What's New? PPP Loans Re-Open

President Trump signed an additional COVID-19 relief bill that will re-open the Paycheck Protection Program through March 31, 2021.  Read about PPP loans here in The Gold Book - look for updates as more information on this becomes available. 

IRS 2021 Mileage Rates

The IRS has announced the 2021 standard mileage rates for business, medical, and other uses of an automobile. For 2021, the business standard mileage rate is 56 cents per mile (a 1.5 cent decrease from the 57.5 cents rate for 2020), and the rate when an automobile is used to obtain medical care —which may be deductible under Code § 213 if it is primarily for, and essential to, the medical care—will be 16 cents per mile for 2021.

What's New? COVID-19 Emergency Eviction and Foreclosure Prevention Act of 2020

Governor Andrew M. Cuomo has signed the COVID-19 Emergency Eviction and Foreclosure Prevention Act of 2020. The Act (S.9114/A.11181) prevents residential evictions, foreclosure proceedings, credit discrimination and negative credit reporting related to the COVID-19 pandemic. The Act adds to New York State's efforts to protect tenants and homeowners from the economic hardship incurred as a result of the COVID-19 pandemic.

The legislation helps mortgagors facing foreclosure proceedings due the pandemic in three areas:

Residential Foreclosure Proceedings

Tax Lien Sales

Credit Discrimination and Negative Credit Reporting

For details, please visit The Gold Book.

2020 RMD Waiver Reminder

RMDs Waived for 2020

The CARES Act waives required minimum distributions (RMDs) during 2020 for IRAs and defined contribution retirement plans. RMDs are also waived for beneficiaries with inherited IRAs and accounts inherited in a retirement plan. 

Distributions of an amount that would have been an RMD in 2020 can generally be rolled over to another workplace retirement plan or IRA within 60 days of the distribution. RMDs rolled over by August 31, 2020, have special relief.

RMD rolled over by August 31, 2020: Notice 2020-51 [PDF] provides that if a distribution from an IRA of an amount that would have been an RMD in 2020 was made between January 1, 2020, and July 2, 2020, then the distribution can be rolled over by August 31, 2020. If a 2020 RMD was distributed after July 2, 2020, then the distribution must be rolled over within 60 days of the distribution. A 2020 RMD that’s part of a series of substantially equal periodic payments does not prevent it from being eligible for rollover.

Additionally, if a 2020 RMD was distributed before August 31, 2020, but was repaid to the distributing IRA by August 31, 2020:

• The repayment is not subject to the one rollover per 12-month period limitation.
• An RMD from an inherited IRA can be repaid to the distributing IRA.

Inherited IRAs: Distributions from inherited IRAs are not required in 2020. For deaths prior to 2020, beneficiaries are required to take distributions using the 5-year rule or yearly distributions over their life expectancy. The 5-year rule requires the inherited IRA to be distributed within 5 years following the year of the account holder’s death. 2020 does not count toward the 5 years. A taxpayer would essentially have six years, instead of five, to distribute the inherited IRA if the account holder died before 2020.

Taxpayers taking distributions using the lifetime distribution option available for deaths prior to 2020, are not required to take a distribution in 2020. For an account holder who died in 2019, normally they would be required to begin taking distributions from the inherited IRA by the end of the following year, 2020, to take advantage of the lifetime distribution option. Since 2020 does not count, they have until the end of 2021 to begin taking distributions over their lifetime.

Tax treatment of 2020 RMDs that are not rolled over: RMDs in 2020 that are not rolled over or repaid may be eligible to be treated as coronavirus-related distributions for a qualified individual. A 2020 RMD that otherwise qualifies as a coronavirus-related distribution may be repaid over a 3-year period or have the taxes due on the distribution spread over three years. 

Special note for inherited IRAs: If a withdrawal from an inherited IRA qualifies as a coronavirus-related distribution, income from the withdrawal may be spread over three years for income inclusion. However, the withdrawal may not be repaid to the inherited IRA. 

Substantially equal periodic payments are not waived. If a taxpayer is using substantially equal periodic payments to meet one of the exceptions to the 10% additional tax on distributions prior to age 59 ½, they are still required to take the periodic payment in 2020. If the periodic payment is not taken in 2020, the exception is lost and those withdrawals taken in prior years will become subject to the 10% additional tax.

What's New? 2021 Annual CRA Asset Size Threshold Adjustments

The federal bank regulatory agencies announced the annual adjustment to the asset-size thresholds used to define small bank, small savings association, intermediate small bank, and intermediate small savings association under the Community Reinvestment Act (CRA) regulations.

The annual adjustments are required by the CRA rules.  Financial institutions are evaluated under different CRA examination procedures based upon their asset-size classification.  Those meeting the small and intermediate small institution asset-size thresholds are not subject to the reporting requirements applicable to large banks and savings associations unless they choose to be evaluated as a large institution.

