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On-Demand: Unintended Consequences of COVID-19 Legislation on Employee Benefit Plans

Jun 4, 2020

Specialists from EisnerAmper and Polsinelli discussed the unintended consequences of the CARES Act and FFCRA on employee benefit plans.


Diane wasser:I'm Diane Wasser. I'm the founder and the partner-in-charge of the Pension Services Group at EisnerAmper. I've been in the public accounting industry for 36 years, 32 of them with EisnerAmper. We're a full-service public accounting firm, accounting tax consulting. I encourage you to visit our COVID Knowledge Center. It's filled with awesome information as well as our services on cybersecurity, and many other non-typical accounting functions.

I'm real happy to be here today with Jamie. Her and I were very excited to do this presentation together. The culture of our firms is very similar. We have a robust Employee Benefit Plan Audit practice that complements their ERISA practice. And we both have a very consultative approach to servicing our clients. At EisnerAmper, we audit about 450 employee benefit plans, and we're one of 54 firms that audit more than 200 plans a year.I certainly hope that you'll enjoy the program as much as we did preparing it. On the slide, I have an overview of what we're going to cover today. We've broken it up into welfare benefit plans and retirement plans. And as luck would have it, last night, the Senate passed the PPP Flexibility Act. Nothing in our presentation changes as result. It doesn't really impact employee benefit plans. However, it does extend the period for forgiveness.

So, that means that payroll costs and the related retirement plan contributions that could possibly be forgiven as extended from an eight-week time period to 24-week time period. And we'll touch on that a little bit more. I'm going to turn it over now to Jamie so she can introduce herself as well as kick it off with retirement plans and the unintended consequences that are coming out of the CARES Act.

Jamie Kwiatek:Welcome, everybody.  I'm Jamie Kwiatek. I am a shareholder in the Employee Benefits and Executive Compensation Group of Polsinelli. I graduated law school in 1981. So, I've been doing this longer than I want to admit, but I've been doing this. And I want to welcome all of you, and thank you for taking your time to attend today. So, we're going to first talk about welfare benefit plans, as Diane told you.

And now, you may be thinking, "Well, I already made decisions about whether to cover my furloughed reduced hour employees or not." But even if you did, you still need to be sure that you have proper plan documentation to capture the decisions that you made with respect to those employees. And this is important for several reasons. One, if you're audited by the Department of Labor, they want to see your plan documents and see those provisions, make sure that they match up.

And these days, when people are very litigation-intended, you also want to make sure that your plan documents capture it so that you avoid or at least can prevail if you have a participant suit on it. So, the first thing that I have clients do when they're documenting the decisions that they made, is review their plan documents and their leave policies to see if they already cover how they're going to handle furloughed employees. In some cases, none of the documents will cover it.

And in other cases when I was dealing with clients, they had leaved policies that covered furloughed employees, but nothing that covered employees who were reduced from full-time to less than full-time, where the intent and the desire was to allow them to not lose eligibility, and to continue to participate in the plan during that reduced hour period. So, some of the things that you need to think about including in the amendment is, who's eligible?

Is it just your furloughed employees? Was it employees whose hours were reduced? And what about people who voluntarily sheltered at home? So, perhaps they were just not comfortable coming into their workspace and wanted to stay home and had a job where they could not work remotely. Or maybe it was someone who had children and with childcare shut down that had to stay at home to take care of those children.

So, I had one employer that specifically wanted to cover those employees as well even though they were not being furloughed by the company. And then, what benefits are you extending? Did you extend coverage for just your medical, for medical, dental, vision, or for all of the benefits? Disability, life, all the benefits that you might offer? It's also important to have an end date for when the coverage continuation will stop.

Otherwise, you could have employees saying that furloughed employees always providing, or saying that they are entitled to coverage under the plans. You can always move that date if you build a date into your plans and you end up needing it longer. But it is important to have some date in there. You also should specify, is this just for this pandemic or what about, I hate to say it, the next one, or if we have a resurgence of this one?

