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Travel plans didn’t just take a back seat during the chaotic ride of 2020 – for many, they were left on the side of the road.  

Restrictions and limitations remain in place, but PTO hasn’t disappeared in the same way travel capability has. As a result, using vacation time has taken on a new meaning without taking a trip abroad or getting the whole family together for the holidays. With people having worked their way through the pandemic, a new concern is whether 2021 will continue this trend of people abandoning their vacation time in favor of more hours spent at their desks and home offices.  

The Year Vacations Stopped 

Taking time off was never banned by any means. The initial global shutdown combined with the unprecedented amount of people working remotely in the spring simply had many asking a very rational question: ‘Why would I take time off from working at home just to spend more time at home?’ Gwen Schnitzler, assistant vice president, human resources director at Forward Bank, Marshfield, saw a fair amount of this throughout the year. 

“Last year we definitely saw a decrease in PTO usage,” she said. “Some people may have planned trips they had to cancel because they couldn’t travel or didn’t feel comfortable doing so. Some questioned why they would take time off if there’s nowhere to go. There were a lot of factors contributing to this decrease.”  

A lack of places to go was only the starting point for this trend. For other employees, uncertainty in the future and health concerns played a larger role in their willingness to take time off than anything else. 

“With so many unknown factors related to COVID, we had a lot of employees holding on to their PTO,” said Ann Knutson, senior vice president, human resources director of Bank Five Nine, Oconomowoc. “People weren’t sure how this was all going to unfold. Even with FFCRA, people were reluctant to use all of their paid time off.” 

With so much uncertainty and a hold put on travel, it made sense that banks began reconsidering how to accommodate for this evolving scenario. Molly Bauer, Bank of Wisconsin Dells vice president, human resources officer, noted that properly responding to this created necessary reassurance for the individuals preparing for any unpredictable occurrence. They ultimately decided to do what they noticed other banks were doing. 

“We increased our carryover amounts for 2021,” said Bauer. “Then, time not used by the end of June goes into our ‘extended leave bank’ which can be used for illness-related events.”  

Each bank took its own approach to the situation based off the needs of its employees. Forward Bank realized early on that even if 2021 did provide a glimpse of hope, many of their employees might very well continue viewing the situation with caution. The fear was that the additional time off would simply go unused.  

“Under normal circumstances, employees can already carry over a week,” said Schnitzler. “We thought about extending that, but then understood how in a way we were almost prolonging the problem.” 

Instead, Forward Bank offered employees the option to cash out up to two weeks of PTO. The option was announced in the summertime, which allowed everyone to fully think about what they wanted to do and plan for it. For those who opted to use this choice, the payment was made on the Friday after Thanksgiving.  

“It gave the people who didn’t think they’d use that PTO a way to cash out instead,” Schnitzler added. “We timed it around the holidays so if employees wanted to put that toward holiday-related expenses they could.” 

She noted that the idea was well-received, even by those who decided not to take advantage of it. People were just happy to have that element of choice during a year that vacations allowed for anything but.  

A Good Time to Take Time Off 

Although these changes helped to make life easier, there hasn’t been much of an argument to carry this concept over into the new fiscal year. For some, this is a matter of life finally beginning to return to normal. For others, there is a concern that employees are not taking the time off they deserve. Many employees point to the recent growth in work spurred by essential tasks such as PPP as reason for sticking around. 

“Things got really busy, really quick,” said Schnitzler. “Of course, we still accommodated for when people wanted to take time off. But with mortgages, PPP loans, and the knowledge that even if time was to be taken off there weren’t a lot of options for recreation, the majority of people decided they would just keep working.” 

This became especially difficult for employees still working remotely. Now that their home had doubled as their office, taking time off simply meant spending more time in the place that they work. Schnitzler added that especially now with workloads leveling out a bit, it’s good to view spending time not working as an important part of the work itself, regardless of where or how you end up using that PTO.  Whether you’re simply recharging or looking to spend more quality time with your family, taking that time away from work is crucial for your health and well-being.  

“If you’re at a point where you feel like you have so much going on and can’t possibly take time away, that is exactly the time to use some vacation,” said Knutson. “This prevents burnout and encourages creativity. When people are away from work, they’re able to think about how they might take a new approach to their work style. They can think about developing new workflows. And it helps you keep in mind that life isn’t just about work.” 

Encouraging employees to take time off comes with several benefits. It can help them gain perspective, recalibrate, and have a positive effect on mental and physical health.  

“The past year speaks a lot about our workforce and the fact that so many people are willing to keep powering through, especially last year when things were so crazy,” Schnitzler said. “Seeing that dedication in this industry is amazing.” 

