill 2099 proposes to make HSAs more broadly available by removing the requirement that individuals be enrolled in a high deductible health plan. Further details of these proposals have not yet been made available.

A third bill has been introduced by Senator John Kennedy (R-LA). The Telehealth HSA Act would allow high deductible health plans to provide telehealth services before meeting the plan deductible without affecting HSA eligibility. Currently, employees may need to pay out of pocket for such services.

All three bills have been referred to the Senate Finance Committee for further consideration.


Supreme Court Leaves Affordable Care Act In Place

On June 17, 2021, the United States Supreme Court held that the plaintiffs did not have standing to pursue an action under the Patient Protection and Affordable Care Act (PPACA) because the individual mandate is unenforceable and, as such, “unenforceable language is insufficient to establish standing.” Regarding the states, the Supreme Court held that the “pocketbook injuries” cannot be traced to the government’s unlawful conduct. The Supreme Court failed to consider whether reducing the penalty to zero rendered the individual mandate unconstitutional and, in turn, if the individual mandate is unconstitutional, whether the individual mandate is severable from the remainder of the PPACA.

The lawsuit was narrowly centered around the individual mandate, which requires an individual to enroll in health coverage for the year or pay a penalty. In 2017, Congress passed the Tax Cuts and Jobs Act, which reduced the tax imposed by the individual mandate to zero effective January 1, 2019. Thereafter, two individuals and various states filed a lawsuit claiming the reduction of the tax to zero rendered the individual mandate unconstitutional. In particular, the entirety of the PPACA depends on the individual mandate and its effective removal rendered every other provision under the PPACA inoperable. The circuit court agreed with the plaintiffs and held that the individual mandate became an unconstitutional command when Congress reduced the amount to zero and, thus, it required the entirety of the PPACA to be struck down. The court of appeals held that the district court’s severability argument was incomplete and requested that the district court review the entirety of the PPACA to determine whether any of its provisions were affected by the reduction of the tax to zero beginning in 2017. In response, the petitioners, 16 states led by the State of California, filed a writ of certiorari to review the lower court’s decision.

Because the Supreme Court failed to review the constitutionality of the individual mandate and its effect on the PPACA, the PPACA continues to be in effect.  Nonetheless, it is unclear whether the current administration will increase the individual mandate penalty amount to prevent future attacks on the PPACA. If the penalty is increased, employers should expect their employees to enroll in either employer-sponsored, individual, or other health coverage.


IRS Issues Final Regulations for Mandatory Deadline Postponements Related to Federally Declared Disasters

The IRS has released final regulations regarding the mandatory 60-day postponement of deadlines for certain time-sensitive, tax-related acts in circumstances of federally declared disasters, implemented under the Further Consolidated Appropriations Act of 2020.

The tax-related acts covered by this guidance are defined in Internal Revenue Code Section 7508A. This is the authority cited for postponement of deadlines in cases of localized disaster declarations. Such localized relief is announced by the IRS in news release form, describing the area affected—generally on a county-by-county basis—and describing the length of the deadline postponements.

The final regulations clarify the definition of “federally declared disaster” for purposes of deadline extensions to include both a major disaster declared under section 401 of the Stafford Act and an emergency declared under section 501 of the Stafford Act.

Additionally, the guidance provides details of the 60-day mandatory postponement period.

  • If the Treasury Secretary does not exercise her discretion to postpone a time-sensitive act, it cannot be postponed under the mandatory extension.
  • Time-sensitive acts specifically postponed include making contributions to a qualified retirement plan or IRA, withdrawing excess IRA contributions, recharacterizing IRA contributions, and completing rollovers.
  • The mandatory 60-day postponement period begins on the earliest incident date specified in a disaster declaration and ends on the date that is 60 days after the latest incident date.
  • In no event will the mandatory 60-day postponement period exceed one year.
  • The extension will not apply when there is no specified initial incident date.

The definition of “federally declared disaster” is applicable today with final publication in the Federal Register. The clarifications to the mandatory 60-day postponement period apply to disasters declared on or after December 21, 2019.