Industry & Regulatory News

IRS Extends Final Hardship Regulations Amending Deadline for Pre-Approved Plans

The IRS has issued Revenue Procedure 2020-09, guidance that extends the deadline for pre-approved retirement plans to amend for final IRS hardship regulations published in September 2019. The amending deadline for these plans is extended to December 31, 2021.

Significant changes to hardship distribution requirements were enacted in the Bipartisan Budget Act of 2018 (BBA). Changes contained in the legislation and reflected in the final regulations—applying to 401(k) and 403) plans—included the following.

  • Eliminates the six-month suspension of deferrals and employee after-tax contributions following a hardship distribution.
  • Eliminates the need for available plan loans to be taken before receiving a hardship distribution.
  • Broadens available plan sources from which hardship distributions may be taken, to include (in addition to elective deferrals) earnings on elective deferrals, as well as qualified non-elective contributions (QNECs), qualified matching contributions (QMACs), ADP and QACA safe harbor contributions—and the earnings thereon (certain restrictions on hardship-available sources apply to 403(b) plans).
  • A general standard may be used to determine if a hardship distribution is needed to satisfy a financial need.
  • Other provisions apply to casualty losses and to certain federally declared disasters.

BBA and final regulations provisions must be effective for hardship distributions on or after January 1, 2020, although certain changes could be applied for 2018 and 2019 plan years.

SEC Proposes Amendments to Investment Advisor Advertising Rules and Compensation for Solicitations

The Securities and Exchange Commission (SEC) has published in today’s Federal Register proposed amendments to rules that prohibit certain investment adviser advertisements and payments to solicitors. These proposed amendments are intended to “reflect market developments since the rule’s adoption in 1961.” The SEC is also proposing amendments to Form ADV that are “designed to provide the Commission with additional information regarding advisers’ advertising practices.”

Finally, the SEC is proposing conforming amendments to the “books and records” rule, to align it with the proposed amending of the advertising and solicitation rules. Public comments will be accepted by the SEC on or before February 10, 2020.

Age Table for 2020 Valuations in Certain Defined Benefit Plans Posted in Federal Register

Today’s Federal Register contains the official publication of a Pension Benefit Guaranty Corporation (PBGC) retirement age table for use by single-employer defined benefit pension plans that are undergoing distress or involuntary terminations, and have valuation dates in 2020. A pre-publication version of the guidance was announced Friday, December 6. As noted by PBGC, “this table is needed to compute the value of early retirement benefits, and thus the total value of benefits under the plan.”

Bill Would Allow Tax- and Penalty-Free Retirement Savings Withdrawals for Student Loan and Education Payments

Sen. Rand Paul (R-KY) has introduced legislation that would permit tax-free, penalty-free withdrawals from IRAs and employer-sponsored retirement plans for qualified education expenses or student loan repayment. According to a summary released by Sen. Paul’s office, the Higher Education Loan Payment and Enhanced Retirement (HELPER) Act would do the following.

  • Permit up to $5,250 per year to be distributed from an IRA or employer-sponsored retirement plan, tax-free and exempt from the 10 percent early distribution penalty tax, if used for eligible education expenses or eligible student loan repayments
  • Additionally, permit such tax- and penalty-free distributions for qualifying education expenses of a spouse or dependent
  • Allow employers to make student loan payments of up to $5,250 per year on behalf of an employee, as a tax-free employee benefit
  • Permit employees to elect Roth treatment for employer-made contributions to their retirement plan accounts—contributions that would generate potentially-tax-free earnings (currently, all employer contributions are pretax)
  • Repeal the current-law cap and phase-out of the student loan interest income tax deduction

The bill has been referred to the Senate Finance Committee.

Health Groups Sue to Block Hospital Price Transparency Rules

A group of health care associations and providers has filed suit in U.S. District Court for the District of Columbia to block Trump administration-backed guidance requiring hospitals to disclose their standard charges. The guidance was issued by the Department of Health and Human Services Center for Medicare and Medicaid Services (CMS), and published as final regulations in the Federal Register on November 27, 2019.

Under this guidance, hospitals operating in the United States would be required to “establish, update, and make public a list of their standard charges for the items and services that they provide.” The guidance further states that this CMS action was “…necessary to promote price transparency in health care and public access to hospital standard charges,” and that the public will thereby “have the information necessary to make more informed decisions about their care.” The effective date is January 1, 2021.

Plaintiffs in the suit include the American Hospital Association, Association of American Medical Colleges, Federation of American Hospitals, National Association of Children’s Hospitals, and several hospital groups located in California, Missouri, and Nebraska.

The plaintiffs allege that the CMS final regulations would require disclosure of confidential information, violate the speech protections of the First Amendment to the U.S. Constitution, would undermine competition and blunt innovation, and would financially “overwhelm many hospitals.” They further allege that the final regulations are arbitrary and capricious and “lack any rational basis.”