But at the end of the day, she noted that dedication doesn’t mean giving up the PTO you’ve earned. Allowing yourself some extended time to relax is part of the reward for hard work, not the antithesis of it. 

“It’s really as simple as this,” she added. “We don’t give people vacation time with the expectation that they’re not going to use it.”  

Returning to the Office 

Taking the opportunity to clear the mind outside of the day-to-day responsibilities of work is a necessary part of self-care, but prioritizing this time off doesn’t change the fact that the spread of COVID is still an issue. Making sure guidelines are set in place upon return to the office gives workers the time off they deserve while preventing any further spread. This might look different at each bank, and it doesn’t have to require any extraordinary planning. 

“We’ve just been following CDC and local health department guidelines,” Knutson said. “We are not scientists, we are not doctors, we are not medical professionals, and we don’t want to pretend like we are. I think that’s important because we don’t want to step outside of our expertise. We have to be able to rely on the experts.” 

Knutson noted that when you follow the professional advice that’s out there, you have the experts to lean on. And though planning is crucial, it’s equally as important to not overreach when it comes to people’s lives. Managing risk does not mean asking workers to quarantine after returning from seeing their in-laws in Illinois, and having a plan can be as simple as asking employees to be honest with where they’ve been and if they believe they’ve been exposed to the virus. 

“The banking industry is one that likes to make quick decisions once we have as many facts as we possibly can,” she continued. “This way we can make a more accurate decision upfront and won’t have to change our position at a later date.”  

Another concern is whether employers might discourage people from enjoying themselves by placing harsh restrictions on their ability to work once they come back. If allowing a few days of remote work isn’t an option, setting allotted time aside for employees to quarantine if necessary when returning from a trip is one way to incentivize vacation and stay safe in the process.  

“[Bank of Wisconsin Dells] has set up a bank of the equivalent of 10 days of paid time for anything that we require you to be out for, such as travel quarantine or extra days for illness,” said Bauer. “This is in addition to our PTO plan and the FFCRA time.”  

With all these factors considered, it is still uncertain whether people will end last year’s trend of skipping out on vacation time. While there are still plenty of things to remain cautious of, there is also reason to be optimistic that bankers are re-evaluating the importance of their time off.  

“We don’t know what the future is going to look like,” admitted Schnitzler, “but we’ve seen employees begin to feel more comfortable with traveling again. The virus is still out there, but there are a lot more precautions in place and I think people are really becoming more comfortable.” 

As Knutson sees it, employees are preparing for some much-needed time out of the office, whether it be for travel plans or to simply unwind.   

“I’m finding and hearing that more people are planning on taking PTO for vacation purposes,” she said. “It seems that so many people are beginning to look past the current situation and realizing that they just need some time to relax after such a long, difficult, and unexpected year.” 

By, Alex Paniagua

Treasury Department announced that as of July 6, 2020 it has cancelled outstanding Economic Impact Payment (EIP) checks issued to recipients who may not be eligible for such program payments, including those that may be deceased. 

In its release, Treasury encouraged banks to determine the status of EIP checks by using either:   

  • The Treasury Check Verification Application (TCVA) for single queries; or 
  • The Treasury Check Verification Service (TCVS) for bulk queries using an automated programming interface (API). 

For a cancelled EIP check in TCVA (single query), the response will be “The U.S. Treasury Check has already been paid.” For a cancelled EIP check in TCVS (bulk queries), the response will be “U.S. Treasury Check has been cancelled.” 

If a bank inadvertently negotiates a cancelled EIP check, Treasury will not request or demand recovery from the bank, unless there is an additional reason to do so, for example the check was not properly endorsed. Similarly, Treasury will not reclaim from banks ACH payments made to recipients who may not be eligible for such payments under program specifications. 

EIP recipients are responsible for returning to Treasury a payment made to someone who may not be eligible for such payment under program specifications in accordance with guidance at www.irs.gov/coronavirus

Customers should use the following address for the return of EIP checks to the Treasury: 

U.S. Department of the Treasury 
Bureau of the Fiscal Service 
Philadelphia Financial Center 
P.O. Box 51320 
Philadelphia, PA 19115 

Treasury also requests customers include correspondence explaining the reason for return.  

Treasury has also posted frequently asked questions (FAQs) for banks and other useful links about EIPs at https://www.fiscal.treasury.gov/news/useful-covid-19-links.html. Treasury will continue to update the FAQs as needed when there is new information to provide. 

By, Ally Bates

This was the Special Focus section for the May 2020 Compliance Journal, click here to view the entire edition.

