Ascensus Announces Completion of Truist Retirement Recordkeeping Acquisition

All Heritage BB&T Plans Successfully Transitioned to Ascensus Platform

Ascensus—whose technology and expertise help millions of people save for retirement, education, and healthcare—has completed the acquisition of the heritage BB&T bundled retirement recordkeeping business from Truist Bank that was announced on January 6, 2021. Financial terms of the deal, which closed on March 3, were not disclosed.

In total, this transaction covers more than 1,200 plans with approximately 140,000 participants and more than $6 billion in assets—all of which have been successfully transitioned to Ascensus’ platform. With this addition, Ascensus currently serves approximately 115,000 retirement plans with 3.3 million participants and assets under administration of approximately $209 billion.

“Thanks to the Truist and Ascensus teams’ highly collaborative efforts, we were able to successfully migrate all of the heritage BB&T plans to Ascensus over the course of this past weekend,” said Kevin Cox, president of Ascensus’ Retirement line of business. “I’d like to express my gratitude to Truist for their partnership in supporting the transition of their clients and plans to our platform.”

“We’re pleased to welcome heritage BB&T clients to Ascensus and offer them access to our robust resources, including financial wellness programs, managed account services, and award-winning support,” continued Cox.

“With the ongoing consolidation in the retirement industry, Ascensus plans to pursue similar opportunities to work with organizations to provide an attractive home for their non-core retirement servicing businesses and clients,” stated Raghav Nandagopal, Ascensus’ chief corporate development officer.


About Ascensus
Ascensus helps millions of people save for what matters—retirement, education, and healthcare. Through co-branded, private-labeled, and other governmental partnerships, 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, third-party administrator, and government savings facilitator in the United States. For more information, visit

SBA Rule Allows Schedule C Tax Filers to Use Gross Income for PPP Loans

The Small Business Administration (SBA) has issued an interim final rule effective March 4, 2021, that would allow business owners who file an IRS Form 1040, Schedule C, to use gross income rather than net earnings from self-employment in determining payroll costs for Paycheck Protection Program (PPP) loans. Previously, PPP rules defined payroll costs for individuals who file an IRS Form 1040, Schedule C, as payroll costs (if there are employees) plus net profits, which is net earnings from self-employment.

This change would affect many sole proprietors who have been effectively excluded from the PPP, especially those with very little or negative net profit, many of which are located in underserved communities. Business owners with employees can use either net profit or gross income minus certain employee benefit and wage expenses.

PPP loans were initially created by the Coronavirus Aid, Relief, and Economic Security (CARES) Act to assist small employers in retaining employees on their payrolls in a time of financial stress during the coronavirus (COVID-19) pandemic. If certain conditions are met, PPP loans can be forgiven and treated as a grant. Among the conditions for full forgiveness is a requirement that 60 percent of loan proceeds be used for payroll expenses. These expenses can include not only wages and salaries, but also employer contributions to defined contribution and defined benefit retirement plans. Expenses can also include providing group healthcare coverage, including payment of insurance premiums.

To mitigate the risk of fraud or abuse, if a borrower that is Schedule C filer elects to use gross income to calculate his or her loan amount on a First Draw PPP Loan and more than $150,000 in gross income was reported on the Schedule C that was used to calculate the loan amount, the borrower will not automatically be deemed to have made the statutorily required certification concerning the necessity of the loan request in good faith. The borrower may be subject to a certification review by the SBA.

The interim final rule also removes exclusions for small business owners with prior non-fraud felony convictions and those struggling to make student loan payments from participating in the program. Unless extended, the PPP is currently set to expire on March 31, 2021.

DOL Delays Effective Date for Independent Contractor Final Regulations

Consistent with a directive by President Biden in a January 20, 2021-issued memorandum entitled, “Regulatory Freeze Pending Review,” the Department of Labor (DOL) Wage and Hour Division has finalized its proposal to delay until May 7, 2021, the effective date of final regulations on independent contractor status. The regulations were published January 7, 2021, in the Federal Register. Their intended purpose as described by the DOL was to clarify distinctions between employee and independent contractor status in employment situations.

Businesses sometimes use independent contractors to control costs and create efficiencies. Some businesses have run afoul of federal and state laws by classifying workers as independent contractors when they are actually employees. Because various definitions of “independent contractor” have emerged under federal and state laws, determining whether workers are independent contractors or employees has, under some circumstances, been confusing at times, resulting in inconsistent worker classifications. The delivery of employee benefits, such as retirement savings and certain other benefits, is often tied to a determination of independent contractor or employee status.

On February 5, 2021, the DOL issued a notice of proposed rulemaking in accordance with the presidential memorandum proposing to delay the effective date of the independent contractor rule to May 7, 2021, which would be 60 days beyond its original effective date. In its request for a delayed effective date, the DOL stated that this action will not have negative effects because the final regulations have not yet been implemented, and the existing public guidance—Wage and Hour Division Fact Sheet #13, Employment Relationship under the Fair Labor Standards Act (FLSA)—”will continue to be available to all.”

Retirement Spotlight: IRS Regulations Address Tax on Unrelated Businesses in Plans

The IRS has released final regulations on computing unrelated business taxable income (UBTI) for a tax-exempt organization. This guidance may affect only a relatively small portion of tax-exempt retirement plans. For those plans that invest in certain types of assets, however, knowing the rules will be important. As explained later, these final regulations may help simplify administration and reporting requirements for what are usually considered to be more complex investments.

The final regulations pertain to Internal Revenue Code Section (IRC Sec.) 512(a)(6), added by the Tax Cuts and Jobs Act of 2017. The regulations are generally effective for taxable years starting on or after December 2, 2020. Tax-exempt organizations may choose to apply the final regulations to taxable years that start on or after January 1, 2018. Alternatively, they may rely on a “reasonable, good-faith interpretation” of IRC Sec. 512(a)(6) for such taxable years.

Rationale for the Unrelated Business Tax

IRC Sec. 501(c) contains the list of exempt organizations that receive special tax benefits. Perhaps most familiar to many are IRC Sec. 501(c)(3) entities, which are organized and operated for religious, charitable, scientific, educational, and other similar purposes. Because of the societal benefits that these organizations confer, they are exempt from federal taxation. Hence the name “exempt organizations”.

Because these exempt entities operate free from most taxation, they can devote more of their resources to their purpose. Some organizations own or operate businesses outside this purpose, usually to raise money to further the organization’s goals. But this could allow them to have an advantage over for-profit organizations conducting the same kind of business.

  • Example: Misty Meadows Arboretum is an IRC 501(c)(3) exempt organization whose primary purpose is to educate the community about various ecosystems. It relies primarily on charitable contributions from its members. It always has a spring plant sale, which is open to the public and brings in a modest profit. Misty Meadows’ new director sees potential in creating a larger plant sale. Eventually, the arboretum builds multiple greenhouses to meet the huge demand. Before long, the annual plant sale is by far Misty Meadows’ biggest revenue source. Unfortunately, Misty Meadows’ director wasn’t aware that the arboretum was prohibited from using its tax-exempt status to run the almost year-round plant-sales operation without paying any tax.

Exempt organizations that operate a business enterprise outside their tax-exempt purpose are required to pay taxes on profits from that enterprise. This levels the playing field so that not-for-profit entities do not have an unfair advantage, which would be contrary to public policy.

Retirement Plans as Exempt Organizations

In addition to the UBTI rules applying to IRC 501(c)(3) organizations, they also apply to trusts under IRC Sec. 401(a). This includes pension plans, profit sharing plans, and 401(k) plans. The IRS also applies the UBTI rules to IRAs.

In the vast majority of plans and IRAs, UBTI will not be a factor. Generally, most assets in these types of plans are invested in mutual funds or time deposits (i.e., certificates of deposit). Even participants in plans that permit greater investment latitude will often invest in individual securities. Only those plans that permit true investment self-direction will normally become subject to the UBTI rules. The plans most often associated with unrelated taxable businesses are truly self-directed owner-only 401(k) plans and IRAs. These types of accounts are referred to as self-directed accounts or SDAs. And while some financial organizations may permit SDA owners to place assets in investments that generate UBTI, many SDA investments (e.g., precious metals, promissory notes) do not.

How Does the Tax on UBTI work?

The rules on UBTI can be complex, but here are some of the basics.