So, think about that when you are structuring your plan amendment and drafting that. The documents that you might want to amend, if you have a self-funded plan, perhaps you want to amend that document itself. With insured plans, you're not going to be amending the insurance certificates and booklets. The insurer isn't going to permit that. So, the best way there, if it's not something that you cover in your leave policies, is to amend your wrapper plan. And if you're saying, "What in the world is a wrapper plan?"

So, a wrapper plan document is the document that is created when you treat multiple benefits as if they're all in one plan. A lot of the times, it's just for 5500 filing purposes. But for those of you who are too small to have your welfare plan subject to 5500 filing requirements, it is still important to have a wrapper plan that pulls them together so that the employees now and the Department of Labor, if they ever audit, know that it is just one plan.

Also, you need to review ACA and other laws. I forgot to mention payment provision, so the other thing that you should include in there. So, were the employees required to continue to pay to have the continued coverage? Were you picking up the coverage for them during that period? If so, are they expected to pay you back when they come back? So, in addition to the ACA, and most of the time, whatever you did is going to be fine under the ACA and not trigger any penalties.

There are very limited circumstances where it might come into play that are beyond this presentation. But some other laws is, what about if you picked up their premiums while they were gone but you're expecting them to repay? Be sure you look at state pay laws to figure out what consents are necessary, when those consents must be obtained. It's also very important that you make sure that the insurance carriers are actually going to honor what you're doing or what you did.

And if it's too late now because you already did it, at least you should know what your exposure and risk is there. When we were looking into this for clients, we did not find any uniformity in what the insurance companies, how they were treating it. So, one insurance company said, "We're not going to audit through the period ending May 31." Well, we now know there are companies that have furloughed employees beyond May 31.

But I also didn't know what that meant. Okay, you're not going to audit. When you audit in June, does that mean that you're then going to challenge the decisions and the eligibility that we allowed in April, May, the end of March? And they would refuse to give us any clarification, which was not very helpful. That's why I went ahead and allowed it anyway. Some of them, we had one that was great.

And I'll do a call out to them. It was SunTrust. And they put out a memo that said exactly what they weren't going to allow, who they were going to allow you to continue the coverage for them, from what start date and end date they weren't going to allow it. So, it was nice to at least have clarity from one of the insurance companies. And then, we found others that would just say, "Well, we looked to you to determine eligibility." And that's great.

But what if your compliance group doesn't agree with that later on? So, at least it let us know to some extent what they were thinking, what they were allowing. We also, when we were doing the amendments, ran the amendments by the carriers. In that way, even if it didn't say, "Yes, we approved, no, we don't approve," at least at that point, we had an argument that we said, "We ran it by you. If you had a problem with something, you should have spoken up that."

Okay. Moving on. We have also had a lot of new regulations and regulatory guidance from the IRS and the Department of Labor with respect to welfare benefit plans during this period. This includes extended claims and notice periods for 2020. And our opinion is that this guidance applies not only to your insured plans, your self-insured plans, but also to your Health FSAs, which are actually considered by law to be self-funded health plans, and your health reimbursement arrangements.

So, make sure that your administrators are aware of these new extended claim periods, and know how to administer them. It also would apply to any other claims periods and then appeal periods. And basically, what it does, it says that anything during the outbreak period, and we're still in the outbreak period. So, until they tell us that the national emergency is over, the outbreak period is ongoing. During this time, you just treat it as if this period never existed.

The biggest area of concern that I see is COBRA because they also extended all of the periods under COBRA until 60 days after the end of the outbreak period. This would apply even to the employer notice that you're eligible for COBRA. We do not recommend that you delay giving that notice to the participants because they may want to go ahead and elect, even though they don't have to. And in addition to that, you don't want to forget to give them the notice at some point because COBRA litigation right now is rampant.

And for a while, every time I was looking at the news, another company was sued in class actions for a failure to comply with the COBRA rules. In addition, the employee election period is extended, which means you're going to see more adverse selection of COBRA coverage. And the premium payment period is extended. The good news is you do not have to start paying benefits until you actually received the premiums.

