Grappling with COVIT-19 issues has certainly been difficult, but retirement plan filings and payments are still required. The Internal Revenue Service has provided relief for some of them by granting extensions. Here is a summary of those extensions:
Deductibility of Employer Contributions
The IRS has extended the due date to July 15, 2020 for those employers filing Federal income tax returns and making Federal income tax payments that would ordinarily be due April 15, 2020. The IRS has indicated that July 15, 2020 is the end of the grace period for employers to make contributions deductible for 2019.
Funding Extension for Defined Benefit Plans
Defined benefit plans have another deadline. That’s the date required minimum contributions must be made to avoid a 10% non-deductible excise tax. For calendar year plans, the due date would ordinarily be September 15, 2020 for contributions due in 2020. That contribution can now be delayed to January 1, 2021 increased for interim earnings. In addition, employers have the option to use an alternative funding target percentage as a measure of the funded status of the plan.
Restatement of 403(b) Plans and Defined Benefit Plans
The IRS requires that pre-approved retirement plan documents which our firm sponsors be updated every six years for an employer plan to remain qualified.
The IRS has extended the due date for 403(b) plans to be in document compliance from March 31, 2020, to June 30, 2020. This is an opportunity for 403(b) plans that do not have an up-to-date document to fix “document failures” retroactive to January 1, 2010 (the date the IRS required a 403(b) plan to have a document). Note, however, that this does not include “operational failures” that have to be corrected.
Defined Benefit Plans and Cash Balance Plans
The IRS has also extended the April 30, 2020deadline to adopt a pre-approved defined benefit plan or cash balance plan. The new deadline is July 31, 2020.
Extensions Not Granted
Return of Employee Excess 401(k) Contributions
An extension for the return of excess employee 401(k) contributions was not part of the compliance relief. The return of those excess contributions adjusted for earning are still due no later than April 15, 2020 in order to exclude the distributions from income.
Form 5500 Filing
The Department of Labor now has expanded authority to postpone certain ERISA filing deadlines including Form 5500. To date, the DOL has not done so. For calendar year plans, the due date for Form 5500 for the 2019 plan year remains July 31, 2020 unless extended to October 15, 2020.
The IRS and the DOL will be providing additional information on these extensions, and we will keep you informed.
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This blog post is for informational purposes only and should not be considered tax or legal advice. Taxpayers should always review their specific facts and circumstances with their tax or legal advisors.