The U.S. House of Representatives passed by a 417-1 margin on Thursday, May 28, the Paycheck Protection Program Flexibility Act of 2020. This legislation would modify certain core terms of this Small Business Administration (SBA) emergency lending program. The Paycheck Protection Program (PPP) was created by the Coronavirus Aid, Relief, and Economic Security (CARES) Act, signed into law on March 27, 2020. Under the program, qualifying small businesses may apply for loans from the SBA to retain employees on their payrolls, and—especially attractive to business owners—the loans are forgiven if certain conditions are met.
As provided in the CARES Act, PPP loans taken to cover 8 weeks of program-eligible expenses can be forgiven (no repayment required). Although mortgage, rent, and other business expenses are included, to be eligible for forgiveness, 75 percent of a loan amount must—under current rules—be used for employee payroll expenses. Certain employee benefits, including defined contribution and defined benefit plan employer contributions, health insurance benefits (including premium payments), and certain employee leave benefits can be considered payroll expenses.
Today’s House-passed legislation would extend the 8-week period to 24 weeks, and would change the 75 percent payroll requirement to 60 percent.
The legislation would also relax certain loan forgiveness provisions in recognition that an employer may be unable to rehire some former employees or to find similarly qualified employees. Loan amounts not forgiven could be repaid over a period of 5 years instead of 2 years as under current rules.
Members of the U.S. Senate have been discussing a similar bill, one said to expand the 8-week period to 16, not 24 weeks. If the Senate is unable to pass its version of PPP revisions this week, which seems likely, its bill could be taken up when the Senate returns to Washington, D.C., next week.
The House of Representatives late Friday passed H.R. 6800, the Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act, providing additional aid to many who are adversely affected by the novel coronavirus (COVID-19) pandemic. The bill also contained non-COVID-19-related provisions considered likely to prove controversial in the Senate.
Unlike the Families First Coronavirus Response Act, and the Coronavirus Aid, Relief, and Economic Security (CARES) Act—both of which moved fairly rapidly through Congress—the HEROES Act has been called “dead on arrival” by Senate Majority Leader Mitch McConnell (R-KY), who—with Republican colleagues—envisions a much less comprehensive bill. Sen. McConnell has also expressed a desire to move slowly and gauge the effectiveness of earlier relief. Most expect no additional COVID-19-related legislation to be enacted before sometime in June.
As announced last week, the House bill contains provisions for the following.
- Continued financial assistance to unemployed workers
- Financial assistance to state, local, tribal, and territorial government entities
- Waiver of 2019 required minimum distributions (RMDs)
- Waiver of the 60-day and one-rollover-per-12-month rules for otherwise-required RMDs waived for 2019 and 2020
- Amendments to the Emergency Family and Medical Leave Expansion Act
- Relief for participants in health flexible spending arrangements (FSAs)
- Codifying the ability of employers to deduct certain expenses covered by loans that are forgiven under the SBA Paycheck Protection Program
- Providing money purchase pension plans the early distribution and loan relief that the CARES Act provided to other qualified retirement plans
- A new retirement “composite plan,” with features that include those of 401(k) and defined benefit (DB) pension plan
- Relief for multiemployer (collectively-bargained) DB pension plans
- Amortization relief for single employer DB pension plans
- Further funding relief (beyond that provided by the SECURE Act) to certain community newspaper DB plans
- Aid to certain federal agencies affected by the pandemic, including the Departments of Homeland Security, Interior, Health and Human Services, Labor, Transportation, Housing and Urban Development, and Education
- Enhanced Medicare and Medicaid benefits
- Medical supply chain enhancement
- Testing and reporting enhancement
- National strategic stockpile for pandemic response
- Bankruptcy protections for homeowners
- Certain student loan relief and protections
- Additional aid to veterans during the COVID-19 pandemic
- Federal election early and by-mail voting procedure
Published in today’s Federal Register are final regulations issued by the Department of Labor’s (DOL’s) Employee Benefits Security Administration (EBSA) that provide an additional safe harbor for ERISA retirement plans to deliver DOL-required disclosures by electronic means. A pre-publication version was released by EBSA on May 21. (The regulations’ preamble notes that the agency has chosen not to extend the guidance to welfare benefit plans at this time.)
These regulations become effective 60 days from today’s publication date. The EBSA noted in the guidance, however, that retirement plans may rely on these regulations immediately; no enforcement action will be taken against a plan for premature reliance due to the impact of the coronavirus (COVID-19) pandemic.
The Department of Labor’s Employee Benefits Security Administration (EBSA) has issued a pre-publication version of highly-anticipated final regulations on default electronic delivery of retirement plan disclosures. These regulations become effective 60 days following their publication in the Federal Register, currently scheduled for Wednesday, May 27.
Retirement plan administrators and service providers have been awaiting these final regulations since they were issued in proposed form in October 2019. This guidance is expected to enhance the ability of retirement plans and their service providers to deliver required disclosures to participants and beneficiaries by electronic means.
The House of Representatives late Friday passed H.R. 6800, the Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act, providing additional aid to many who are adversely affected by the novel coronavirus (COVID-19) pandemic. The bill also contained non-COVID-19-related provisions considered likely to prove controversial in the Senate.
Following passage by an overwhelming margin in the U.S. House of Representatives Thursday, President Trump today signed into law the Paycheck Protection and Healthcare Enhancement Act, infusing $320 billion in additional funding into the Small Business Administration’s Paycheck Protection Program (PPP).