And then, what notice do you have to give participants that these periods have been extended? The law is silent on that. I do believe that you still have to give them some notice. What I would recommend is that you amend your wrapper document or your self-funded plan document as soon as possible. When you do that, you have to give summary material modifications to your participants. Don't wait the 120 days after the end of the year to give that. Distribute that. And then, you've given them notice.

I do not recommend making it part of your COBRA notices or going with them because a lot of the litigation is around the fact that the notices don't follow the Department of Labor safe harbor notice. And that notice, which was updated a couple of days after this information came out, this guidance came out, does not include anything on these extended time periods. So, we don't recommend that. And we think if you send a side letter with it, that that's likely to confuse the participants.

And that's the other major area of litigation in this. Okay. Finally, cafeteria plans have changed quite a bit. It seemed like every day they were issuing something new. So, first, they came out and they said, "The over-the-counter drugs that you weren't allowed to reimburse from FSAs, well first, you were. Then, the law changed and you weren't. And now, they're back again." That is effective right now. The IRS did not say by when you have to amend the cafeteria plans.

So, if you're going to allow that now, I would get that amendment done sometime this year. In addition, they've allowed new mid-year special enrollment elections under the cafeteria plan. And obviously, you would make these under your health plan as well. Under HIPAA, there was never an issue with being more liberal than the HIPAA special enrollment rules. But under the cafeteria plans, you're only allowed to allow participants to make changes if there is a change in status. So, we had one client.

There was an insurance company that came out and said, "We're allowing a special enrollment period for our coverage for participants who initially declined coverage." And that was great, except that the cafeteria plan rules didn't allow those premium payments to be paid on a pretax basis. So, we had one employer that allowed it and then wanted to allow pretax premiums. And we said, "No, not allowed." And every time anything came out from the IRS, they would say, "Is it allowed now?"

And we'd say, "No." And then, I woke up one morning, I know, exciting thing to do at 6:00 in the morning, but I always checked to see what new rules and laws have come out. And there was finally the notice that those special enrollments were actually allowed. So, we got to contact the client and say, "Good news, now you can do it on a pretax basis. Even better news, we hadn't already amended the plan to say that it couldn't be on a pretax basis."

And we just built that into the cafeteria plan. In addition, for your coverage, your medical coverage, et cetera, they are allowing you to revoke your existing election and make a new election into a different option offered by the employer, or you can revoke your existing election and certify that you are electing new coverage either on the marketplace or through a spouse's plan.

Now, the one thing that we do not believe this covers is if you continued coverage during furlough and somebody dropped that coverage by not making required premiums, we do not believe that they can now elect new coverage. Similarly, changes are now allowed to FSAs, both health and DCAPs. And you can revoke, elect, make a new one, drop it, decrease, increase these elections. These are all optional provisions.

So, before you adopt, think through exactly, "What do I want to adopt and how do I want it?" For example, do we want to allow people to make several changes? Do we only want them to be able to make one? Do we want to adopt this for the health FSA but not for the others, the DCAP, not for the other? So, there are a lot of things for you to think through. Work with your TPA and work with your legal counsel to make sure you're putting these in place properly.

 For amendment timing, these amendments they actually told us they are not due until the end of next year. But make sure that your TPA can administer whatever it is you put in place. Make sure they understand, because like the COBRA rules and everything else, even if you have a TPA, ultimate liability and responsibility lies with you as the plan sponsor. These changes can only be prospective, not retroactive.

Another thing that the IRS did in this coverage, and I didn't even know this was possible, because there's nothing in the law that says the IRS can do it. But since it's a good thing, I'm not going to complain. They increased that $500 rollover limit, which applies if you don't have a grace period and you've elected to allow people to use anything left in their health FSA in the following year up to $500. That's now up to $550. So, if people have more up to $550 left from 2020, they can still use that in 2021.

And then, the final thing that they did was for people who didn't use up their carryover or their grace period, any amount that they had for grace period plans before March 15 of 2020, they are now allowing those to be carried over through the end of the year instead of ending at March 15th. And now, I'm going to turn it over to Diane.

