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CARES Act Changes Rules Governing Retirement Plans

March 30, 2020

Among the many other provisions of the CARES Act are those impacting retirement plans (including 401(k)s, profit sharing plans, and IRAs) in order to provide an influx of cash to struggling employees.

Tax Favored Distributions
In calendar year 2020, an individual (including a self – employed individual) who is either diagnosed with SARS-CoV2 or COVID-19, has a family member diagnosed with SARS-CoV2 or COVID-19, or experiences adverse financial consequences due to quarantine, furlough, layoff, reduced work hours, or is unable to work due to lack of child care, may take a distribution of up to $100,000 in any taxable year. An employer may accept an employee’s certification that the request is due to one of these reasons.

Unless the employee chooses otherwise, the distribution will be included in his income ratably over three (3) years. Additionally, over a three (3) year period that begins on the day after the distribution occurs the employee may repay (in one or more payments) any amounts which they received as a distribution under this provision. These repayments shall not count against the contribution limits for the plan year.

Loans from Qualified Plans
Loans issued from qualified plans during the next six (6) months shall have their limits increased to the lesser of $100,000 or 100% of their vested account balance.

Current loans shall have repayments delayed with all interest accrued during the delay being forgiven and the five (5) year rule for loans being disregarded. Any payments due on or before December 31, 2020, shall be delayed for one (1) year. Any remaining payments shall have their due date adjusted as a result of the delay. 

Temporary Waiver of Required Minimum Distributions
For calendar year 2020, RMDs from 401(k)s, profit sharing plans, 403(b)s, 457(b) and IRAs shall be waived if the taxpayers required beginning date is in 2020 and the distribution was not made before January 1, 2020. 

Plan Amendments
Plan amendments that are required due to the implementation of these provisions must be made on or before the last day of the first plan year beginning on or after January 1, 2022.

For questions, or more information, please contact Priscilla A. Grant, BMD Business, Corporate and Tax Member at pag@bmdllc.com or 330.253.5934.

Client Alert

Update: President Trump Signs Paycheck Protection Program Flexibility Act of 2020

June 4, 2020On June 3, 2020, Congress updated the CARES Act by passing the Paycheck Protection Program Flexibility Act of 2020 (“FA”). The legislation, which has not yet been signed into law by President Trump, would provide more flexibility to small businesses who received loans under the Paycheck Protection Program (“PPP”).Client Alert

Workers’ Compensation Claims and COVID-19

June 2, 2020Can one of my employees file a workers’ compensation claim if they claim that they contracted coronavirus at work? We get that question a lot. Yes, they can, but you should oppose any application for coverage if you receive one. Generally, the claim will not be granted unless the employee has a job that poses a special hazard or risk of exposure to the virus and the employee can prove that he or she contracted the virus at work.Client Alert

Ohio State Dental Board Implements Teledentistry Rules

May 26, 2020Ohio law defines “teledentistry” as the delivery of dental services through the use of synchronous, real-time communication and the delivery of services of a dental hygienist or expanded function dental auxiliary pursuant to a dentist’s authorization.[1] The law requires a dentist who desires to provide dental services through teledentistry to apply for a teledentistry permit from the Ohio State Dental Board (“OSDB”).[2] Pursuant to the mandate under Ohio Revised Code 4715.436, the OSDB is implementing the following teledentistry permit rules and requirements (to be set forth under Ohio Administrative Code Chapter 4715-23). These regulations, which were subject of a public hearing on February 19, 2020, are effective on May 30, 2020.Client Alert

HHS Addresses Drug Manufacturer Coupons on Out-of-Pocket Limits

May 25, 2020On May 7, 2020, the US Department of Health and Human Services (“HHS”) announced their Notice of Benefit Parameters for 2021 in which HHS addressed the application of prescription drug manufacturer copay coupons towards a patient’s out-of-pocket limit. Under this guidance, HHS will permit, but not require, plans and insurers to count direct support offered to enrollees by drug manufacturers (i.e., coupons) for specific prescription drugs toward the annual limits on cost-sharing, regardless of whether a generic equivalent is available.Client Alert

Important Updates, Deadlines, and Clarifications for the HHS Provider Relief Funds

May 22, 2020On May 20, 2020, HHS made important updates and clarifications regarding the General Distribution payments to providers. Between April 10, 2020 and April 24, 2020, HHS distributed an initial $30 billion to providers based on the provider’s 2019 Medicare fee-for-service receipts. These funds were distributed automatically and providers did not need to submit an application in order to receive these funds. The funds were originally touted as a “no strings attached” stimulus payment reserved for healthcare providers. But HHS issued a 10-page Terms and Conditions and required that providers sign an attestation confirming receipt of the funds and agreeing to the Terms and Conditions.
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