Seyfarth Synopsis: The IRS has announced that the due date for contributions to a single-employer defined benefit pension plan due in 2020, previously extended to January 1, 2021 by the CARES Act, will be considered timely if made no later than January 4, 2021.
Under the funding rules for qualified defined benefit pension plans, plan sponsors generally must make any minimum required contributions no later than 8-1/2 months after the plan year to which they relate. For calendar year plans, this means that the minimum required contribution is due no later than September 15th of the year following the applicable plan year. Plans with a funding shortfall for the prior plan year also must make quarterly minimum required contributions (for a calendar year plan, these contributions are due April 15th, July 15th, October 15th and the following January 15th).
The CARES Act, enacted in late March 2020 in response to the COVID-19 pandemic, delayed the timing of any annual and quarterly minimum required contributions due in 2020 (i.e., attributable to the 2019 plan year for calendar year plans) until January 1, 2021. As a practical matter, because January 1, 2021, is a national holiday and banks will not transfer funds on that date, the delayed contributions were actually due no later than December 31, 2020. IRS Notice 2020-82, just issued on November 16th, effectively extends the deadline to the first business day after the new year, i.e., January 4th. The guidance is welcome news for plan sponsors who wish to make contributions in calendar year 2021 rather than 2020.
Subsequent to the issuance of the IRS Notice, the PBGC followed suit and revised its guidance to incorporate the extension for contributions due in 2020 to January 4, 2021 for PBGC purposes.