Diane Wasser:Thank you, Jamie. That was great. That stuff always makes my head spin. So, I appreciate you putting it in terms that I could understand, and hopefully, everybody could benefit from. So now, we're going to move into retirement plans. And in summing it up, all these were designed to get easy, quick access to retirement plan funds. So, the employers can implement the provisions of this relief and not worry about amending the plan specific to these provisions in the CARES Act until the end of the plan year 2022.

And for government plans, that's the end of 2024. So, it gives a little leeway as long as the plan is operated in accordance with the terms that these can be implemented quickly and swiftly, and worry about amending it later. And the thing that I'll talk about a few times about other amendments that may be a consequence probably aren't directly to reflect the CARES Act revision. So, we may not have as much time to make those particular amendments as with the other ones.

So, these are the main things I'm going to touch on. First is coronavirus-related distributions. These apply to affected individuals, which there's a specific definition of what is affected, be it someone whose spouse has coronavirus or they had it, or they're caring for someone with it. There are specific guidance on who is eligible as being affected for the coronavirus-related distributions. Those allow a participant to have a distribution actually anywhere from 01/01/20 to 12/31/20 of retirement plan funds up to $100,000 or 100% of the vested account balance.

And out of that $100,000, you'd have to deduct any loans that are already otherwise outstanding. I'm sorry, I got that confused with my next topic. So, coronavirus-related distributions is $100,000 or 100% of the vested balance. I jumped ahead of myself there a little bit. And these, for whatever the age, even if the person's under 59 and a half, they don't have to have the 10% penalty applied to it, and there's no 20% withholding requirement.

There is a 10% automatic withholding that will occur unless the participant waives it, and employers do have an obligation to inform the participant that they can waive that 10% withholding. This money can be recontributed as a rollover anytime within three years to an IRA or to a qualified plan. And if it's not, then the taxation is over a three-year period. And somebody can decide, "Well, I don't want $100,000. I want to take out 20." And then, they may change their mind, it just continues from the moment the loan is taken out until you get to $200,000.

There's no interest on the distribution when you go to pay it back. And certain employers are allowing participants, all types, to avail themselves of this coronavirus-related distribution. Some are limiting it to active. So, it depends on the terms of the plan that are elected similar to where the funds come from. Those vested accounts, are they all types of contribution accounts within the plan or are they certain ones?

That could be an unintended consequence that people overlook when they want to just get this relief implemented and they overlooked that maybe they restricted it to profit sharing contributions or something, or to active participants, and they forget that they did that, or they overlook it and just let anyone affected by coronavirus take money no matter what their status is, no matter what vested account funds it's coming from. So, that's something to watch out for.

And another one would be ultimately not amending the plan to include these or overlooking the limit, the $100,000 with 100% of the vested balance. The enhanced loan terms, I got ahead of myself a little bit there. So, I hope I didn't confuse you. I just talked about the coronavirus-related distributions, and that is a distribution that can actually be repaid as a rollover. And there's no penalties that apply to that.

For the coronavirus-related loans for affected individuals affected by the virus as defined, the loans that were used to typically seeing allowed plans are $50,000 or 50% of the vested account balance. In this case, affected people can take up to $100,000 or 100% of the vested balance. And that's where you would back out any previous loans that are outstanding from the $100,000 that's available. These will be paid back over five years.

And therefore, loans made between March 27th and September 22nd of 2020. Here is an area, if your plan currently allows for one loan at a time outstanding and someone has an existing loan and wants to take advantage of this, the plan they have to be amended currently to allow for more than one loan. And since that's specifically not a CARES Act provision, if your plan wouldn't otherwise allow for the loan and you're adding that.

An unintended consequence I saw already is just confusing the loans and the payment terms, and the maturities. Everybody really wants to allow people to take advantage of these things. And they might be moving pretty quickly and overlook something. So, always pay attention to the terms of the plan that you adopt. And make sure that in practice and operation, that's what you're following. So, those two are the coronavirus-related distributions, and the enhanced loan provisions are for individuals affected.

