Postponed Tax Deadline Affects Benefit Plans
The IRS announced special filing and payment relief in response to COVID-19 through Notice 2020-18 that postpones Federal income tax return and payment due dates from April 15, 2020 until July 15, 2020. The IRS recently provided more guidance on this issue in the form of FAQs, and the guidance addresses the following topics related to benefit plans:
- The 10% additional tax assessed on a distribution from a retirement plan (e.g., tax assessed from a withdrawal of elective deferrals before age 59 ½) due date for reporting and payment has been postponed from April 15, 2020 to July 15, 2020.
- Excess deferrals made to a retirement plan in 2019 must still be removed from the plan no later than April 15, 2020 in order to exclude the distributions from income; no extension was provided by the Notice.
- Lastly, the deadline to make contributions to an HSA for 2019 or to an IRA for 2019 has been extended from April 15, 2020 to July 15, 2020.
If you have any questions regarding this guidance or any of the other effects COVID-19 has had on benefit plans, contact a Graydon Employee Benefits attorney.