IRS Releases 2019 Required Amendments List for Individually-Designed Qualified and 403(b) Plans

The IRS has issued Notice 2019-64, the 2019 Required Amendments List for drafting individually designed retirement plan documents for plans intended to be qualified under Internal Revenue Code Sections 401(a) (“qualified plans”) and 403(b).

In general, a Required Amendments List includes statutory and administrative changes in requirements that are first effective during the plan year in which the list is published, but does not include guidance that is issued or legislation that is enacted after the list has been prepared.


The list is divided into two parts. Part A covers changes in requirements that generally would require an amendment to most plans; or, to most plans of a type that would be affected by the change. Part B includes changes in requirements that the Treasury Department and the IRS anticipate will not require amendments to most plans, but might require an amendment because of an unusual provision in a particular plan.

IRS Grants Filing Extension for Certain Affordable Care Act Reporting

The IRS has issued Notice 2019-63, granting a 30-day extension to file information returns (forms) that report required information on compliance with certain requirements of the Affordable Care Act (ACA). The IRS makes clear that the 30-day extension applies to the deadline for providing the forms to taxpayers; the to-IRS deadlines remain unchanged.

Under Internal Revenue Code Section (IRC Sec.) 6056, certain “applicable large employers” (generally, those with 50 or more full-time-equivalent employees) are required to file with the IRS and distribute to employees information on offers of coverage under—and enrollment in—the employer’s health insurance plan(s). Under IRC Sec. 6055, providers of health coverage are required to report to the IRS and to employees the months that the employee was covered under ACA-defined minimum essential coverage. The information returns used to report this information include Forms 1094-B, 1094-C, 1095-B, and 1095-C.

The deadline for providing these forms to employees and covered individuals is extended from January 31, 2020, to March 2, 2020. The February 28, 2020, paper-copy IRS deadline and March 31, 2020, electronic submission IRS deadlines are not extended.

This notice also extends relief from penalties to reporting entities that report incorrect or incomplete information on the return or statement when these entities can show that they made good-faith efforts to comply with the information-reporting requirements. This relief applies to missing and inaccurate taxpayer identification numbers and dates of birth, as well as other information required on the return or statement.

The Treasury Department and the IRS have requested comments as to whether an extension of the due date for furnishing statements to individuals and the good-faith reporting relief will be necessary for future years and, if so, why.

IRS Seeks Continued Information Collection Authority

Today’s Federal Register contains an IRS solicitation of public comments on the agency’s request for continued authority to collect information on use of the Form 8809, Application for Extension of Time to File Information Returns. The form can be used by entities seeking an extension of time to file (with the IRS) certain annual information returns, including those that report transaction and account information for IRAs, employer-sponsored retirement plans, health savings accounts, medical savings accounts, Coverdell education savings accounts, 529 plans, and ABLE accounts.

Public comments on whether the IRS should have continued authority to collect information on use of this form must be received by the agency on, or before, January 31, 2020.

Federal Agency Health Care Price Transparency and Cost Sharing Rules Posted in Federal Register

A late posting in Wednesday’s Federal Register contains the official publication of guidance by several federal agencies with regulatory authority over elements of health care delivery. These include the IRS, the Department of Labor (DOL), and Department of Health and Human Services (HHS). This guidance is being issued in response to an Executive Order by President Donald Trump concerning health care price transparency and patient cost sharing. Members of Congress have also been vocal in requesting that steps be taken to equip citizens to become better informed consumers of health care services.

Cost-Sharing Proposed Regulations
The IRS, DOL, and HHS are jointly issuing proposed regulations under which group health plans and health insurance issuers in the individual and group health insurance markets would be required to disclose certain cost-sharing information.

The stated objective of these proposed regulations is to allow “…a participant, beneficiary, or enrollee (or his or her authorized representative) to obtain an estimate and understanding of the individual’s out-of-pocket expenses and effectively shop for items and services.” This information is to be made available on a website and—if requested—through non-Internet means.

These proposed regulations would also require health insurance plans and issuers to disclose in-network provider negotiated rates, and “historical out-of-network amounts through …machine-readable files posted on an Internet web site, thereby allowing the public to have access to health insurance coverage information that can be used to understand health care pricing and potentially dampen the rise in health care spending.”

Comments will be received for a 60-day period that begins with this publication. The document notes that all comments will be made public, and submitters are, therefore, warned not to include personally-identifiable information. Comments may be submitted electronically, by regular mail, or by express or overnight mail delivery.

Hospital Charges Disclosure Final Regulations
The HHS’s Centers for Medicare and Medicaid Services (CMS) has also issued guidance—these as final regulations—requiring hospitals operating in the United States to “establish, update, and make public a list of their standard charges for the items and services that they provide.” The effective date of these final regulations is January 1, 2021.

The guidance states that this action by the agency is “…necessary to promote price transparency in health care and public access to hospital standard charges” and that the public will thereby “have the information necessary to make more informed decisions about their care.”