On Feb. 9, 2018, Congress passed, and the president signed, the Bipartisan Budget Act of 2018 (the “Budget Act”). As we previously discussed here, the Budget Act contains a number of provisions that affect qualified retirement plans. These changes include expanding the type of funds that can be distributed under Code Section 401(k) in the … Continue Reading
On April 26th, the IRS released Rev. Proc. 2018-27, effectively reinstating a $6,900 limit on 2018 health savings account (“HSA”) contributions for family coverage. This is welcome relief for individuals who planned on contributing the maximum permitted HSA contributions for 2018 as well as employers who offer plans that facilitate these contributions. Background In our … Continue Reading
On March 5, 2018, the IRS released Revenue Procedure 2018-18, which, among other things, adjusts downward the 2018 total contribution limit to health savings accounts (HSAs) for individuals enrolled in family coverage. In late 2017, the IRS announced that the 2018 HSA limit for individuals enrolled in family coverage would be $6,900. The recently enacted … Continue Reading
On Friday, February 9, 2018, Congress passed, and the President signed, the Bipartisan Budget Act of 2018 (the “Budget Act”). The Budget Act contains a number of provisions that affect qualified retirement plans. Plan sponsors should consider the impact of the Budget Act on their retirement programs. Hardship Withdrawals. The Budget Act relaxes the rules … Continue Reading
Following the old “better late than never” axiom, the IRS recently announced (see Notice 2018-06) that once again it would be extending the distribution (but not filing) deadline for the Affordable Care Act (ACA) reporting requirements set forth in Sections 6055 and 6056 of the Internal Revenue Code (the “Code”). Under Code Section 6055, health … Continue Reading
In the wake of massive floods caused by Hurricane Harvey, the Department of Labor (DOL), Internal Revenue Service (IRS), and Pension Benefit Guaranty Corporation (PBGC) have issued initial employee benefit plan guidance. The temporary relief provided in the guidance relates to such things as hardship distributions, plan loans, filing deadlines, plan deposits, and notice requirements. … Continue Reading
If your 401(k) plan recordkeeper has not talked to your company lately about hardship distributions, it may be time to reach out to the recordkeeper. The short story is that the IRS recently issued an internal memorandum (found here https://www.irs.gov/pub/foia/ig/spder/tege-04-0217-0008.pdf) providing guidance to its employee plans examination group on the substantiation requirements for hardship distributions … Continue Reading
A lot has been written over the last few months about what to do now that the IRS has closed its determination letter program for ongoing individually designed tax-qualified retirement plans. Some see this as cause for celebration because we no longer have to go through the trouble of collecting documents, filling out forms, and … Continue Reading
A recent IRS information letter confirms that “waiting time penalties” paid under California law are not wages for federal income tax withholding purposes. Section 203 of the California State Labor Code imposes penalties on employers that fail to pay final wages to terminated employees within a specified period of time. These penalties are paid to … Continue Reading
On January 29, 2016, the IRS issued Notice 2016-16 that provides guidance on mid-year changes to a safe harbor plan under sections 401(k) and 401(m) of the Internal Revenue Code. The guidance provides that a mid-year change either to a safe harbor plan or to a plan’s safe harbor notice does not violate the safe … Continue Reading
As reported on Proskauer’s Tax Talks Blog, after last year’s customer data security breaches at major U.S. corporations, the IRS announced special tax relief for identity protection services provided to individuals affected by a security breach. In response to comments solicited in connection with that announcement, the Treasury Department and IRS have in Announcement 2016-02 … Continue Reading
On October 21, 2015, the IRS issued proposed regulations to clarify the treatment of same-sex spouses for federal tax purposes. By way of background, in 2013, the United States Supreme Court held in United States v. Windsor that the portion of the Defense of Marriage Act defining marriage as being between opposite-sex partners was unconstitutional. … Continue Reading
Earlier this month, the Office of Chief Counsel of the Internal Revenue Service released a Memorandum clarifying the impact of a correction of a Code Section 409A operational failure before the date of vesting of nonqualified deferred compensation but during the year of vesting. In the Chief Counsel Memorandum, the IRS clarified that such a correction, … Continue Reading
The IRS has informally stated that it is intending to make some significant changes to the Determination Letter program, and is even considering eliminating the program for individually designed retirement plans (other than perhaps initial and final determination letters). The agency apparently is looking to streamline its operations and focus its resources on other areas. … Continue Reading
The IRS announced yesterday that the maximum annual employee contribution to a health care flexible spending account plan is increasing by $50 to $2,550 for 2015 (up from the $2,500 limit that has applied since 2013). Employers that sponsor health care FSAs should take this increase into account in preparing for open enrollment, and may … Continue Reading
On Thursday, September 18, 2014, the Internal Revenue Service (“IRS”) released Notice 2014-55, which expands the cafeteria plan “change in status” rules to allow plans to offer employees an option to revoke their elections for employer-sponsored health coverage to purchase a qualified health plan through a Health Insurance Marketplace (“Marketplace”). The notice is effective immediately … Continue Reading
A recently posted IRS Q&A raises the specter of serious penalties for non-compliance with the Affordable Care Act. The context of the question relates to the consequences to employers that do not establish a health insurance plan for their own employees, but instead reimburse them for premiums they pay for other health insurance. The IRS … Continue Reading
A district court in the District of Columbia recently held that the Internal Revenue Service’s (“IRS”) rule authorizing premium tax credits to individuals who enroll in health-care coverage through federal exchanges was unambiguously consistent with the “text, structure, and purpose” of the Affordable Care Act (“ACA”). Halbig v. Sebelius, No. 13-cv-0623, 2014 U.S. Dist. LEXIS … Continue Reading
Prior to the U.S. Supreme Court’s Windsor decision that repealed Section 3 of the federal Defense of Marriage Act (DOMA), same-sex spouses were not recognized as spouses for federal tax and benefits purposes. In the immediate aftermath of Windsor, the Internal Revenue Service (IRS) issued Revenue Ruling 2013-17, which stated the IRS position that, for … Continue Reading
By Ahuva Warburg and Lisa A. Berkowitz Herrnson on Posted in IRS
On December 11, 2013, the IRS issued IRS Notice 2013-74 which provides guidance on in-plan Roth rollovers. An in-plan Roth rollover is a rollover within a Section 401(k), Section 403(b) or governmental Section 457(b) plan to a designated Roth account in the same plan. