Legislative updates

President Biden’s fiscal year 2024 budget includes proposed retirement account restrictions for certain taxpayers — similar to those included in the Build Back Better Act passed by the House in 2021 — but left by the wayside enroute to the passage of the Inflation Reduction Act of 2022.

The United States Senate on Thursday confirmed Danny Werfel, in a 54-42 vote, as the next commissioner of the Internal Revenue Service. Mr. Werfel, who was nominated in November 2022 as his predecessor Charles Rettig’s term ended, will serve through November 2027.

Credible studies have concluded that employers who automatically enroll plan participants into a retirement plan help place them on a lifetime path to meaningful savings.

Representative Suzan DelBene (D-WA) and co-sponsors Sean Casten (D-IL), Juan Vargas (D-CA), and Dean Phillips (D-MN) have introduced the Freedom to Invest in a Sustainable Future Act.

The SECURE 2.0 Act makes it easier for individuals who own the entire interest in an unincorporated trade or business to make elective deferrals to a 401(k) plan for their first plan year.

The SECURE 2.0 Act gives certain employers a general business tax credit for immediately including military spouses in their defined contribution plan.

A final rule from the Department of Labor titled “Implement SECURE Act and Related Revisions to Employee Benefit Plan Annual Reporting on the Form 5500” has left the Office of Management and Budget.
 
According to a description of the rule, it is likely to include guidance on the implementation of Group of Plans reporting pursuant to Section 202 of the SECURE Act. The Department of Labor released certain form revisions last year but indicated that it was evaluating public comments on elements of the September 2021 proposal related to 1) Defined Contribution Group reporting under the SECURE Act and related audit issues, 2) new Schedule MEP (Multiple-Employer Retirement Plan Information)  reporting requirements, 3) financial improvements to the Schedule H, 4) changes in participant counts related to plan audit requirements, 5) reporting for multiple employer welfare arrangements that file Form M-1, and 6) questions on pension plan compliance.

Earlier this week, President Biden announced his intent to extend the national emergency concerning the COVID-19 pandemic through May 11, 2023. President Trump initially declared a national emergency at the beginning of the COVID-19 outbreak in March 2020. Shortly after President Biden took office, the national emergency was extended for one year through February 28, 2022. President Biden extended the national emergency for a second time on February 18, 2022, until February 28, 2023.

Beginning March 1, 2020, the national emergency declaration has provided relief to health and welfare plans by extending the following deadlines:

• HIPAA special enrollment periods
• 60-day election period for COBRA continuation coverage
• Date for making COBRA continuation coverage premium payments
• Date for individuals to notify a health plan of a qualifying event or determination of disability
• Date that individuals can make a claim for benefits under the plan's claims procedures (extending the runout period for reimbursement by health plans, health FSAs, or HRA plans until after the pandemic has subsided)
• Date for individuals to perfect an incomplete claim
• Dates for appealing denied benefits and for external review of claims denials
• Date that a group health plan sponsor or administrator must provide a COBRA election notice

As clarified in Notice 2021-01, the Department of Labor, the Internal Revenue Service, and the Department of Treasury explained the extension of deadlines applies on a person-by person basis and cannot exceed one year, as follows:

• one year from the date an individual was first eligible for relief, or
• 60 days after the announced end of the national emergency

 If the national emergency ends on May 11, 2023, as planned, the extension of deadlines would end on July 10, 2023. Normal deadlines for the events listed above will apply as of that date. President Biden has indicated that he intends to end both the public health emergency and the national emergency on May 11, 2023.

Senator Ted Cruz (R-TX) has reintroduced the Student Empowerment Act. The bill would allow public, private, and religious school students to use 529 savings accounts to cover K-12 expenses—including expenses related to tutoring, testing fees, and educational therapies for students with disabilities.

This credit applies to qualified plans (defined contribution and defined benefit plans under IRC Sec. 401(a) and 403(a)), and SEP and SIMPLE plans.