News

Ascensus Acquires Health & Welfare Form 5500 Preparation and Plan Document Services Business from ABV Advisors

Book-of-Business Transaction Boosts Ascensus’ Compliance Expertise While Increasing Client Base for Health & Welfare Form 5500 Solutions

Ascensus—whose technology and expertise help millions of people save for retirement, education, and healthcare—is pleased to announce that it has acquired the book of business of ABV Advisors, a health & welfare Form 5500 preparation and plan document services business. Financial terms of the deal were not disclosed.

Based in Carmel, Indiana, ABV Advisors is a benefit compliance advisory firm that serves brokers of employee benefit plans, financial advisors, professional employer organizations, and affinity associations throughout the U.S. Its primary specialty is ERISA-related compliance for employee benefit plans, including wrap plan documents, preparation of DOL Form 5500, and Affordable Care Act required Forms 1094-C & 1095-C.

ABV Advisors’ business will further expand the ERISA compliance, plan documentation, filing, and related services that have been among Ascensus’ core offerings for many years across its Retirement, FuturePlan by Ascensus, and Health & Benefits lines of business. In 2019, Ascensus acquired Wrangle, the country’s market leader in providing health & welfare Form 5500 preparation and related ERISA compliance services. Prior to that, Ascensus significantly expanded its health benefit administration offerings, providing consumer-directed healthcare and benefit continuation services via the acquisitions of Chard Snyder, Benefit Planning Consultants, Inc., and HR Simplified.

“The team at ABV Advisors truly understands the importance of an employee benefit plan to a company and its employees, as well as the complexities of maintaining that plan,” says Kevin Cox, president of Ascensus’ Retirement line of business. “Ascensus looks forward to being a trusted partner and resource for ABV Advisors’ brokers, advisors, and plan sponsors via our deep industry expertise, outstanding client service, and proven technology platform.”

“At ABV Advisors, our highly consultative, client-centric approach has allowed us to build trusting, long-lasting relationships with our clients, including large, nationally recognized employee benefits consulting, insurance brokerage, and accounting firms,” notes Anne Vandeveer, ABV Advisors’ president. “We know these clients will receive the same high-touch interactions from Ascensus and look forward to sharing our decades of knowledge and experience in continuing to service these clients.”

“ABV Advisors has worked diligently over the years to cultivate an extremely loyal client base as well as a strong reputation for excellence,” says Raghav Nandagopal, Ascensus’ chief corporate development officer. “Adding their business allows us to continue to build upon that reputation under the Ascensus brand while expanding our health & welfare Form 5500 and ERISA-related compliance capabilities.”

“We’re excited to integrate ABV Advisors’ compliance expertise and build solid, long-term relationships with their network of employee benefit brokers, advisors, and plan sponsors,” Nandagopal adds.


IRS Announces Extension to File Tax Return

The Treasury Department and IRS have announced that tax filing due dates for 2020 tax year federal income tax returns, including the federal income tax payment deadline, will be automatically extended from April 15, 2021, to May 17, 2021. No special form must be filed to request the filing extension. The IRS will be providing formal guidance in the coming days.

While the postponement of federal income tax payments seems to suggest that certain other actions tied to the normal April 15, 2021 filing deadline may be extended as well—such as making 2020 IRA and health savings account (HSA) contributions, similar to the extension provided in 2020—it is not clear at this time.


IRS Issues Deadline Relief for Louisiana Victims of Winter Storms

The IRS has issued a news release announcing the postponement of certain tax-related deadlines for Louisiana winter storm victims. The tax relief postpones various tax filing and payment deadlines that occurred starting on February 11. The entire state of Louisiana is included in this relief. 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, and making retirement plan loan payments.

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.


IRS Provides Updated Draft Withholding Forms

The IRS has made available a third early release 2022 tax year draft Form W-4P, Withholding Certificate for Periodic Pension or Annuity Payments. The IRS indicated previously 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 second early release 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.

Both drafts indicate that computational steps should not change, and the draft forms may be relied upon for purposes of initiating systems programming (but not for filing purposes).


Washington Pulse: American Rescue Plan Act Provides Coronavirus Relief

President Biden has signed legislation that funds another round of assistance as the nation copes with the health and economic effects of the coronavirus pandemic. Several previous bills in 2020 provided direct cash benefits to Americans, created a small business lending program to help employers retain employees, and provided enhanced access to tax-favored retirement savings.

