HR Agency Implements Portions of COVID-19 Economic Stimulus Package That Help Feds

The Office of Personnel Management on Tuesday provided agencies with additional information about a provision of the $2 trillion economic stimulus legislation signed into law last month by President Trump that waived the cap on premium pay for work related to responding to the coronavirus outbreak.

In a memo to agency heads, acting OPM Director Michael Rigas laid out how agencies may use elements of the new law waiving the limits on premium pay on both biweekly and annual bases, as well as the cap on aggregate pay “for work performed in response to COVID-19.”

“Section 16003 of the [Coronavirus Aid, Relief and Economic Security Act] permits the head of an agency to waive the premium pay limitation and apply a higher annual premium pay cap for services performed by an employee during fiscal year 2020 that the head of the agency determines are primarily related to the preparation, prevention or response to COVID-19,” Rigas wrote. “[It] also provides that any premium pay for such services is excluded from the aggregate limit on pay.”

But there are some catches, Rigas noted. The waivers may be used only if funding for the premium pay comes from the Federal Emergency Management Agency, either directly or through reimbursement. And despite the waiver, an employee’s aggregate pay still may not exceed level 2 of the Executive Schedule, which this year is $197,300.

Another section of the law provides a much broader authority to waive the premium pay cap, without the restriction that funding for the compensation come from FEMA, but it is only retroactive to February 2, whereas the FEMA-related provision is retroactive to January 1. Both expire at the end of fiscal 2020.

Rigas wrote that premium pay provided as a result of the broader authority should not be considered basic pay for retirement calculation purposes, and may not be used when computing lump sum payments for accumulated annual leave.

The Thrift Savings Plan also announced temporary changes as a result of the CARES Act this week, specifically when it comes to required minimum distributions, the amount of money that normally must be withdrawn from a retirement account each year when a participant reaches retirement age.

In essence, required minimum distributions are suspended for this year. Participants will not be forced to take distributions this year, TSP officials said, regardless of their age or employment status, and the agency will not send automatic distribution payments in 2020.

“If you make a withdrawal, we will withhold for federal taxes at the rate appropriate for the type of withdrawal you make, without regard to [required minimum distribution] rules that would otherwise apply,” the TSP wrote. “You can transfer or roll over to an IRA or eligible employer plan any otherwise eligible withdrawals you make.”