Benefits Monthly Minute

IRS Says Relax | The (Bumpy) Path Out of the Pandemic

IRS Says Relax

Earlier this month, the IRS issued Rev. Proc. 2021-38, which extended the timeframe during which pre-approved plans may timely adopt interim amendments. Under the prior system, pre-approved plans must adopt interim amendments by the end of the remedial amendment period prescribed by regulation. For single employer plans, this generally meant the later of the due date for the employer’s tax return for the year in which the qualification change took effect, or the last day of the plan year in which the change took event. Rev. Proc. 2021-38 simplifies this deadline so that interim amendments must be adopted by the end of the second calendar year after the calendar year in which the change in qualification requirements is effective with respect to the plan. Accordingly, the employer’s tax filing deadline is no longer relevant in determining the date by which an interim amendment must be adopted.

KMK Comment: Plan sponsors that use pre-approved plans should check with the pre-approved plan provider to meet this deadline. Also, it bears noting that Rev. Proc. 2021-38 only applies to qualified plans under IRC 401(a), however, Rev. Proc. 2021-37 similarly modifies the interim amendment rules applicable to pre-approved 403(b) plans, so the procedures are now more closely aligned.

The (Bumpy) Path Out of the Pandemic

The Biden administration recently announced its “Path Out of the Pandemic” which includes a highly publicized mandate that requires all employers with 100 or more employees to ensure their workforce is fully vaccinated or require any unvaccinated workers to produce a negative COVID test result on a weekly basis.  The Department of Labor’s Occupational Safety and Health Administration (OSHA) has been tasked with developing this rule which is expected to impact over 80 million workers in private sector businesses. DOL officials have informally stated that OSHA’s rulemaking will be issued in the coming weeks.

KMK Comment: At this point, it is unclear precisely when OSHA’s rulemaking will be complete, what the effective date will be, and what the specific legal requirements will entail. And, it goes without saying that legal challenges will be forthcoming. Consequently, private-sector employers will need to stay abreast of developments and must be ready to quickly adapt and communicate with employees. Among the unanswered questions are whether the 100-employee standard applies to part-time and full-time employees, the treatment of remote workers and temporary employees, whether employer size will be analyzed on a location, entity, or controlled-group basis, and how the testing requirements will be met. It is also unclear how this mandate may impact any incentives or surcharges that employers may have implemented through a wellness plan. We will keep you informed as additional information is released.

The KMK Law Employee Benefits & Executive Compensation Group is available to assist with these and other issues.

Lisa Wintersheimer Michel

John F. Meisenhelder

Antoinette L. Schindel

Kelly E. MacDonald

Rachel M. Pappenfus

KMK Employee Benefits and Executive Compensation email updates are intended to bring attention to benefits and executive compensation issues and developments in the law and are not intended as legal advice for any particular client or any particular situation. Please consult with counsel of your choice regarding any specific questions you may have.

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