  • Annual income of $1,000. Form 990-T: Exempt Organization Business Income Tax Return, must be filed for plans with gross income of $1,000 or more from an unrelated trade or business. Form 990-T must normally be filed for qualified plans and IRAs by the trust’s tax return due date (generally April 15 for calendar-year tax filers).
  • Tax rates. A filer gets a $1,000 “specific deduction.” So an IRA with exactly $1,000 in gross income from an unrelated business would have to file Form 990-T, but it doesn’t pay tax on the income unless there is UBTI after the $1,000 deduction (and any other deduction) is applied. The tax rate schedule for trusts then applies for any taxable unrelated business income. This rate starts at 10 percent—but quickly rises to 37 percent (on taxable income over $12,950).
  • Filing Form 990-T. This is one of the biggest concerns surrounding SDAs: who is responsible for actually filing Form 990-T? The Form 990-T instructions state that the exempt organization (e.g., the 401(k) plan) and the trustee or custodian of the IRA must file. Practically, the financial organization may address this requirement by clarifying (in a service agreement) that the account owner must prepare any Form 990-T that is needed, while the financial organization (as trustee or custodian) will file it with the IRS. It is important that both parties understand their roles. The financial organization may not know enough of the details about the underlying investments to prepare Form 990-T, but the account owner may assume that, because the financial organization is allowing self-directed investments, it is also taking care of every aspect of such investments. Unless financial organizations are charging for providing this service, it is unlikely that they will volunteer to do it. And if they agree to prepare Form 990-T, they must have access to sufficient information. This is but one reason that financial organizations must carefully consider whether they wish to offer self-directed accounts. If they do, they should ensure that their clients clearly understand their respective roles and duties.

NOTE: Any financial organization allowing—and any individual owning—retirement plan investments that require Form 990-T filing should consult with a competent tax adviser.

Specific Provisions in the Final Regulations

The regulations contain provisions that may affect how unrelated businesses operate within a retirement plan.

  • Multiple unrelated businesses are treated separately. The final regulations require an exempt organization subject to the unrelated business income tax—if it has more than one unrelated trade or business—to calculate UBTI separately for each one. But the rule also prohibits offsetting the income of one unrelated business with the net operating loss of another. Using the example above, let’s consider how the new rules would dictate how the arboretum would report UBTI if it decided to build and operate a restaurant to increase its income.

The final regulations require an exempt organization to identify each separate business using the first two digits of the North American Industry Classification System (NAICS) code. The NAICS code (pronounced “nākes”) is a six-digit system that classifies over one thousand industries. The first two digits identify the general sector of the business (e.g., construction, manufacturing, education). Each successive digit narrows the business definition. In our example, for instance, the arboretum’s greenhouse operation could be classified with the first two digits “45,” which identifies “Retail Trade”; the restaurant would be classified under “Accommodation and Food Service,” which is “72.” If multiple businesses have the same first two digits, they are not considered separate businesses of the exempt organization. If the digits are different, they must file a separate Form 990-T schedule for each business with gross income of at least $1,000. In addition, one unrelated business cannot reduce its tax obligation by using the net operating loss (NOL) of another. So if the arboretum’s greenhouse made a profit, it could not reduce its taxes by using the restaurant’s NOL. Each “separate” unrelated business must stand on its own.

  • Unrelated businesses in the nature of investments. An exempt organization may be permitted to treat various investments that are subject to UBTI as one distinct unrelated trade or business. This allows the organization to invest in multiple unrelated businesses that can be combined for UBTI purposes into one “business” classified as investment activity. The regulations limit such investments to
    • qualifying partnership interests (QPI),
    • qualifying S corporation interests (QSI), and
    • debt-financed properties.

An exempt organization may identify “investment activities” on its Form 990-T (Schedule A)—using a six-digit non-NAICS code rather than the two-digit NAICS code. But it can classify multiple unrelated investments as investment activity on one Schedule A only if each of the investments is one of the types just mentioned. The organization has a QPI in an unrelated trade or business if the organization

  • is not a general partner in the partnership, and
  • either holds no more than a 2 percent interest in the profits or capital, or holds no more than 20 percent of the capital interest and does not significantly participate in the partnership.

The regulations contain similar rules for a QSI. But instead of using the term “profits or capital interest,” the tern “stock ownership” is used. So for investments in both partnerships and S corporations, exempt organizations with limited ownership and involvement can combine such investments into one unrelated business classified as “investment activity.” This approach gives exempt organizations more investment flexibility by reducing their need to obtain information from entities they invest in—information that may be harder for a small investor to readily obtain.

Debt-financed properties are likely to be included in this investment activity category because special UBTI rules already apply to such properties. Grouping other investments together may be a practical way for the IRS to simplify Form 990-T filing, thus ensuring greater compliance.

Practical Impact on Retirement Plans

The only specific plan provision in the final regulations—adopted without change from the proposed regulations—merely codified a rule that the IRS has operated under for years. This addition clarifies that the definition of unrelated trade or business for trusts (such as qualified retirement plan trusts) also applies to IRAs.