Annual adjustments to these asset-size thresholds are based on the change in the average of the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).

Read more on Bank Size Criteria in The Gold Book.

NYS POA Rules Amended in 2021

Governor Cuomo has signed legislation that will significantly change New York legislation regarding powers of attorney. The amendment will be effective 180 days from December 15. 

To summarize, the legislation:

• Expands the grounds for reasonably refusing to honor a power of attorney.
• Allows a person who, in good faith, accepts an acknowledged power of attorney without actual knowledge that the signature is not genuine, may rely upon the presumption that the signature is genuine.
• Specifies a timetable and process for a third party to accept or reject a power of attorney.
• Relaxes the wording requirement providing that a power will be acceptable if the language "substantially conforms" to the statutory language.
• Eliminates the statutory gifts rider is eliminated. 
• Provides authority to make gifts absent language in the modifications section has been increased from $500 to $5,000 in any calendar year.

NYS Minimum Wage to Increase

The minimum wage in New York State is still set to increase on New Year's Eve. The Department of Labor announced the minimum wage will rise to $12.50 an hour in areas of New York outside of the New York City area. The decision came despite calls from some lawmakers to delay the increase due to financial burdens on struggling businesses.

More about minimum wages can be found in The Gold Book.

New York Minimum Wage

New Jersey Minimum Wage

What's New? 2021 Regulation Z Exemption Threshold

Based on the annual percentage increase in the CPI-W as of June 1, 2020, the protections of the Truth in Lending Act and the Consumer Leasing Act generally will apply to consumer credit transactions and consumer leases of $58,300 or less in 2021. This exemption amount remains unchanged from 2020. However, private education loans and loans secured by real property (such as mortgages) are subject to the Truth in Lending Act regardless of the amount of the loan.

Read more in The Gold Book. 

What's New? Cost of Living Adjustments

The Internal Revenue Service announcd cost of living adjustments affecting dollar limitations for pension plans and other retirement-related items for tax year 2021. For details see:

Cost of Living Adjustments for Pension Plans

Traditional IRA Deductions

Roth IRA Contribution Limitations

What's New? New COVID-19 Safety and Soundness Standards for Financial Institutions

On June 23, 2020, the financial institution regulatory agencies jointly issued interagency examiner guidance for assessing safety and soundness considering the effect of the COVID-19.

Read more on the interagency guidance in The Gold Book.

 

New CIP Rule Exemption

The FDIC, the Board of Governors of the Federal Reserve System, the Office of the Comptroller of the Currency, and the National Credit Union Administration, collectively the federal banking agencies (FBAs), with the concurrence of the Financial Crimes Enforcement Network (FinCEN), grant an exemption from the requirements of the customer identification program (CIP) rules for loans extended by banks and their subsidiaries to all customers to facilitate purchases of property and casualty insurance policies.

See Customer Identification Program in The Gold Book to learn more.

What's New? Plan Loans Under the CARES Act

The Internal Revenue Service today released Notice 2020-50 (PDF) to help retirement plan participants affected by the COVID-19 coronavirus take advantage of the CARES Act provisions providing enhanced access to plan distributions and plan loans. This includes expanding the categories of individuals eligible for these types of distributions and loans (referred to as "qualified individuals") and providing helpful guidance and examples on how qualified individuals will reflect the tax treatment of these distributions and loans on their federal income tax filings.

Read more about Plan Loans in The Gold Book.

What's New? RMD Rollover Relief Under CARES Act

The Internal Revenue Service announced that anyone who already took a required minimum distribution (RMD) in 2020 from certain retirement accounts now has the opportunity to roll those funds back into a retirement account following the CARES Act RMD waiver for 2020.

The 60-day rollover period for any RMDs already taken this year has been extended to August 31, 2020, to give taxpayers time to take advantage of this opportunity.

The IRS described this change in Notice 2020-51 (PDF), released today. The Notice also answers questions regarding the waiver of RMDs for 2020 under the Coronavirus Aid, Relief, and Economic Security Act, known as the CARES Act.

The CARES Act enabled any taxpayer with an RMD due in 2020 from a defined-contribution retirement plan, including a 401(k) or 403(b) plan, or an IRA, to skip those RMDs this year. This includes anyone who turned age 70 1/2 in 2019 and would have had to take the first RMD by April 1, 2020. This waiver does not apply to defined-benefit plans.

In addition to the rollover opportunity, an IRA owner or beneficiary who has already received a distribution from an IRA of an amount that would have been an RMD in 2020 can repay the distribution to the IRA by August 31, 2020. The notice provides that this repayment is not subject to the one rollover per 12-month period limitation and the restriction on rollovers for inherited IRAs.

