Proposal to Modernize CRA Regulations Underway

Since 1977 the Community Reinvestment Act has steered trillions of dollars into neighborhoods across our country helping to reinvigorate those communities by meeting their credit needs and investing in vital community development projects. A recent proposal will help ensure CRA remains an effective and relevant tool to encourage more lending, investment, and services in the communities banks serve, including low- and moderate-income (LMI) neighborhoods.

The proposed rule would improve the CRA rules for everyone through four basic improvements. First, the proposed rule would clarify what counts for CRA credit by articulating clear standards and requiring agencies to publish an illustrative list of qualifying activities. We can eliminate the guessing by community members and banks as to what counts for CRA credit. Second, the proposal preserves assessment areas in the local areas around branches and would require banks that draw a large portion of their deposit outside of their facilities-based assessment areas to designate additional assessment areas wherever they have significant concentrations of deposits. Third, the proposal would evaluate CRA performance more objectively by assessing what portion of a bank’s retail lending is targeted to LMI individuals and areas as well as measuring the impact of that activity by comparing the value of a bank’s CRA qualifying activity with its deposits in each assessment area and at the overall bank level. This approach considers the units of activity in each major retail business line and the dollars the bank is committing to CRA activities in the communities it serves. Fourth, the proposal would improve the transparency and timeliness of reporting. Better reporting will allow stakeholders to gauge banks’ performance throughout the evaluation cycle and will help speed up regulatory decision making.

The proposal would also allow small banks the option to be evaluated under the existing framework or opt in to the proposed evaluation method.

This is an important step toward making CRA work better for everyone.

What's New? 2019 Tax Filing Deadline Extended

The federal income tax filing due date is extended from April 15, 2020 to July 15, 2020. 

This extension results from President’s natural emergency declaration as a result of the COVID-19 virus. Taxpayers do not need to file any additional forms or call the IRS to qualify for this automatic federal tax filing and payment relief.  

Since contributions to an IRA must be made by the annual tax filing due date, the contribution deadline is also July 15, 2020.

What's New? Revised “A Guide to HMDA Reporting: Getting It Right!”

The Task Force on Consumer Compliance of the Federal Financial Institutions Examination Council recently developed a revised version of “A Guide to HMDA Reporting: Getting It Right!” (Guide). The updated Guide is intended to assist financial institutions in complying with the Home Mortgage Disclosure Act (HMDA) as implemented by the Consumer Financial Protection Bureau’s (CFPB) Regulation C. This Guide applies to HMDA data that financial institutions are required to collect beginning on January 1, 2020 and must submit by March 1, 2021. The Guide provides helpful background information and an easy-to-use summary of certain key requirements, including those relating to institutional coverage, transactional coverage, and data collection, reporting, and disclosure requirements.

Read more in The Gold Book.

Quick link to the guide.

What's New? NYS Lactation Accommodations

Under the New York City Human Rights Law, employers must provide reasonable accommodations for employees to pump and/or express breast milk at work. Each person’s experience breastfeeding and pumping is unique, and employers must reasonably accommodate those unique needs. Click here for details in The Gold Book. 

What's New? NYS SHIELD Act

On July 26, New York's governor signed the "Stop Hacks and Improve Electronic Data Security" (SHIELD) Act, requiring businesses to implement safeguards for the "private information" of New York residents and broadening New York's security breach notification requirements. 

Every employer with employees in New York must comply with the SHIELD Act because "private information" includes an individual's name and Social Security number.

For details and requirements, click here.

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 2020. For details see:

Cost of Living Adjustments for Pension Plans

Traditional IRA Deductions

Roth IRA Contribution Limitations

Other Real Estate Owned: Final Rule

The Office of the Comptroller of the Currency (OCC) published a final rule on other real estate owned (OREO) activities for national banks and federal savings associations. OREO refers to real estate acquired in satisfaction of debts previously contracted and real estate no longer used or planned to be used to conduct banking activities. The final rule is effective January 1, 2020.

The final rule:

• clarifies and streamlines the OCC's existing OREO rule for national banks.
• updates the regulatory framework for OREO activities at federal savings associations.
• makes technical amendments to the capital rules, including on provisions related to OREO.

Note for Community Banks:

The final rule applies to all national banks and federal savings associations.

OCC Releases Bank Supervision Operating Plan for Fiscal Year 2020

The Office of the Comptroller of the Currency (OCC) has released its bank supervision operating plan for fiscal year (FY) 2020.

