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Notice 2020-82: Contributions to defined benefit plans, extended due date (COVID-19)

Contributions to defined benefit plans

The IRS today released an advance version of Notice 2020-82 announcing a contribution to a single-employer defined benefit pension plan with an extended due date of January 1, 2021, will be treated as timely if it is made no later than January 4, 2021 (which is the first business day after January 1, 2021).

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Read Notice 2020-82 [PDF 20 KB]

Background

A provision of the “Coronavirus Aid, Relief, and Economic Security Act” (CARES Act) (Pub. L. No. 116-136) provides that any minimum required contribution that would otherwise be due under section 430(j) during calendar year 2020 is due on January 1, 2021.

The IRS in August 2020 issued Notice 2020-61 as guidance regarding the extension of time for single-employer defined benefit plan contributions under the CARES Act provision. Read TaxNewsFlash

Notice 2020-82

Today’s notice notes that the purpose of the extended due date for contributions to January 1, 2021, is to allow employers sponsoring these plans to defer these payment obligations until calendar year 2021, but as further noted, financial institutions cannot transfer funds on the January 1, 2021 due date and thus employers would need to make these contributions prior to January 1, 2021 (which would be inconsistent with the legislative intent to defer the payment obligation until calendar year 2021).

Notice 2020-82 therefore provides that:

  • The IRS will treat a contribution with an extended due date of January 1, 2021, pursuant to the CARES Act as timely if it is made no later than January 4, 2021 (which is the first business day after January 1, 2021).
  • For a contribution that is made by January 4, 2021, and treated as timely, the amount of the minimum required contribution that is satisfied by the contribution (and the amount that may be added to the plan’s prefunding balance on account of any excess contribution) is determined by computing the applicable interest adjustment using the actual contribution date.

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