House Approves Revised Heroes Act, as Negotiations Continue on COVID Relief

Amid ongoing negotiations with Trump administration officials,  the House of Representatives moved forward on its own Oct. 1, approving a scaled-back economic relief bill with targeted retirement provisions. 

The revised HEROES Act (H.R. 925, as amended) was approved by the House on a near-party-line vote of 214-207 (18 Democrats voted no). 

Apart from that vote, House Speaker Nancy Pelosi (D-CA) and Treasury Secretary Steve Mnuchin (who has been negotiating on behalf of the Trump administration) continue to negotiate and exchange proposals, but there are still numerous contentious issues. The House was scheduled to adjourn until after the elections, but that may change if it appears that an agreement is near. Additionally, over the weekend President Trump strongly urged Congress to reach a deal in a tweet from Walter Reed hospital. 

According to an update by Pelosi, continuing disagreements involve Democrats' demands for additional funding for the child tax credit, state and local governments and expanded unemployment insurance, among other things. Republicans, meanwhile, continue to insist on liability protections for businesses and schools, as well as further reducing the overall cost of the legislation. 

The $2.2 trillion HEROES Act—which was reduced from the $3.4 trillion bill passed by the House in May—provides individual and small business tax breaks, a second round of direct payments, funding for state and local governments, additional Paycheck Protection Program (PPP) funding and reforms, and additional funding for unemployment benefits, among many other provisions. 

The bill also includes relief for single and multiemployer pension plans, as well as various other retirement-based provisions. If an agreement does finally emerge, the provisions below—which are currently included in the revised HEROES Act—could be part of the package. 

Miscellaneous Retirement-Related Provisions

• Waiver of required minimum distributions for 2019
• Waiver of 60-day rule in case of rollover of otherwise required minimum distributions in 2019 or 2020
• Exclusion of benefits provided to volunteer firefighters and emergency medical responders made permanent
• Application of special rules to money purchase pension plans
• Grants to assist low-income women and survivors of domestic violence in obtaining qualified domestic relations orders
• Modification of special rules for minimum funding standards for community newspaper plans
• Minimum rate of interest for certain determinations related to life insurance contracts

Relief for Single Employer Pension Plans

• Extended amortization for single employer plans
• Extension of pension funding stabilization percentages for single employer plans

Relief for Multiemployer Pension Plans

• Special partition relief
• Repeal of benefit suspensions for multiemployer plans in critical and declining status
• Temporary delay of designation of multiemployer plans as in endangered, critical, or critical and declining status
• Temporary extension of the funding improvement and rehabilitation periods for multiemployer pension plans in critical and endangered status for 2020 or 2021
• Adjustments to funding standard account rules
• PBGC guarantee for participants in multiemployer plans

Other Provisions of Interest

• Three distinct set-asides for additional, targeted PPP funding relief for the smallest businesses, struggling non-profits, and second loans to the hardest hit businesses, as well as extending the covered period and streamlining the forgiveness process
• Coordination between the PPP and the Employee Retention Tax Credit by permitting qualified wages to be taken into consideration for purposes of the ERTC if a PPP loan is not forgiven
• Clarification that expenses paid or incurred with proceeds from PPP loans that are forgiven under the CARES Act and are not included in gross income do not result in a denial of any deduction or basis of any asset for federal tax purposes

It seems likely that an agreement may be reached between the House leadership and the Trump administration before the elections, but time is running short and it’s not clear whether the Senate would go along. Senate Majority Leader Mitch McConnell (R-KY) currently doesn’t appear to be part of the negotiations and he likely would not bring a bill up for consideration unless it had the support of the Republican caucus. In addition, given the recent COVID-19 outbreak among Republican senators, the Senate does not plan to be in session for the next two weeks, until Oct. 19.  

If the House and Senate are not able to approve a bill before recessing for the elections, there will be a lame-duck session. Congress approved a continuing resolution that temporarily funds the federal government, but only until Dec. 11. An earlier preview of what we might see in a lame-duck session can be found here. 

The 2,000-page text of the revised HEROES Act can be found here, and an 87-page summary of the bill can be found here.