Defined Benefit Plan Changes Due to COVID-19
The Coronavirus Aid, Relief and Economic Security (CARES) Act was passed on March 27, 2020, in light of the substantial impact of the coronavirus. The CARES Act included some relief provisions for tax-qualified defined benefit pension plans.
Delay of Required Contributions
Under the CARES Act, an organization can delay until January 1, 2021, any required contributions otherwise due in 2020 to meet funding requirements.
The amount of each minimum required contribution will be increased with interest from the original due date to the date of payment.
Benefit Restriction Relief
For benefit restriction purposes, a plan sponsor may elect to use the Adjusted Funding Target Attainment Percentage (AFTAP) for the last plan year ending prior to January 1, 2020, for any plan year that includes calendar year 2020.
Plan Document Extension
The IRS announced that it is extending the rapidly approaching due date for Pre-Approved Defined Benefit Plans, in light of the COVID-19 pandemic. Under the announcement, plan sponsors now have until July 31, 2020, to comply with final regulations issued in 2007 to adopt a pre-approved plan document. This has been extended from the previous due date of April 30, 2020.
PBGC Filing Extension
The PBGC has announced an extension of the due date to July 15, 2020, for PBGC premium payments and other filings due on or after April 1, 2020, and before July 15, 2020. Note that the extension doesn’t apply to all situations, but the filer can request an additional extension on a case-by-case basis.
IRS Form 5500 Filing Extension
The IRS has extended the due date to July 15, 2020, for Form 5500 filings due on or after April 1, 2020, and before July 15, 2020. Note this doesn’t impact calendar year Form 5500’s due July 31, 2020.