No Payroll Tax Deferral for Postal Workers, and More

The U.S. Postal Service on Tuesday announced that it would not follow the executive branch’s lead on President Trump’s controversial payroll tax deferral, electing not to implement the initiative for its employees.

Last month, Trump issued a presidential memorandum allowing employers to defer the tax that funds Social Security between Sept. 1 and Dec. 31. Although most private sector employers have indicated they will not use the program, the administration has moved to carry out Trump’s directive for all employees at federal agencies and in the military service branches.

This implementation has occurred despite outcry from federal employee groups, which have criticized the mandatory nature of the deferral and uncertainty surrounding how agencies will recoup the deferred tax money next year. Officials in the Trump administration have indicated they would urge Congress to forgive any tax debts incurred by workers because of the deferral, while Trump himself has used that possibility to encourage impacted employees to vote for him.

In a statement Tuesday, the Postal Service indicated that it would not implement the controversial deferral for its more than half a million employees.

“This would not constitute a forgiveness of the tax but merely a deferral,” USPS wrote. “Employees would still be required to repay the deferred taxes between January and April next year. These deferred payments would be in addition to next year’s taxes . . . After thoroughly considering the impact on both employees and the organization, the Postal Service has elected not to implement the optional deferral.”

In retirement benefits news, officials at the federal government’s 401(k)-style retirement savings program on Monday issued regulations that ended a temporary rule that made it easier for married federal workers to make withdrawal elections during the pandemic.

In a final rule published in the Federal Register, the Thrift Savings Plan said it is ending a temporary waiver to the requirement that participants seeking to make withdrawals obtain a notarized signature from their spouse because of the difficulty in finding a notary during a pandemic. The waiver was implemented via an interim rule in April.

“The temporary suspension of the notarization requirement for spousal consent was necessitated by the coronavirus pandemic, which disrupted day-to-day life in an unprecedented way and made it difficult and unsafe to have forms notarized in person,” the rule states. “The uncertainty caused by the evolution of state laws permitting remote notarization coupled with the TSP’s lack of a technological workflow to allow participants to submit remotely notarized forms electronically created an extraordinary hurdle for married TSP participants who needed to request a withdrawal during this difficult time.”

But since the pandemic’s onset, the TSP has developed the technology to accept remotely notarized forms electronically, and the vast majority of states have passed laws enabling notaries to verify documents remotely.

“Moreover, states have increasingly lifted business and school closures, stay-at-home/shelter-in-place orders, and other coronavirus pandemic-related restrictions, allowing TSP participants to access services such as in-person notaries (mobile or otherwise) that were not available to them in April,” the rule states. “Therefore, the executive director has determined that this temporary waiver is no longer necessary. A married TSP participant who completes a withdrawal election form on or after Oct. 1, 2020, must have his or her spouse’s signature notarized.”