The notice provides two sample amendments that employers may adopt to give plan participants and beneficiaries whose RMDs are waived a choice as to whether or not to receive the waived RMD.

What's New? FCRA COVID-19 Relief

The Consumer Financial Protection Bureau issued guidance on consumer reporting during the COVID-19 pandemic. The frequently asked questions (FAQs) address responsibilities under the CARES Act and FCRA when information is furnished to consumer reporting agencies. Lenders they must comply with the credit reporting requirements of the CARES Act. Read more in The Gold Book.

COVID-19 Relief Programs: Preemption

Federal, state, and local governments have taken many actions to respond to the economic disruption caused by the spread of COVID-19. While the Office of the Comptroller of the Currency (OCC) recognizes that a wide range of stakeholders, including state and local governments, have an important role to play in the country’s COVID-19 response, the agency reminds stakeholders that banks are governed primarily by uniform federal standards. This bulletin applies to community banks.

Click here to read the OCC bulletin: COVID-19 Relief Programs: Preemption.

What's New? Final Remittance Rule

On May 11, 2020, the Consumer Financial Protection Bureau issued a final rule (2020 Final Rule) amending the Remittance Transfer Rule. The rule is effective beginning July 21, 2020.  Click here to read more.

What's New? Additional CRA Guidance

The Gold Book has been updated with additional OCC guidance and FAQs for financial institutions. Click here.

Considerations for Economic Impact Payments

Signed in March 2020, the CARES Act provides Economic Impact Payments (EIPs) to qualified consumers. The government is disbursing EIPs to people based on information contained within their 2018 or 2019 federal tax returns. Both electronic and physical EIPs are distributed in weekly cycles. As these stimulus funds begin to be distributed to individuals, certain questions and risks have arisen that financial institutions need to consider.

EIP Automated Clearing House (ACH) direct deposits returned by an institution will be redistributed as a physical check payment. Use caution when an EIP is received for deceased accountholders. EIPs are not subject to reclamation of funds by the Treasury Department and should be handled in accordance with the institution’s existing controls.

There are cases where an electronic EIP is received for a closed account. An institution may risk reputational harm returning the EIP if the closed account relates to an existing customer that’s readily identifiable. However, an institution may expose itself to liability if it distributes the funds to an incorrect party. Careful analysis should be performed with proper documentation if an institution chooses not to automatically return the EIP.

As a Receiving Depository Financial Institution (RDFI), the institution is protected by safe harbor if it exactly processes and posts the EIP in accordance with the instructions accompanying the transaction entry. Any change in depositing the funds into an account other than that received in the transaction entry, or subsequently transferring the funds to another account, will create potential liability. 

EIPs are not protected from offset by the financial institution for outstanding debts or overdrafts. New York has passed restrictions prohibiting institutions from claiming EIPs for such purposes. Institutions should review their core system settings to ensure that EIPs are not automatically applied to such pre-existing negative account balances. Different systems may require different process solutions.

As EIPs have Social Security Numbers (SSN) included in the payment transaction information, institutions must review IT controls to determine whether the SSN information will carry into the recording and reporting of the EIP through its online statements, physical paper statements, and mobile banking services. Fraud may exist in the creation of fraudulent EIP checks or the fraudulent transacting of valid EIP checks. Multiple deposits of EIP checks through remote deposit capture or mobile banking channels are other concerns that should be considered. Communication and training on potential fraud and identity theft red flags will be essential in combatting these risks.

IRS Postponement of Deadlines

IRS Forms 5498 reporting deadlines are postponed to August 31, 2020. 

The deadlines applicable to any of the following acts that would have fallen on or after April 1, 2020 and before July 15, 2020 have been postponed until July 15, 2020:

• Simplified Employee Pension (SEP) and Savings Incentive Match Plan for Employees of Small Employers (SIMPLE) plan contributions
• Indirect rollovers from employer sponsored retirement plans to IRAs
• 2019 traditional IRA, Roth IRA, and HSA regular contributions -(from previous guidance)
• 2019 CESA regular contributions
• Rollovers between IRAs, between HSAs, and between CESAs
• 120-day rollover period for first-time home buyers
• Repayment of a Qualified Reservist Distribution
• Deadline to remove excess or unwanted IRA contributions

Extention of 5498 Filing Deadline

On May 28, 2020, the IRS issued Notice 2020-35, which further postpones, to August 31, 2020, the due date for filing with the IRS and furnishing to account holders Form 5498, IRA Contribution Information, Form 5498-ESA, Coverdell ESA Contribution Information, and Form 5498-SA, HSA, Archer MSA, or Medicare Advantage MSA Information. Previously, on April 10, 2020, the IRS issued Notice 2020-23, which provided guidance that extended from June 1 to July 15 the deadline for filing and furnishing IRS Forms 5498 and 5498-SA.