Title II, Subpart B of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) consists of provisions that affect retirement account distributions, charitable contributions, and employer payments on student loans. The following is a summary of the provision affecting retirement accounts. 

Several sections of Subpart B effect distributions from retirement accounts including: temporary treatment for coronavirus-related distributions, limited repayment and income tax treatments for qualified individuals, and waivers from required minimum distributions.

Coronavirus-related Distributions  

The new law allows for temporary treatment for distributions referred to as “coronavirus-related distributions” (CRDs). For a distribution to be considered a CRD, the distribution need be:  

  1. Made on or after January 1, 2020 and before December 31, 2020; and 
  2. Made to an individual:   
    • Who is diagnosed with the virus SARS-CoV-2 or with coronavirus disease 2019 (COVID-19) by a test approved by the Centers for Disease Control and Prevention;  
    • Whose spouse or dependent (as defined in section 152 of the Internal Revenue Code) is diagnosed with such virus or disease by such a test; or 
    • Who experiences adverse financial consequences as a result of being: 
      • Quarantined;  
      • Furloughed or laid off or having work hours reduced due to such virus or disease; or 
      • Unable to work due to lack of childcare due to such virus or disease, closing or reducing hours of a business owned or operated by the individual due to such virus or disease, or other factors as determined by the Secretary of the Treasury. 

CRDs are permitted for up to $100,000 (in the aggregate) from eligible retirement accounts and are not subject to the standard 10% withholding tax penalty that would otherwise apply to a distribution taken before the participant was 59½. Eligible retirement accounts include qualified defined contribution retirement plans, including 401(k), 403(b), 457(b), and IRAs.  

The new law does allow for retirement plan administrators to rely upon an employee certification that he/she meets the CARES Act conditions to make a CRD. There is no further detail in the CARES Act regarding what specific certification should be made for reliance there upon.  

CRDs will automatically be included as qualified individual taxable income ratably over a 3-taxable year period beginning with the year withdrawn. The participant may voluntarily elect income treatment differently—such as including CRDs as qualified taxable income all in one tax year.  

The CARES Act also allows participants to repay CRDs back to eligible retirement plans and IRAs for which they are beneficiaries and for which a rollover contribution of such distributions can be made. The repayment period is three years from date the distribution was received. Repayments will be treated as satisfying general 60-day rollover requirements and will generally require the participant to file an amended tax return.  

Loans from Qualified Retirement Plans 

Separate from options available for CRDs, the CARES Act increases the amount qualified individuals may borrow from a qualified retirement plan. From the date of enactment until 180 days thereafter, qualified individuals may borrow up to 100% of the individual’s vested account balance or $100,000, whichever is less. This is an increase from current thresholds of 50% and $50,000. A qualified individual is someone that meets the criteria listed in item 2. above. Not all retirement plans allow for participant loans; plan participants should discuss loan options with retirement plan administrators.  

In the case of a qualified individual with an outstanding loan from a qualified retirement plan on or after the date of enactment of the CARES Act (March 27, 2020), if the due date for any repayment of the outstanding loan occurs during the period beginning March 27, 2020 and ending December 31, 2020, such due date is delayed for one year. In determining the traditional 5-year period for when a loan from a qualified retirement plan must be repaid, the traditional time period disregards the delayed period.   

Waiver of Required Minimum Distribution for 2020 

The rules for required minimum distributions (RMDs) for defined contribution plans (such as 403(b) and certain 457(b) accounts) and IRAs have also been impacted by the CARES Act. Under section 2203 of the Act, RMDs are waived for 2020. Due to the changes, an accountholder who was otherwise required to take an RMD in 2020 is no longer required to take the RMD. Additionally, an accountholder who turned 70½ in 2019 but had not yet taken the first RMD by April 1, 2020, is not required to take the first RMD; nor is that accountholder required to take a 2020 RMD.  

The RMD changes also impact inherited IRA-holders. If an accountholder inherited an IRA from a person who died before January 1, 2020, the accountholder is not required to take a 2020 RMD. If the accountholder inherited an IRA as a designated beneficiary, the accountholder is generally required have the IRA funds distributed to him/her within a ten-year time period. Under the CARES Act, if the death occurred after December 2019, the ten-year period does not start until 2021—skipping 2020. A non-designated beneficiary (i.e., estate, charity) normally is required to receive the inherited IRA funds over a 5-year period. Under the CARES Act, 2020 is skipped giving the non-designated beneficiary six years to have the IRA funds fully distributed.  