The plan provides the foundation for policy initiatives and for supervisory strategies as applied to individual national banks, federal savings associations, federal branches, federal agencies, and technology service providers. OCC staff members use this plan to guide their supervisory priorities, planning, and resource allocations.

Supervisory strategies for FY 2020 focus on:

• cybersecurity and operational resiliency.
• Bank Secrecy Act/anti-money laundering (BSA/AML) compliance management.
• commercial and retail credit underwriting practices and oversight and control functions.
• impact of changing interest rate outlooks on bank activities and risk exposures.
• preparedness for the current expected credit losses (CECL) account standard, and preparation for the potential phase-out of the London Interbank Offering Rate (LIBOR).
• technological innovation and implementation.

What's New? SECURE Act Makes Significant Changes to Retirement Accounts

The SECURE Act (Setting Every Community Up for Retirement Enhancement) became effective January 1, 2020 and makes sweeping changes to Retirement Accounts.

Important highlights include:

• Age Limit Eliminated for Traditional IRA Contributions

Beginning in 2020, the new law eliminates the age limit for traditional IRA contributions (formerly 70 ½). Now, those who are still working can continue to contribute to a traditional IRA, regardless of their age. See Eligibility in The Gold Book.

• RMD Age Raised to 72

The SECURE Act also raises the age for beginning RMDs to 72 for all retirement accounts subject to RMDs. IRA owners reaching age 70 ½ in 2020 catch a break and will not have to take their first RMD in 2020 now that the RMD deadline has been extended to age 72. See Mandatory Distributions and When Benefits Must Begin in The Gold Book.

• New Exception to the 10% Penalty for Birth or Adoption

The SECURE Act adds a new 10% penalty exception for birth or adoption. It is limited to $5,000 per individual over a lifetime. The birth or adoption distribution amount can be repaid at any future time (re-contributed back to any retirement account). See IRS Penalty Exceptions and Withdrawals Prior to Age 59-1/2 in The Gold Book.

• Elimination of "Stretch" IRA

Beginning for deaths after December 31, 2019, the stretch IRA is replaced with a ten year rule for the vast majority of beneficiaries. The rule requires accounts to be emptied by the end of the tenth year following the year of death. There are no annual RMDs. Instead, the only RMD on an inherited IRA is the balance at the end of the 10 years after death. For deaths in 2019 or prior years, the old rules would remain in place.

There are five classes of “eligible designated beneficiaries” who are exempt from the 10-year post-death payout rule and can still stretch RMDs over life expectancy. These include surviving spouses, minor children, disabled individuals, the chronically ill, and beneficiaries not more than ten years younger than the IRA owner.

See Accounts of Deceased IRA Holders and When Benefits Must Begin in The Gold Book.

Updated Life Expectancy Tables

The IRS has issued proposed regulations revising the life expectancy and distribution period tables used for determining required minimum distributions (RMDs) from qualified retirement plans, individual retirement accounts (IRAs), annuities, and other tax-favored employer-provided retirement arrangements. The proposed regulations would affect participants, beneficiaries, and plan administrators of qualified retirement plans and other retirement arrangements, as well as owners, beneficiaries, trustees, and custodians of IRAs and annuities. The updated tables generally are proposed to be applicable for distribution calendar years beginning on or after January 1, 2021.

Plan Amendments

Amendments for any required modifications are not required to be incorporated into the plan document until IRS guidance is published. It is expected that such amendments will be issued to be effective with plan year 2022. At that time, the IRS will provide the date by which amendments must be adopted. See The SECURE Act in The Gold Book.

2020 Standard Mileage Rates

The Internal Revenue Service has issued the 2020 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.

Beginning on Jan. 1, 2020, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

• 57.5 cents for every mile of business travel driven, down 1/2 cent from the rate for 2019.
• 17 cents per mile driven for medical or moving purposes, down 3 cents from the rate for 2019.
• 14 cents per mile driven in service of charitable organizations.

More information may be found here on IRS.gov. 

What's New? 2020 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.

RMD AGE JUMPS TO 72 in 2020!

Significant Retirement Plan Changes Coming!

On Dec. 20, the President signed the Setting Every Community Up for Retirement Enhancement Act (SECURE Act).