This latest round of relief, a $1.9 trillion stimulus bill known as the American Rescue Plan Act of 2021 (ARPA), contains a third round of direct payments to Americans, funding to help hard-hit industries, and many other provisions—including some that will affect health plans and defined benefit plans.

Health Plan Relief

ARPA’s health-related provisions are meant to help individuals who have suffered a job loss or a reduction of hours to maintain their health insurance coverage. The following text summarizes the most important health plan-related provisions.

COBRA Continuation Coverage Premium Assistance

ARPA provides premium assistance for COBRA continuation coverage. This type of coverage allows eligible individuals who lose their health benefits to continue participating in their group health plan for a limited period of time. The premium assistance is designed to help both employees and employers. For example, premium assistance can help former employees keep their employer health plan coverage at a critical time. COBRA coverage can be prohibitively expensive—individuals may have to pay up to 102 percent of the cost to the plan—which discourages enrollment in many circumstances. If the premium is subsidized, employees are more likely to opt for COBRA coverage. When faced with a serious medical event, individuals and families who have this coverage can avoid potentially catastrophic financial consequences.

Premium reimbursement can help employers by ensuring increased COBRA coverage enrollment. Having a large number of COBRA enrollees can help employers spread costs over a greater number of healthy individuals who will pay premiums without having significant claims (as opposed to having only individuals with substantial medical costs enrolled in COBRA coverage).

Premium Assistance Basics

ARPA effectively provides free COBRA coverage by creating a subsidy that pays 100 percent of the COBRA premiums. Normally, the individual who is enrolled in COBRA coverage would need to pay these premiums. ARPA authorizes payment for premiums arising from COBRA coverage during the period beginning on April 1, 2021, and ending on September 30, 2021. This premium assistance is available only for certain categories of individuals who are enrolled in COBRA coverage during this period. These “assistance eligible individuals” include the following persons:

  • Employees who are eligible for COBRA coverage because of involuntary termination of employment for reasons other than gross misconduct. (A key feature of the relief is that employees who voluntarily terminate are not eligible for the subsidy.)
  • Employees who are eligible for COBRA coverage because of a reduction in hours that causes them to lose eligibility for their employer’s health plan.
  • Dependents of the employees who have lost eligibility for the reasons indicated above.

COBRA-eligible individuals who meet these criteria and who either 1) have not yet enrolled in COBRA coverage, or 2) had already enrolled in COBRA coverage but discontinued their coverage, have an additional 60 days to elect COBRA coverage and to take advantage of the subsidy. The 60-day enrollment period will begin on the date that the individual receives an ARPA-required notice that explains both the subsidy itself and the individual’s extended opportunity to elect COBRA continuation coverage.

The subsidy is “paid” through a tax credit that is provided to the employer sponsoring the health plan or to the insurer providing the coverage when an individual enrolls in COBRA coverage.

ARPA also permits employers—at their discretion—to allow individuals who are eligible for the subsidy to enroll in different coverage also offered by the employer, as long as the other coverage is also offered to other similarly situated active employees and

  • does not exceed the premium cost of the health coverage initially enrolled in,
  • does not provide excepted benefits only, and
  • is not a qualified small employer health reimbursement arrangement (QSEHRA) or a flexible spending arrangement (FSA).

Premium Assistance Notification

Because awareness of the subsidy is critical to increasing COBRA enrollment, employers must communicate the availability of premium assistance and the option to enroll in different coverage (if allowed). Individuals must receive the additional notification within 60 days of becoming eligible. Employers may provide the disclosures by amending existing notices or by including a separate document with the COBRA election notice.

Within 30 days following the bill’s enactment, the Departments of Labor (DOL), Treasury, and Health and Human Services must issue model notice language in order to help employers comply with the COBRA premium assistance notification requirements. Specifically, the model notices must include

  • the forms necessary to establish eligibility for premium assistance;
  • the plan administrator’s or other party’s contact information—including name, address, and telephone number;
  • a description of the extended election period provided;
  • a description of the qualified beneficiary’s penalty for failure to notify the plan if eligibility for premium assistance ceases;
  • a description of the qualified beneficiary’s right to a reduced premium and any conditions on entitlement to the reduced premium; and
  • a description of the qualified beneficiary’s option to enroll in different coverage (if the employer permits).

