Broker Check

Recent Legislation

Relief for Insurance Policyholder

A recent Executive Order issued by Governor Andrew Cuomo, together with recent amendments to the insurance and banking regulations (the “regulations”) issued by the New York State Department of Financial Services (“Department”), extend grace periods and give you other rights under your life insurance policy or annuity contract if you can demonstrate financial hardship as a result of the novel coronavirus (“COVID‑19”) pandemic.

These grace periods and rights are currently in effect but are temporary, though they may be extended further.  Please check the Department’s website at  https://www.dfs.ny.gov/consumers/coronavirus for updates.

A copy of the Executive Order and regulations can be found at https://www.governor.ny.gov/news/no-20213-continuing-temporary-suspension-and-modification-laws-relating-disaster-emergency    and https://www.dfs.ny.gov/system/files/documents/2020/03/re_consolidated_amend_pt_405_27a_27c_new_216_text.pdf, respectively.

Insurance Payments - Grace Period

If you can demonstrate financial hardship as a result of the COVID-19 pandemic, your insurer must extend to 90 days the applicable grace period for the payment of premiums and fees under your life insurance policy or annuity contract.  If you do not make a timely premium payment and can demonstrate financial hardship as a result of the COVID-19 pandemic, your insurer may not impose any late fees relating to the premium payment or report you to a credit reporting agency or a debt collection agency regarding such premium payment.

Catching up on Overdue Insurance Payments

The regulations also require your insurer to permit you to pay the overdue premium over a 12-month period if you did not make a timely premium payment due to financial hardship as a result of the COVID-19 pandemic and can still demonstrate financial hardship as a result of the COVID-19 pandemic.  This also applies if the insurer sent you a nonpayment cancellation notice prior to March 29, 2020.

Policies Financed by Premium Finance Agencies – Grace Period

If your life insurance policy or annuity contract has been financed through a premium finance agency, and you do not make an installment payment, the premium finance agency may not cancel your life insurance policy or annuity contract for a period of at least 90 days, including any contractual grace period, if you can demonstrate financial hardship as a result of the COVID-19 pandemic, and subject to the safety and soundness of the premium finance agency.  In addition, if you do not make a timely installment payment to the premium finance agency and can demonstrate financial hardship as a result of the COVID-19 pandemic, the premium finance agency must extend the due date for the installment payment by at least 90 days, may not impose any late fees relating to that installment payment, and may not report you to a credit reporting agency or a debt collection agency regarding that installment payment.

Catching up on Overdue Payments to Premium Finance Agencies

If you do not make a timely installment payment to the premium finance agency due to financial hardship as a result of the COVID-19 pandemic, the premium finance agency must permit you to pay the installment payment over a 12-month period if you can still demonstrate financial hardship as a result of the COVID-19 pandemic, subject to the safety and soundness of the premium finance agency. This also applies if the premium finance agency issued a non-payment cancellation notice prior to March 29, 2020.

How to Demonstrate Financial Hardship

If you are unable to make a timely premium payment due to financial hardship as a result of the COVID-19 pandemic, you may submit to your insurer or premium finance agency, as applicable, a statement that you swear or affirm in writing under penalty of perjury that you are experiencing financial hardship as a result of the COVID-19 pandemic, which the insurer or premium finance agency, as applicable, shall accept as satisfactory proof.  Such statement is not required to be notarized.

Questions

If you have any questions regarding your rights under the Executive Order or regulations, please contact your insurer, broker, or premium finance agency.

The Coronavirus Aid, Relief and Security (CARES) Act

This historic and sweeping legislation was created to help keep workers paid and employed, allows businesses to remain operational and makes necessary health care system enhancements to stabilize the economy. We want to make sure you are aware of certain provisions designed to help you. 


INDIVIDUAL ASSISTANCE

Recovery Rebates

  • Provides all U.S. residents with an adjusted gross income of $75,000 or less $1,200 for singles and heads of households ($2,400 for married couples filing joint returns and an adjusted gross income of $150,000 or less).
  • The rebate is phased out by $5 for every $100 over $75,000 that an individual receives, and phased-out completely for incomes exceeding $99,000 (single), $146,000 (head of household with one child) or $198,000 (joint with no children).
  • Those with children are eligible to receive an additional $500 per child.
  • Those with no income, or income that comes from non-taxable benefits such as SSI, are still eligible for the rebate.
  • Checks will be sent to the address or bank account used on 2018 or 2019 tax returns. No action will be required for most eligible recipients.

Unemployment Compensation

  • Expands eligibility to include self-employed individuals and independent contractors.
  • Expands eligibility to 39 weeks (through the end of 2020).
  • Increases the maximum amount available by $600 per week.
  • Allows for individuals who quit their jobs due to coronavirus related concerns to be eligible for unemployment assistance.


RETIREMENT ASSISTANCE

Required Minimum Distributions

  • RMDs for 2020 are waived completely for IRAs and DC plans. They do not need to be made up next year.
  • We are waiting for IRS guidance related to putting distributions already taken back. It was allowed in 2009.