Prior to the SECURE Act, participants in IRAs and qualified retirement plans generally were required to begin receiving certain minimum distributions by April 1 of the calendar year following the year in which the participant attains age 70½. Acknowledging that Americans are living and working longer, the SECURE Act increases the RMD age from 70½ to 72, applicable to distributions made after Dec. 31, 2019, for individuals who reach 70½ from Jan. 1, 2020 and later.

Additionally, the inherited IRA has been changed from the "stretch" of a beneficiary's life expectancy to 10 years. Non-spousal beneficiaries must now take required minimum distributions (RMDs) based on their life expectancy, so passing the IRA to younger heirs stretched how long it can continue to grow before funds must be withdrawn.

Taxpayers will also have the option to keep contributing to individual retirement accounts after the age of 70½ (which was previously not permitted), as long as there is earned income. 

Plan sponsors will need to evaluate, and likely update, current policies and procedures for notifying participants of an upcoming RMD trigger date and for updating any notices that it sends to participants regarding RMDs. Stay tuned for more details related to all the provisions that affect retirement accounts. Updates will be posted soon in The Gold Book.

What's New? Reg. CC

On June 24, 2019, the Consumer Financial Protection Bureau (the Bureau) and the Federal Reserve Board (the Board) jointly announced a final rule amending Regulation CC. The final rule includes the COLA changes required by the Dodd-Frank Act as well as certain amendments made by the Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCPA).

The COLA changes are effective July 1, 2020 and may be found in The Gold Book.

What's New? 401(k) Hardship Distributions

New hardship rules became effective for calendar year plans beginning January 1, 2019.  Most of these rules are welcome changes which should make more funds available to plan participants who are experiencing financial hardship.  

The final regulations eliminate the requirements that plan participants take loans from the plan to the extent they are available before they are permitted to take a hardship distribution from the plan and that participants may not make new contributions to the plan within six months of the hardship distribution. They also change the casualty loss hardship distribution rules for disaster relief and the rules for determining the amount of plan funds available for distribution, while clarifying the requirement that funds not be available from other sources. 

Read more in The Gold Book.

What's New? NJ Family Leave Act Updated

New Jersey recently added dramatic expansions to the New Jersey Family Leave Act and New Jersey Family Leave insurance. Click here to read about the New Jersey Family Leave Act in the Human Resources chapter of The Gold Book.

What's New? New Appraisal Thresholds

The FDIC, the Federal Reserve and the Office of the Comptroller of the Currency  have amended the Appraisal Rule and created a new definition of, and a separate category for, residential real estate transactions and raises the threshold for requiring an appraisal for such transactions from $250,000 to $400,000. Read more here in The Gold Book. 

What's New? HMDA Relief

The Consumer Financial Protection Bureau issued a final rule providing relief for smaller institutions from the Home Mortgage Disclosure Act (HMDA) data collection and reporting requirements by extending until Jan. 1, 2022, the current temporary coverage threshold of 500 for open-end lines of credit. The Bureau said it would address permanent relief in a future rulemaking. To read the final rule click here. Read more about HMDA Rules in The Gold Book.

What's New? Private Flood Insurance

A final rule under the Biggert-Waters Flood Insurance Reform Act of 2012 permits regulated lending institutions to accept flood insurance provided by private insurers that does not meet the statutory definition of “private flood insurance,” subject to certain conditions. The final rule takes effect on July 1, 2019.

Further information may be found in The Gold Book.

What's new? NYS Wage Exemptions

Under the New York Exempt Income Protection Act wage exemption, a financial institution must make a certain amount available to the depositor based on the amount of the federal or New York State minimum wage (whichever is higher). Read more about the increased wage exemption amounts in The Gold Book. 

Debt Collections Proposed Rule

The Consumer Financial Protection Bureau issued a Notice of Proposed Rulemaking to implement the Fair Debt Collection Practices Act. The proposal would provide consumers with clear protections against harassment by debt collectors and straightforward options to address or dispute debts. It would also set clear, bright-line limits on the number of calls debt collectors may place to reach consumers on a weekly basis; clarify how collectors may communicate lawfully using newer technologies, such as voicemails, emails and text messages, that have developed since the FDCPA’s passage in 1977; and require collectors to provide additional information to consumers to help them identify debts and respond to collection attempts.

Read more about the Fair Debt Collection Practices Act in The Gold Book.

The proposed rule may be found here:

https://files.consumerfinance.gov/f/documents/cfpb_debt-collection-NPRM.pdf