Vol. XIX, Issue 26
May 12, 2020
Participant Mailing—CARES Act RMD Notices
The Internal Revenue Service (IRS) requires that retirement plan participants begin taking annual distributions and/or begin receiving monthly benefit payments from their retirement accounts—called required minimum distributions (RMDs)—by their required beginning date.
The Coronavirus Aid, Relief and Economic Security Act (CARES Act) has altered this annual requirement by waiving the RMDs for 2020 from defined contribution accounts [e.g., the Clergy Retirement Security Program Defined Contribution Plan (CRSP DC), the Ministerial Pension Plan (MPP—both the 35% that is payable as a lump sum and the 65% that must be annuitized), the United Methodist Personal Investment Plan (UMPIP) and the Horizon 401(k) Plan]. Wespath is mailing a special letter to impacted participants who have defined contribution account balances that would have been subject to a RMD this year.
No action is required on the participant's part to receive the waiver. Wespath will automatically waive applicable RMDs. If a voluntary distribution is taken, the portion of the distribution that would have been the RMD will have 10% federal withholding applied, unless the participant elects otherwise.
The CARES Act RMD waiver only applies to defined contribution plans. Participants with defined benefit plans subject to an RMD [e.g., the Clergy Retirement Security Program Defined Benefit Plan (CRSP DB), the Pre-82 Plan and the Collins Pension Fund] must begin receiving their monthly benefits. If benefit payments have not been scheduled to begin by the RMD date, a letter will be mailed by July 31.
If you have any questions please reach out to your liaison or plan sponsor manager. Participants with questions may contact Wespath at 1-800-851-2201, business days from 8:00 a.m. to 6:00 p.m., Central time.
CARES Act Updates
Employee Retention Credit
The CARES Act provides several key economic support vehicles for small businesses impacted by COVID-19—including churches and other non-profit employers.
The Internal Revenue Service (IRS) recently published guidance on the CARES Act's Employee Retention Credit—a measure that encourages employers to avoid employee layoffs despite economic pressures due to the COVID-19 pandemic. Employee Retention Credits are available to nonprofits as a credit against payroll taxes for the 2020 tax year. Employers that received loan funds through the CARES Act's Paycheck Protection Program (PPP) are not eligible for Employee Retention Credits.
Wespath partnered with the General Council on Finance and Administration (GCFA) to summarize IRS guidance about eligibility and limitations for this credit, and to provide some examples for local churches. The summary is provided here.
Additional information about the Employee Retention Credit was provided in the May 7, 2020 On Board Express.
Paycheck Protection Program (PPP) Loans
We expect additional guidance from the Small Business Administration (SBA) and Department of Treasury (Treasury) regarding certification and forgiveness of PPP loans soon. We will analyze such guidance for our stakeholders once it is published.
In the meantime, the Church Alliance has submitted another comment letter to the SBA regarding PPP loans. The Church Alliance thanked the SBA for explicitly stating that SBA loans will be made and administered consistent with constitutional, statutory and regulatory protections for religious liberty. Additionally, the Church Alliance asked for clarifications regarding federal funding related audit requirements, and posed several questions with suggested outcomes ahead of anticipated guidance regarding loan forgiveness.
Other Updates
Wespath Videos: Wespath's Andy Hendren and Steve Clark appeared in videos explaining parts of the Families First Coronavirus Response Act and CARES Act. You can view Andy's video here and Steve's video here.
Ongoing Advocacy: The Church Alliance joined a number of other national nonprofit organizations and associations in endorsing a letter being circulated by Senators Jim Lankford (R-OK) and Angus King (I-ME) to Senate leadership. The letter urges Senate leadership to address important nonprofit clarifications and provisions in the next Congressional relief package, including increasing the unemployment insurance reimbursement rate for self-funded nonprofits to 100% (it is currently at 50%), and strengthening charitable giving incentives.
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