Benefit plans also can offer age 59 and a half distributions. Once you reach age 59 and a half, this is still available to anyone whether related to coronavirus or not as long as the plan allows for it. Plan sponsors could consider if they do not have that provision, maybe they're going to amend for that. And that's something they would do now to allow for those in-service withdrawals to occur. And also, always hardship withdrawals.

This again would be available to all participants, assuming that the plan allows for them. And there's very specific guidelines and reasons why a hardship withdrawal is acceptable. And recently, a while back, there was a new one for a FEMA-declared major disasters. And a lot of states have declared major disasters because of COVID. So, that could be an addition for a reason for a hardship.

Other ones could be preventing a foreclosure or eviction with everything going on. That can be used to prevent that. And also, for uninsured medical expenses. These are taxable. And depending on the age of the person, it could lend itself to a 10% penalty if they're under 59 and a half. Loan suspensions is another thing. This really is an optional. This is required to allow anyone with a loan payment date from March 27th through 12/31/20, can be delayed for a year.

And that again is for people that are affected by COVID. In accordance with that definition, you wouldn't really have to do a formal amendment on because it's required that those loan payments be suspended for up to a year. I couldn't even bring myself to do a presentation about employee benefit plans without talking about the timing of the deposits of employee deferrals. Everyone, especially in March, was going through a lot of transition.

And one of my clients said, "So, those rules probably don't apply right now, do they?" And I said, "Yes, they do." The government wants, as soon as funds are withheld from a participant's pay, they want those funds in the benefit plan as soon as they can be reasonably segregated from the employer's general assets. And that has not been loosened. That's something that the government doesn't want plan sponsors borrowing from their planned participants as opposed to borrowing from the bank.

So, if you're paying payroll, you can deposit those deferrals. So, I urge you to keep on that. Next. I know Jamie touched on it in furloughs and what goes through when you're considering that. So, for our retirement plan purposes, a furlough is not a severance from employment. So, furloughed employees are still active, and they could take the coronavirus-related distribution. Their status isn't impacted by that. Can they take a distribution?

No, because they're still considered active. So, that's an unintended consequence that people confuse really what that furloughed employee means and think that they can avail themselves of certain benefits or distributions that they really can't. If it's a 401(k) plan, they're not contributing. They're not deferring their funds into the plan while they're on furlough because they're not receiving a paycheck. So, they're not receiving a match, but they could still be eligible for other types of employer contributions.

And I'll touch on that in a moment. It really depends on the plan's provisions. And when I was preparing for this, it led me to think about other things that people earn service towards like eligibility, vesting, allocations of employer contributions like I just mentioned. Vesting, I forget if I said it, and also, benefit accruals and a defined benefit plan. So, for eligibility, it really depends on what the plan says. It could say six months of employment. It could be based on hours.

So, you have to look at what your plan provision says because furloughed employees may have otherwise met them. And also, for vesting, it would depend on how vesting service is calculated. If it's based on 1,000 hours, the furlough could impact that. If it's based on elapsed time, they may be good already. Something very close to look at because a lot of plans when they're looking at, do employees get employer type contributions other than a match?

Usually, because I already knocked that off for the furloughed employee, they will look at our, do they have 1,000 hours or are they employed on the last day of the plan year? And it may be an unintended consequences employers may have wanted the furlough people to continue to get that benefit, or maybe they assumed that they weren't. So, the terms of the plan have to be looked at. And there also is an opportunity to amend how that service is earned to impute that that person is earning that service while they're on furlough.

So, there's an opportunity to do that. You can always accelerate terms like that, but you really can't take them away. So, if you were intending for people to get those contributions types while they were on furlough, perhaps consider imputing that time while they're on furloughs that they do get credit for that. Similar to benefit accruals and a defined benefit plan, a lot of time they're based on compensation.

So, furloughed employee wouldn't be getting that, but they may be based on service. Another thing to look into exactly what the plan says to see if perhaps they are still earning benefit accruals. Partial plan terminations. This also is an area that could be very unintended. We had a client very early on that was hit pretty hard and had to make some serious decisions about their employees. And the unintended consequence was a partial plan termination.