Other than that, the effects on plans, if they apply at all, are likely minor. But they are still important. Consider a self-directed account owner, for example, who has invested in a debt-financed rental property and has also bought (at arm’s length) a very small interest in a partnership (a QPI). Historically, if each investment generated at least $1,000 in gross income, each would be reported as a separate business (with a separate Form 990-T schedule). Now it is clear that multiple investments can be more easily grouped into one classification: investment activities. And to the extent that different investments in a plan can be aggregated, there is less concern about the new limitation on NOLs reducing profits in another unrelated business. Most SDAs will simply require a Form 990-T with a single Schedule A that accounts for all their unrelated business investments.


Although these regulations may have little effect on retirement plans, those who work with self-directed retirement plans should consider the following questions.

  • Do any of my plans contain investments that may generate UBTI?
  • If so, do I know who is responsible for filing IRS Form 990-T? While a financial organization that operates in the self-directed account sector may file this form routinely (when needed), it may be worth verifying what the trust agreement or other controlling documents state.
  • Does the entity filing Form 990-T know about the details of the final regulation? While the implications of the final regulations are relatively minor, knowing the details can still be helpful.

The IRS has released a draft version of the updated Form 990-T (and instructions), which contain details on the filing requirements mentioned in the final regulations.

Please visit for the latest news and developments.


Click here for a printable version of this issue of the Retirement Spotlight.

Guidance Issued for Group Health Plans Regarding Coverage of COVID-19 Services

The Departments of Labor, Health and Human Services, and Treasury (the Departments) have issued “FAQs About Families First Coronavirus Response Act and Coronavirus Aid, Relief, and Economic Security Act Implementation Part 44” (the FAQs).

The FAQs address the requirement to cover items and services related to diagnostic testing, qualifying preventive services, and recommended immunizations of COVID-19 without the imposition of cost sharing, prior authorization, or other medical management requirements. In particular, the FAQs provide that group health plans or issuers

  • cannot impose medical management criteria, including medical screening, to determine coverage of a diagnostic test;
  • may distinguish between an individual clinical assessment versus a test for the general workplace, health and safety, or for public health surveillance;
  • must cover diagnostic tests provided through testing sites administered by a state or locality;
  • must cover point of care tests without cost sharing;
  • must cover immunizations with a recommendation in effect from the Advisory Committee on Immunization Practices (ACIP);
  • must begin providing coverage for qualifying preventive services no later than 15 business days after the date the United States Preventive Services Task Force or ACIP make an applicable recommendation;
  • cover the immunization fee even when not billed for the immunization; and
  • provide immunizations in accordance with immunization specific recommendations, regardless of priority.

Additionally, the FAQs provide that the Departments will not take enforcement action against a group health plan or issuer that fails to provide an advance notice of modification to a Summary of Benefits Coverage (SBC), so long as the group health plan or issuer provides the notice as soon as practicable.

The FAQs further clarify that employers are permitted to offer benefits for COVID-19 immunizations and its administration under an Employee Assistance Program (EAP) or through an onsite medical clinic that constitute an excepted benefit.

Finally, the FAQs provide information about the reimbursement of COVID-19-related services for the uninsured from the federal government.

House Passes COVID-19 Relief Bill

The House of Representatives has passed by a vote of 219-212 the American Rescue Plan Act of 2021 to provide additional relief to address the continued impact of COVID-19. Noteworthy retirement and health provisions include the following.

  • Freezing of cost-of-living adjustments after 2030 for retirement plan annual additions and compensation cap limits
  • Extending defined benefit single-employer plan funding shortfall amortization period from 7 to 15 years beginning with 2020 plan years
  • Extending single-employer pension plan funding stabilization percentages, with the 10 percent interest rate corridor reduced to 5 percent effective in 2020 and phase-out of the 5 percent corridor delayed until 2026
  • Health benefit provision granting premium assistance to cover 85 percent of the cost of COBRA continuation coverage, and extending the COBRA election period
  • Refundable tax credit reimbursing employers and plans that paid a subsidized portion of the premium on behalf of an assistance-eligible individual

The Senate is likely to take up and debate later this week a version of the bill that, once passed, would need to return to the House. The Senate parliamentarian is also expected to weigh in on whether multiemployer pension bailout relief and premium subsidies for laid-off workers through COBRA can be included in the bill. While legislation created through the budget reconciliation process can be passed through the Senate with a simple majority vote—additional restrictions apply—including that provisions be predominantly fiscal in nature.

