PLANADVISER - May/June 2020 - 6

compliance news //
years to repay the distribution without
being taxed. However, state tax treatment
of CRDs may vary, and communications
explaining the benefit
should reflect that, says Adam Cohen,
a partner in global law firm Eversheds
Sutherland and leader of its employee
benefits team. The same issue exists
for the CARES Act provision allowing
employers to offer certain help
with employee student loan repayments.
Under the act, employers may
make payments up to $5,250 toward
employees' student loans through the
end of this year, and the payments
need not be reported as taxable income
for federal income tax purposes.
Participant communications about the
student loan payments should include
warnings about state tax treatment,
similar to what is included in communications
about CRDs, Cohen says.
 'Down-Market' Fee Challenge
Plaintiffs have filed a proposed class
action lawsuit against Aegis Media
Americas, alleging that the firm has
permitted excessive fees to be levied
on participants within its defined
contribution (DC) retirement plan.
Filed in the U.S. District Court for the
Southern District of New York,
the
complaint alleges a familiar host of
fiduciary breaches commonly included
in Employee Retirement Income Security
Act (ERISA) lawsuits. What distinguishes
the suit is the relatively small
size of the plan compared with the
many other plans that have faced
similar allegations. Such plans generally
have well over $1 billion in assets,
while the Aegis plan in question held
some $540 million at the end of 2018,
according to case documents, though it
has presumably grown since then.
 Iowa Adopts Best Interest
Standard for Annuities
On May 11, the Iowa Insurance Division
filed an " adopted regulation " to
require annuity agents to act in the
best interest of their customers. Iowa's
annuity standard builds on efforts
by the National Association of Insurance
Commissioners (NAIC) to develop
a framework Suitability in Annuity
Transactions Model Regulation that is
harmonized with rulemaking by the
Securities and Exchange Commission
(SEC), as well as a public comment
period and hearing that the division
itself held. The new regulation
includes several important changes
relative to the original version the
division published. Most importantly,
the Iowa regulation now includes an
explicit caveat to the effect that regulated
entities that meet the standards
prescribed by the SEC's Regulation Best
Interest (Reg BI) will be assumed to be
in compliance with Iowa's regulation.
 Digital Letter Ruling Requests
The IRS has issued Revenue Procedure
(Rev. Pro.) 2020-29, which modifies
revenue procedures 2020-01 and 2020-1
IRB [Internal Revenue Bulletin], established
at the beginning of this year.
While 2020-29 remains effective,
the IRS will accept electronic submissions
only " if [these] are transmitted by
facsimile or compressed and encrypted
email attachments using the electronic
submission procedures described in
Section 4 of this revenue procedure " and
are " signed using the electronic signature
procedures described in Section 5. "
The agency will also continue to accept
printed requests for advice as provided
in Rev. Pro. 2020-1.
 IRS Q&A About Relief Provisions
Section 2202 of the Coronavirus Aid,
Relief and Economic Security (CARES)
Act, enacted on March 27, provides for
special distribution options and rollover
rules for retirement plans and
individual retirement accounts (IRAs),
as well as expands permissible loans
Rev. Pro. 2020-1 generally requires
taxpayers to submit paper copies of
written materials with " wet signatures. "
Through 2020-29, the IRS will temporarily
allow the electronic submission
of requests for letter rulings, closing
agreements,
determination
and
information letters
letters
submitted
under the jurisdiction of its Office of
Chief Counsel.
The new procedures also apply for
determination letters issued by the
IRS Large Business and International
Division (LB&I). In Rev. Pro. 2020-29,
the IRS establishes that, until it makes
further modifications, both paper and
electronic requests for determination
advice will be accepted. The procedure
provides detailed information on how
taxpayers may request advice from
the IRS in the form of letter rulings,
including nonautomatic requests for
changes in methods of accounting,
nonautomatic requests for changes
in accounting periods, closing agreements,
determination letters and
information letters. Rev. Pro. 2020-1
generally requires taxpayers to submit
paper copies of written materials with
" wet signatures. "
from certain retirement plans.
A new Q&A document from the IRS,
published on May 4, clears up some
questions stakeholders may have about
the relief package's provisions. The
agency says it, along with the Treasury
Department, is formulating guidance on
Section 2202 and anticipates releasing
that guidance soon. It points to IRS
Notice 2005-92, issued on November 30,
2005, that provided guidance on the taxfavored
treatment of distributions and
plan loans under sections 101 and 103
of the Katrina Emergency Tax Relief Act
of 2005 (KETRA) for those who suffered
the effects of the hurricane. The Treasury
Department and the IRS anticipate
that the guidance on the coronavirus
legislation will apply the principles of
Notice 2005-92, as the provisions of
Section 2202 are substantially similar.
The current guidance explains coronavirus-related
distributions (CRDs)
and describes relief for participant
loans provided under the CARES act. It
also lists who is a qualified individual
for purposes of Section 2202. -PA
6 | planadviser.com May-June 2020
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PLANADVISER - May/June 2020

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