So, a partial plan termination can occur when a group of employees that's previously covered by a plan are involuntarily removed. That can happen because of the plan amendment. And generally, it happens with a plan through a shutdown or a downsizing, restructuring, things like that. So, the furloughed employees wouldn't count as someone affected by this. However, if it was a long-term furlough, they could count. So, I put in here, it's an ugly formula.

But generally, a partial plan termination occurs when there's a 20% reduction in plan participants. So, that's the number of participating employees that had an event where they were severed. Their employment was severed, as of the end of the year. So, again, the furloughed employees initially wouldn't really come into consideration for this unless they turn out to be long-term furloughs. So, you take the amount of employee participants that were affected by the downsizing and divide it by the number of participants at the beginning of the year, both eligible and active.

Plus, any newly entered participants for the year. And if that is 20% or more, then a partial termination has occurred. What does that mean? That means that the affected individuals, those individuals that are no longer employed, become 100% vested in their balances in the plan. So, that could be pretty costly to have a lot of unvested accounts that all of a sudden become vested for those affected individuals. So, I saw that firsthand as an unintended consequence of reacting swiftly to the business right after, soon after we really got hit by this pandemic.

Lastly, I'm going to talk about defined benefit plan, just some specific things that are coming up. And you may have heard that the required minimum distributions from plans were suspended. There we go. You may have heard that required minimum distributions were suspended. That's defined contribution plan only. That's not defined benefit plans. And also, there was a deadline for preapproved plans to be adopted.

It was April 30, 2020, and that got extended till July 31, 2020. And also, the Secure Act actually before COVID, the Secure Act allowed that in service withdrawals at age 59 and a half instead of age 62. So, plans might be amended for that. The coronavirus-related distributions that I talked about in the beginning, the $100,000 or the 100% of the vested account balance, that applies to defined benefit plans, if the plan allows for lump sum distributions.

Many plans have benefit distribution restrictions when they're funded status falls below a certain percent. And in order to avoid such restrictions on issuing lump sum payments, the government allowed that the funded status of 2019 be considered as opposed to what the funded status in 2020 is, to determine what the restrictions are. So, that if a plan was in good standing and had a funded status of over 80% and was allowed to do lump sum distributions, if the plan called for that, just by falling below 80% in 2020, they would then not have to have that restriction that otherwise would have been imposed.

So, that's nice relief. Lastly, the minimum required contributions to defined benefit plans. Well, the timing on that was loosened so that the minimum required contribution is able to be made by 01/01/21 as opposed to during the 2020 year when it would have normally been due. And there is an interest element there from when it would have been done till extending it, but that's a nice relief. Hopefully, as plan sponsors get back in here, they'll be able to have the money that might be pretty darn tough to have at their fingertips when it's due.

I mentioned very briefly in the beginning about the PPP and the Flexibility Act that came out. And I mentioned that retirement plan contributions do count as a payroll cost for purposes of the forgiveness. If, however, it's for the time period of the originally eight weeks, now 24 weeks. So, if you put 100% of the contribution into the plan during the PPP period, that's fine. But the only amount that would be able to be forgiven possibly would be for the time period.

So, that would be for originally 8 52nds and now 24 52nds. So, the Flexibility Act did increase the amount of retirement plan contributions that may be able to be forgiven because they extended that time period. I talked about the unintended consequences as I went. My mother always used to say, "No good deed goes unpunished." So, a lot of these things where people were racing to help their participants and allow them the ability to take a distribution or an enhanced loan, whatever the case may be.

And there are certain stumbling blocks or obstacles that may come up later on if they don't really take a diligent look at what's required and what they actually did put in place, especially when it comes to the distribution buckets of what types of the account balance are able to be distributed or to take a loan from. And then, also, just if they were to restrict it to certain types of people active or whatever the case may be.

And certainly, partial plan termination is another one. So, that leads us now to some time for questions. Again, thank you very much for your attendance today and your attention. And thank you, Jamie. And let's see if we have any questions.

Jamie Kwiatek:We have one. And the one question was on the partial terminations. "Does it matter if the terminations occur by employer action or employee action?" Do you want to answer that or you want me to take it?