COVID-19 Relief for Employee Benefit Plans, Participants, and Beneficiaries Continued for Limited Time

The Department of Labor’s (DOL) Employee Benefits Security Administration (EBSA) has released Disaster Relief Notice 2021-01 providing guidance on the duration of COVID-19-related relief previously provided by Disaster Relief Notice 2020-01 and the Notice of Extension of Certain Timeframes for Employee Benefit Plans, Participants, and Beneficiaries Affected by the COVID-19 Outbreak (Joint Notice) issued in 2020 by the DOL, Treasury Department, and the IRS (collectively the “Notices”).

In March 2020, the President declared a national emergency effective March 1, 2020, due to the COVID-19 outbreak. ERISA and the Internal Revenue Code permit the Secretaries of Labor and Treasury to prescribe a period of up to one year that may be disregarded in determining the date by which any action is required or permitted to be completed. The Notices provide relief until 60 days after the announced end of the COVID-19 National Emergency or such other date as announced by the relevant agency.

Therefore, the DOL, in coordination with the Treasury, IRS, and Department of Health and Human Services (HHS), announced in Notice 2021-01 that “individuals and plans with timeframes that are subject to the relief under the Notices will have the applicable periods under the Notices disregarded until the earlier of

  • one year from the date they were first eligible for relief, or
  • 60 days after the announced end of the National Emergency.”

Based on this, the period of time to be disregarded is not a fixed period of time that runs from March 1, 2020, until February 28, 2021. Rather, the period of time to be disregarded is calculated individually for each individual or plan action.

Example 1

If a qualified beneficiary would have been required to make a COBRA election by March 1, 2020, the Joint Notice delays that requirement until February 28, 2021, which is the earlier of one year from March 1, 2020, or the end of the outbreak period (which remains ongoing).

Example 2

If a qualified beneficiary would have been required to make a COBRA election by April 30, 2020, the Joint Notice delays that election requirement until one year from that date (i.e., April 30, 2021).

The Notice states “that plan fiduciaries should make reasonable accommodations to prevent the loss of or undue delay in payment of benefits … and should take steps to minimize the possibility of individuals losing benefits.” By way of example, the Notice states that plan administrators should

  • affirmatively notify participants and beneficiaries who risk losing protections because of the end of the relief period;
  • update or amend and reissue plan disclosures that have provided no longer accurate information as to when action is required to be taken (e.g., COBRA election notices or claims procedure notices); and
  • make participants who are losing group health coverage aware of options available to them, including the Health Insurance Marketplace special enrollment period from February 15 through May 15, 2021.

The DOL recognizes that plans and service providers may not be able to fully and timely comply with ERISA disclosures and claims processing requirements. This includes disruptions due to pandemic and natural disasters to a plan or service provider’s principal place of business that makes compliance impossible. The DOL states that when fiduciaries have acted in good faith and with reasonable diligence under the circumstances, DOL enforcement will be handled with an emphasis on compliance assistance, including grace periods and other relief.

New Withholding Form to Be Used for 2022

The IRS has made available a 2022 tax year draft Form W-4P, Withholding Certificate for Periodic Pension or Annuity Payments, and indicates that the form will be split into two forms. Form W-4P will continue to be used, but only to withhold federal income tax from periodic retirement plan and IRA payments. Periodic payments are installment payments at regular intervals generally over a period of more than one year.

A 2022 tax year draft of new Form W-4R, Withholding Certificate for Nonperiodic Payments and Eligible Rollover Distributions, has also been released and will be used for nonperiodic and rollover distributions beginning in that tax year. Nonperiodic distributions are subject to a 10 percent withholding rate unless a different rate is elected. Eligible rollover distributions are subject to a mandatory 20 percent withholding rate on the taxable amount of the distribution unless a higher rate is elected. A revised draft of Form W-4R is expected to be made available shortly.

IRS Issues Deadline Relief for Texas Victims of Winter Storms

The IRS has issued a news release announcing the postponement of certain tax-related deadlines for Texas winter storm victims. The tax relief postpones various tax filing and payment deadlines that occurred starting on February 11. The entire state of Texas is included in this relief. Additionally, taxpayers in other locations will automatically be added to this relief if the disaster area is further expanded.

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), which include filing Form 5500 for retirement plans, completing rollovers, making retirement plan loan payments, etc.

Affected taxpayers with a covered deadline on or after February 11, 2021, and on or before June 15, 2021, will have until June 15, 2021 to complete the act(s). “Affected taxpayer” automatically includes anyone who resides or has a business located within the designated disaster area. Those who reside or have a business located outside the identified disaster area, but have been affected by the disaster, may contact the IRS at 866-562-5227 to request the relief.