Expiration of Premium Assistance

Eligible individuals will generally receive subsidized premiums for coverage beginning on April 1, 2021, and ending on September 30, 2021. Individuals will become ineligible for premium assistance during that period if they

  • reach the maximum period for COBRA coverage, or
  • become eligible to be covered under another group health plan.

For individuals who reach the maximum period of COBRA coverage, a notice must be provided 15 to 45 days before the expiration of premium assistance. The notice must prominently identify the expiration date. To help employers comply with the requirement, the DOL must produce model notices to communicate the expiration of premium assistance 45 days following ARPA’s enactment.

If, during the period of COBRA coverage, individuals receiving the subsidy become eligible for coverage under another health plan, they must notify the plan that they are no longer eligible for premium assistance. Failure to notify the plan will result in a $250 penalty. If an individual intentionally fails to notify the plan, the penalty could be up to 110 percent of the premium assistance amount. The penalty does not apply if there is a reasonable cause for the failure to notify.

Tax Provisions for Premium Assistance

The premium assistance amount will not be included in the individual’s gross income for federal tax purposes.

Defined Benefit Plan Relief

ARPA’s retirement-related provisions are designed to provide relief to single-employer and multiemployer defined benefit (DB) plans. Following is a high-level summary of these provisions.

Amortization Relief for Single-Employer DB Plans

ARPA treat a single-employer DB plan as having no funding shortfall bases, and no shortfall installments from the bases, in prior years and spreads out funding shortfall installments to 15 years. These changes have the effect of reducing an employer’s minimum required contributions.

Extension of Pension Funding Stabilization Percentages for Single-Employer DB Plans

The three segment rates used for the applicable interest rates are provided with minimum and maximum percentages, effectively stabilizing the rates to be applied in future years. ARPA provides funding relief in a time of lower interest rates by setting the minimum percentage at a five percent “floor.” A plan can elect not to have this provision apply in plan years before 2022.

Multiemployer DB Plan Relief

ARPA provides relief for certain underfunded multiemployer plans for 2020 and 2021 plan years—including retention of the preceding plan year’s plan status (endangered, critical, etc.), extension of the plan’s funding improvement period or rehabilitation period (whichever is applicable) by five years, and use of a 30-year amortization base when amortizing investment losses.

Special Assistance Program for Multiemployer Plans at the Pension Benefit Guaranty Corporation (PBGC)

A special fund will be created for struggling multiemployer plans that are most vulnerable. The fund will provide financial assistance in the form of a lump-sum payment sufficient to provide benefits through 2051. Plans receiving this assistance must comply with additional conditions, including reinstating previously suspended benefits. For plan years beginning after December 31, 2030, multiemployer plan premiums to the PBGC will increase to $52 per participant.

Community Newspaper DB Plans

Certain community newspapers with DB plans can elect to take advantage of more favorable interest rates and amortization periods. They can also avoid some at-risk DB plan requirements.

Next Steps

Employers with defined benefit plans should start reviewing the new rules so they can take full advantage of the relief provided by the American Rescue Plan Act. Single-employer DB plans may want to consider whether to opt into or out of the relief. The stabilization percentages will automatically apply for 2020 if employers don’t opt out.

Employers with health plans should

  • work with COBRA service providers (if applicable) to meet the new COBRA notification requirements,
  • understand how premium amounts are reimbursed through the payroll tax credit process, and
  • coordinate with payroll providers and tax professionals to help ensure proper documentation and tax payments.

Ascensus will closely monitor all future ARPA-related guidance. Visit ascensus.com for the latest updates.

 

Click here for a printable version of this issue of the Washington Pulse.


DOL Announces Non-Enforcement of ESG and Proxy Rules

The Department of Labor (DOL) has issued a statement that it will not enforce two final rules that were issued late in 2020. One rule, “Financial Factors in Selecting Plan Investments,” was published November 13, 2020, and effective January 12, 2021. This rule codified requirements for fiduciaries to consider regarding the promotion of nonfinancial objectives when selecting plan investments, generally requiring investment selection to be predicated on financial or “pecuniary” factors.

