September 27, 2021
IRS Outlines Regulatory Priorities for Coming Year
The U.S. Treasury Department and Internal Revenue Service (IRS) recently released the 2021-2022 Priority Guidance Plan (PGP) outlining their anticipated regulatory projects during the 12-month period from July 2021 through June 2022.
While the guidance detailed in this plan provides insight into the activity expected for this year, the IRS is not bound by this document and many of these projects will also be subject to collaboration with other agencies.
The plan includes 19 items addressing retirement benefits (Pages 3-5 of the document) and 16 items addressing executive compensation, health care and other benefits and employment taxes (Pages 5-6). A number of these items have already been completed.
The following items are particularly noteworthy:
- Mortality assumptions: The IRS plans to issue regulations on mortality tables used to determine present value for single-employer defined benefit pension plans. The American Benefits Council has developed a proposal has developed a proposal relating to the impact of the pandemic on mortality assumptions and will be reaching out to the agency on the priority project.
- Missing participants: The IRS will address missing participants in retirement plans, including the issue of uncashed checks. The Council has long urged regulators to issue consistent guidance regarding missing participants, including steps plans should take when participants or beneficiaries are missing and non-responsive. In August 2019, Treasury issued Revenue Ruling 2019-19 regarding withholding from uncashed checks – prompting inconsistent treatment between the IRS and the Pension Benefit Guaranty Corporation (PBGC) in certain instances. In addition, the Treasury may address escheatment issues under state law and may address such issues as forfeiture of benefits and reinstatement at a later time.
- Student loans: The IRS plans to focus on student loan payments with regard to qualified retirement plans and 403(b) plans. The Council has repeatedly cited student loan debt as a potential barrier to retirement savings, offering support for innovative approaches that allow employers to facilitate student loan repayment without diminishing overall savings.
- Electronic delivery: The IRS plans to update electronic filing requirements for employee plans to reflect changes made by the Taxpayer First Act and electronic delivery rules and other guidance for providing applicable notices and making participant elections.
- Repurposing of VEBA assets: The IRS did not add a specific item regarding the application of the “employer reversion” excise tax to situations in which employers re-purpose welfare benefits fund assets (including in voluntary employees’ beneficiary associations (VEBAs)) for other welfare benefits or for other employees. As reported in the June 3, 2021 Benefits Byte, the Council has repeatedly asked that Treasury and IRS provide guidance on this issue so that employers have clarity. Although a specific item was not added to the plan, we understand that Treasury and IRS are aware of the importance of the issue and that the issue is being actively worked.
- ACA reporting: There is a new entry on the plan related to employer and insurer reporting under the Affordable Care Act (ACA), which captures information regarding offers of coverage relevant to the employer mandate and enrollment in coverage, relevant to the employer mandate and the subsidy for Exchange coverage. Final guidance implementing these requirements was provided several years ago. While it is not entirely clear what topic Treasury and IRS plan to address, as explained in the February 4, 2021 Benefits Byte, earlier this year the Council provided comments urging Treasury and IRS to extend or make permanent some of the relief previously provided with regard to these requirements.
- ICHRAs: As was the case last year, the plan indicates that Treasury and IRS will finalize regulations regarding the application of the employer mandate to employers that offer individual coverage health reimbursement arrangements (ICHRAs). Final rules had been released early in 2021 but were then withdrawn, as part of the “regulatory freeze” during the transition of administrations. As reported in the June 16 Benefits Byte, per the spring regulatory agenda, these final rules are slated for release this month, September 2021. As explained in the October 2, 2019, Benefits Byte, regulations on this topic were proposed in 2019, to which the Council submitted comments.
While the priority guidance plan addresses some health policy issues, most of the significant regulatory activity expected this year relates to implementation of the Consolidated Appropriations Act, 2021 (CAA) provisions applicable to group health plans, including regarding surprise billing and transparency requirements. Because these provisions are under the joint jurisdiction of the U.S. departments of Labor, Treasury and Health and Human Services, they do not appear on the Treasury/IRS priority guidance plan.
For more information on regulatory activity as it applies to retirement matters, please contact Lynn Dudley, senior vice president, global retirement & compensation policy. For more information on regulatory activity as it applies to health care matters, please contact Katy Johnson, senior counsel, health policy.