Diane Wasser:Sure. I'll start. And then, you can chime in. How's that?

Jamie Kwiatek:Sure.

Diane Wasser: It's for employer-initiated events. So, if someone voluntarily has quit, they typically do not go into the calculation. So, it's employer-initiated, like I said, an amendment or a downsizing, or a restructuring. I have had discussions with people where supposedly other types of employee terminations were brought in. But I would say the answer is that the affected people are those that are involuntarily.

Diane Wasser:And maybe Jamie can shed light on a time when other people might be brought into that.

Jamie Kwiatek:No, that should be it. I've always taken that position, that it's just those people that are involuntarily terminated. The only thing you have to be careful about is that the IRS may look backwards and not just look at this pandemic period. And if you had some layoffs at the end of last year, they might aggregate those layoffs with these to create a partial termination situation. And the other time you have to worry about a partial termination, which could occur depending on your performance, is if you don't make contributions for three out of five years.

It can also be deemed to be a partial termination of a plan requiring you to vest everybody. So, you need to be careful about that. We did have a couple of other questions now. So, I'm going to read one but not exactly the way it was typed. So, there was one question about the PPP loan forgiveness and period going from eight weeks to 24. Whether that's been made official or whether there's a risk that the President won't sign the bill. So, it has been passed by the House in the Senate.

You're right, the President has not yet signed it. However, given the fact that it was a huge majority, I think there was only one against. It could survive veto by the President. So, hopefully, that won't occur. But one never knows these days.

Diane Wasser:Right, very true. One other thing I wanted to say while you read that, there could be another unintended consequence. I forgot to mention this. I have heard of a few companies that gave bonuses to their people during this, especially some of the ones whose businesses were booming as a result of this. And an unintended consequence that I've seen before, be it through hurricane disasters or whatnot, again, a good deed. It's great if an employer is going to pay a special bonus or reward employees during a time when things are going well.

Always please refer to the plan document and the provisions of the plan to see if that bonus should be included as compensation and should have employee deferrals or employer contributions applied to it. We see that a lot where it's all well-intentioned but the plan document defines compensation in a way that would include that bonus or that special pay as a result of the pickup in business during this time. So, it can go both ways.

Just make sure if you're adding any compensation that you check the terms of the plan to ensure whether there should be contributions based on that.

Jamie Kwiatek:And if your plan is not written the way you want it to be, you can do an amendment to either capture it or not capture it, depending on what you wanted. We also had a question about, "Who makes the determination of whether someone is a COVID-affected individual for purposes of retirement plans?" Diane, I think you have to go possibly. It's 2:00. Do you want me to take this one?

Diane Wasser: That'd be perfect. Thank you. I appreciate it, everyone.

Jamie Kwiatek:Okay. Thanks, Diane. Great job. So, quickly, we had this question and one other. And I will try and answer those. So, on this one, an infected individual, they can self-certify. And the IRS did come out and say that you do not have a duty to inquire if they self-certify. And therefore, unless you have actual knowledge that that person is not a COVID-affected individual, then you don't have to question it.

If you've turned that self-certification and that process over to your TPAs, I would have your TPA handle it directly. And I've actually recommended to our clients that they make it clear to the TPA that they've delegated that responsibility and that they don't need reports, nor do they want to see reports of the activity, because you don't want to be brought into a situation where you might have to question whether it was right or not. So, I'm going to take one more question.

And then, we will follow up with the rest of you. There was a question about whether the recently passed legislation actually says that you can only use 2450 seconds. And no, that's a good point. That's not in the law. But every practitioner I know has taken that position that you should not be overly aggressive with respect to what you're claiming. You can always run it by your lender who is working with the SBA on approving that and how the application is completed.

I want to again thank everybody for attending today, and I hope you stay safe and healthy.


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Diane Wasser

Diane Wasser is the Partner-in-Charge of New Jersey at Eisner Advisory Group and Managing Partner of Regions at Eisner Advisory Group as well as a member of the Eisner Advisory Group Executive Committee. She has over 30 years of experience providing employee benefit plan audit and consulting services to publicly and privately owned entities across the United States.

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