The other rule, “Fiduciary Duties Regarding Proxy Voting and Shareholder Rights,” was published December 16, 2020, and effective January 15, 2021. This rule governs the proxy voting and shareholder rights exercised by fiduciaries of ERISA-governed retirement plans. They amend existing investment duties regulations that have been in place since 1979.

Federal agencies have been directed to review certain regulations that may be inconsistent with policies set forth under Executive Order 13990 titled, “Protecting Public Health and the Environment and Restoring Science to Tackle the Climate Crisis”. The DOL indicates that they have heard from a variety of stakeholders who have questioned whether the rules fail to appropriately consider the merits of environmental, social, and governance (ESG) factors in improving investment returns for retirement investors.

Until further guidance is published, the DOL will not pursue actions against plan fiduciaries based on a failure to comply with those rules with respect to an investment, including a qualified default investment alternative, or with respect to an exercise of shareholder rights. However, the DOL notes it is not precluded from enforcing any statutory requirement under ERISA, including the duties of prudence and loyalty in ERISA Section 404.


House Passes Amended COVID-19 Relief Bill; President to Sign

Following Senate passage on Saturday, the House of Representatives has passed by a vote of 220-211 the American Rescue Plan Act of 2021 to provide additional relief to address the continued impact of COVID-19. Included in the package are several items that would affect retirement and health benefits.

Defined Benefit Pension Plan Relief

  • Extends the single-employer plan funding shortfall amortization period from 7 to 15 years, to be applied to all plans beginning with 2022 plan years and, by election, retroactive to 2019 plan years. The amended bill provides plan sponsors with more flexibility than earlier versions which would have required use of the 15-year amortization schedule starting with 2020 plan years.
  • Extends single-employer pension plan funding stabilization percentages, as follows.
  • The 10 percent interest rate corridor would be reduced to 5 percent, effective in 2020.
  • The phase-out of the 5 percent corridor would be delayed until 2026, at which point the corridor would, as under current law, increase by 5 percentage points each year until it attains 30 percent in 2030, where it would remain.
  • A 5-percent floor would be placed on the 25-year interest rate averages.
  • The amended bill now allows plan sponsors to elect not to apply the updated percentages until 2022.
  • Extends SECURE Act funding relief for certain community newspapers to additional community newspapers
  • Permits a temporary delay in the designation of a multiemployer (union) plan as being in endangered, critical, or critical-and-declining status
  • Permits a plan in endangered or critical status for a plan year beginning in 2020 or 2021 to extend its rehabilitation period by five years
  • Permits multiemployer plans to amortize investment losses over 30, rather than 15, years, as was granted to plans for 2008 and 2009 losses (for plan years ending on or after February 29, 2020)
  • Creates a financial assistance program under which cash payments would be made by the Pension Benefit Guaranty Corporation to financially troubled multiemployer plans to continue paying retiree benefits; such payments are to be made by Treasury transfer

Absent from the final bill was a provision that would have frozen cost-of-living adjustments (COLAs) for the annual additions limit and compensation cap after 2030.

Health Benefit Provisions

The American Rescue Plan Act also contains provisions to assist employees who have lost employer-provided health insurance benefits and employers that have provided benefit continuation assistance.

  • Provides premium assistance to cover 100 percent of the cost of COBRA continuation coverage for eligible individuals and families from April 1, 2021, through September 30, 2021. This is an increase from prior proposals for premium assistance that would have covered 85 percent of the cost of continuation coverage. Premium assistance is available if health coverage was lost due to involuntary termination of employment or a reduction in hours. It is not available when an employee has a voluntary termination of employment.
  • Extends the COBRA election period for individuals who had not currently enrolled in COBRA who are otherwise assistance-eligible individuals.
  • Requires health plans to provide additional notifications on the availability of the premium assistance and extended election periods; specifies that the Department of Labor must draft and issue model notice language within 30 days following the enactment of the Act.
  • Provides a refundable payroll tax credit to reimburse employers and plans that paid a premium on behalf of an assistance-eligible individual
  • For the 2021 plan year, the dependent care flexible spending arrangement (FSA) contribution limit will increase from $5,000 to $10,500 (half that dollar amount per parent if married filing separately)

President Biden is expected to sign the bill Friday.


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 ascensus.com.


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.