The IRS is still busy issuing guidance on the retirement plan provisions of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). This time it’s about the funding and benefit limitation rules for single‑employer defined pension plans, in the form of Notice 2020‑61 (Notice).
Defined benefit plan sponsors are required to make minimum funding contributions each year, which may include quarterly installments if the plan has a funding shortfall. The CARES Act extended the contribution due date to January 1, 2021, for any minimum required contributions otherwise due during 2020, including quarterly installment payments.
Depending on the plan’s adjusted funding target attainment percentage (AFTAP), some restrictions may apply to benefit payments and accruals. The CARES Act also allows a plan sponsor to treat the plan’s AFTAP for the last plan year ending before January 1, 2020, as the AFTAP for the 2020 plan year for purposes of determining whether the benefit restrictions apply during the 2020 plan year.
The new guidance provides detailed direction in a Q&A format relating to these CARES Act provisions. You can find the full Notice here.
If you have a single-employer defined benefit pension plan and have questions on the CARES Act and the Notice, please contact Jennifer Watkins, Lisa Zimmer, or another member of Warner’s Employee Benefits/ Executive Compensation Practice Group.
