On March 11th, President Biden signed the American Rescue Plan Act (ARPA) into law, providing significant funding and other economic relief to Atlanta families, individuals, organizations, and businesses. Not only is there another round of economic impact payments, unemployment extension, and expanded tax credits, but important changes to the Paycheck Protection Program (PPP) and Employee Retention Tax Credit were also made. Specific funding provisions were included for local government agencies, vaccine distribution, school reopening, and more. Although not widely reported there were also important relief provisions for both Single (SEPP) and Multiemployer Pension Plans (MEPPs). To help clients, prospects, and others, Wilson Lewis has provided a summary of the key details below.
Plan sponsors are permitted to determine when to adopt these changes but must comply by January 1, 2022.
Special Assistance Fund (SAF)
The SAF which is managed by the Pension Benefit Guaranty Corporation (PBGC) provides immediate financial relief to MEPPs on the verge of insolvency and offers access to funds through 2051. To participate, a plan must meet one of the following criteria:
Application Details
Since the ARPA was recently passed the PBGC has not yet had enough time to provide detailed guidance. However, the PBCG has 120 days from March 11th to publish guidelines including materials that should accompany an application and the date of fund transfer if the applicant is approved. It is important to note the ARPA provides the PBGC discretion to limit application acceptance in the first two years. This means that plans projected to become insolvent in the next 5 years or have already implemented a benefit suspension may be given preferential treatment. The PBCG is required to approve an application, unless the applicant is otherwise notified, within 120 days of application submission.
Relief Amount
The amount of relief will be equal to the amount needed to pay all benefits owed from the date of fund disbursement through the last day of the plan year in 2051. The PBGC will issue a single lump-sum payment once an applicant is approved, and the relief amount determined.
Repayment Requirements
Program participants are not required to repay the amount of financial assistance received. While the money can only be spent on benefits and plan expenses, the PBCG can implement rules that require payback in cases of non-compliance. It is important to note plans are not relieved from making PBGC premium payments which are applicable to underfunded plans.
In addition to the SAF, there were other changes passed as part of the ARPA that benefit MEPPs. These include:
Contact Us
The relief is welcome news to pension plans facing funding issues exacerbated by the COVID-19 pandemic. Due to the complexity of the changes and the resulting impact on pension plans, it is important to consult with a qualified advisor to determine how your plan will be impacted. If you have questions about the information outlined above or need assistance with a plan administration or audit issue, Wilson Lewis can help. For additional information call us at 770-476-1004 or click here to contact us. We look forward to speaking with you soon.
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