Plan Withdrawals

  • Waives the 10% penalty tax on early withdrawals up to $100,000 for coronavirus related hardship distributions.
  • Exempts coronavirus related distributions from the 402(f) notice requirements and mandatory 20% withholding applicable to eligible rollover distributions.
  • Permits the individual to recontribute the coronavirus related distribution within three years.
  • Coronavirus related distributions are distributions made during 2020 to an individual who is diagnosed with COVID-19, who has a spouse or dependent diagnosed with COVID-19 or who experiences financial consequences as a result of COVID-19.


SMALL BUSINESS ASSISTANCE

Paycheck Protection Program

  • A new, $349 billion lending program administered by the SBA for small businesses, nonprofits, independent contractors, sole proprietors and self-employed individuals
  • Loans are fully guaranteed and 250% of an average monthly payroll from Feb. 15 – June 30, 2019. There is a $10 million cap on loans.
  • Eligible uses include employee compensation, compensation of an independent contractor or sole proprietor no greater than $100,000 in one year, rent or utility payments or a mortgage interest payment.

Employee Retention Credit

  • A refundable payroll tax credit equal to 50% of employee wages paid by certain employers during the coronavirus crisis, up to $10,000 in wages.
  • Employers are eligible for the tax credit if their operations were affected by government order limiting commerce, travel or group meetings due to coronavirus or whose quarterly receipts are less than 50% for the same quarter in the prior year.
  • Wages paid to employees during which they are furloughed or have reduced hours are eligible.
  • Businesses receiving a loan through PPP are not eligible

Delay of Payment of Employment Payroll Taxes

  • Employers and self-employed individuals can defer the payment of their portion of social security tax
  • The taxes must be paid over the following two years, with half due before December 31, 2021 and the other half by December 31, 2022.
  • Businesses receiving a loan through PPP are not eligible  for this deferral

Excess Business Losses

  • Pass through corporations and sole proprietors are able to deduct more business losses on their taxes, freeing up cash for immediate expenses.
  • The cap, first imposed in the Tax Cuts & Jobs Act, will be effective after December 31, 2020.

The Setting Every Community Up for Retirement Enhancement (SECURE) Act

Barely half (51%) of the workforce is covered by a retirement savings plan through their employer, according to the United States Bureau of Labor Statistics. The December's passage of the SECURE Act, the biggest retirement-oriented legislation to pass in over a decade, is meant to address this issue, among other things.

Here are the top 10 Key Provisions:

1. Open Multiple Employer Plans / Pooled Employer Plans

The SECURE Act allows unrelated small employers to band together in “open” 401(k) multiple-employer plans (MEPs; also referred to as pooled employer plans (PEPs)). This reduces the costs and administrative duties that each employer would otherwise bear alone. The Act also eliminates the “one-bad-apple” rule under which a violation by one employer participating in a MEP can trigger severe penalties for the compliant employers in the MEP.

2. Safe Harbor 401(k) Plans and Timing of Plan Amendments and Adoptions

The SECURE Act very generally permits employers to add a safe harbor feature to their existing 401(k) plans during the year; such additions are even permitted very late in the year and after the endof the year if the employer contributes at least 4 percent of employees’ pay instead of the regular 3 percent. It also allows employers to adopt a plan for a taxable year as long as the plan is adopted by the due date for the employer’s tax return for that year (including extensions).

3. Startup Credit for Small Employer Plans and New Credit for Small Employer Plans Adopting Automatic Enrollment

The SECURE Act increases the business tax credit for plan startup costs to make setting up retirement plans more affordable for small businesses. The tax credit will increase from the current cap of $500 to up to $5,000 in certain circumstances. It also encourages small-business owners to adopt automatic enrollment by providing a further $500 tax credit for three years for plans that add auto-enrollment.

4. Post-70½ IRA Contributions

The prohibition on making deductible contributions to a traditional IRA after age 70½ is repealed.

5. Long-Term Part-Time Employees

The SECURE Act requires employers to include long-term part-time workers as participants in defined-contribution plans except in the case of collectively bargained plans. Eligible employees will have completed at least 500 hours of service each year for three consecutive years, and are age 21 or older. However, these participants can be excluded from employer contributions, nondiscrimination and top-heavy requirements. Previously, part-time workers could be excluded if they haven’t worked 1,000 hours in a 12-month eligibility period.

6. Plan Withdrawals for Birth or Adoption

The SECURE Act allows an exception to the 10 percent penalty for birth or adoption. New parents can now withdraw up to $5,000 from a retirement account within a year of a child’s birth or adoption without the 10 percent penalty those younger than 591/2 would normally owe. The distribution, which is still subject to tax, can be repaid to a retirement account.

7. Increased Required Beginning Date

The SECURE Act increases the age triggering the required beginning date for plans and IRAs to 72.

8. Consolidated Form 5500 Reporting for Similar Plans

The SECURE Act offers a consolidated Form 5500 for certain defined-contribution plans with a common plan administrator to reduce administrative costs, but also increases penalties for failure to file retirement plan returns, such as Forms 5500, required notifications of registration changes and required withholding notices.

9. Fiduciary Safe Harbor for Selecting Annuity Providers

The SECURE Act creates a safe harbor that employers can use when choosing an annuity provider to provide annuity distributions under a defined-contribution plan.

10. “Stretch” RMD

The SECURE Act imposes a 10-year distribution limit for most non-spouse beneficiaries to spend down inherited IRAs and defined-contribution plans. Before passage of the Act, withdrawals from inherited accounts could be stretched over the life of beneficiaries to mitigate taxes.