A change made by the CARES Act is independent of the Setting Every Community up for Retirement Enhancement Act (SECURE Act). The CARES Act made no changes to the new timing rules of the SECURE Act. Thus, under the SECURE Act, it remains that if an IRA-holder reached 70½ prior to January 1, 2020, or if the IRA-holder is not yet 70½, once the IRA-holder reaches 72 after December 31, 2019, he/she must take an RMD.  

Bank Considerations 

Given the new distribution flexibilities for retirement accounts, banks should consider whether further tracking of withdrawals should be implemented for distributions made pursuant to the CARES Act. For example, is the bank be able to track the amount of CRDs taken by a qualified individual from an IRA to help ensure the customer did not exceed the $100,000 threshold. Or whether the bank should track CRDs to then anticipate repayments thereof and perhaps monitor both the timing and amount of repayment.   

Bank should also consider whether any type of automatic RMD activity need be ceased before an otherwise pre-arranged RMD is disbursed to the customer. Banks should be in contact with those IRA customers in distribution regarding the changes made to RMDs. IRA customers may still decide to voluntarily receive an RMD even though the CARES Act waives the distribution requirement for 2020. 

Banks should also become familiar with the frequently asked questions released by the Internal Revenue Service (IRS) regarding the changes made by the CARES Act. In the guidance, IRS references past guidance issued after Hurricane Katrina. It is expected IRS will use the practices implemented in that past disaster in its implementation of the CARES Act changes. IRS needs to issue further guidance for some of the changes made by the CARES Act; banks should keep an eye on the IRS website for that further guidance. The IRS guidance may be viewed at: https://www.irs.gov/newsroom/coronavirus-related-relief-for-retirement-plans-and-iras-questions-and-answers  

Conclusion 

Title II, Subpart B of CARES Act affect retirement account distributions, charitable contributions, and employer payments on student loans. The changes made to retirement accounts include CRDs, limited repayment and income tax treatments for certain withdrawals made by qualified individuals, and waivers from RMDs for 2020. 

Banks should be familiar with guidance issued by the IRS, including a series of frequently asked questions and should consider how the changes may impact IRA operations. Bank should also consider reaching out to IRA customers currently in distribution regarding the opportunity to waive RMDs for 2020.

By, Ally Bates

Late last week, the IRS issued Notice 2020-32 related to the deductibility for Federal income tax purposes of certain otherwise deductible expenses incurred in a taxpayer’s trade or business when the taxpayer receives a covered loan pursuant to the Paycheck Protection Program under section 7(a)(36) of the Small Business Act (15 U.S.C. 636(a)(36)). This Notice can be found here.

Specifically, this Notice clarifies that no deduction is allowed under the Internal Revenue Code for an expense that is otherwise deductible if the payment of the expense results in forgiveness of a covered loan pursuant to section 1106(b) of the CARES Act, and the income associated with the forgiveness is excluded from gross income for the purposes of the Code pursuant to section 1106(i) of the CARES Act. The IRS said that to the extent the income resulting from loan forgiveness under the PPP is excluded from income, it’s considered a “class of exempt income” under regulations promulgated under section 265. The IRS believes this treatment of not allowing the deduction of these covered expenses is appropriate because it prevents a double tax benefit.

It is possible this IRS guidance will be reversed by Congress as the heads of congressional tax committees want expenses funded with small business loans to be deductible. Given this evolving situation, bankers are reminded to be careful about providing tax information regarding any aspect of the PPP loans, and encourage borrowers to consult with their tax advisor regarding any tax implications of a PPP loan.

By, Ally Bates

Last updated on June 24, 2020

By, Eric Skrum

By, Eric Skrum

Last updated 04/02/2020 at 4:00 PM.

By, Eric Skrum

Below is a list from the Small Business Administration of Wisconsin's financial institutions that offer SBA Loans, including contact information/website links. This list DOES NOT include any financial institutions that have applied to become an SBA Lender for the purpose of the Paycheck Protection Program (PPP). (For a full list of all lenders that are participating in PPP and are licensed to do business in the state of Wisconsin, please click here.)

WBA encourages businesses to contact their lender to determine participation in the Paycheck Protection Program (PPP). Please note that PPP is different than the PFP column in the list below (last updated on April 1, 2020 at 1:00 p.m.).

The PDF below, compiled by SBA, lists all lenders (alphabetically) that are participating in the Paycheck Protection Program (PPP) and are licensed to do business in Wisconsin. Therefore, this list includes non-depository institutions and out-of-state or online lenders. WBA strongly recommends businesses work with local institutions that have a physical branch presence in the state. 

In addition, SBA has built a search tool to help businesses find SBA lenders. Access this tool here

By, Eric Skrum

This is a list of the current contacts for the Small Business Administration in Wisconsin.

By, Eric Skrum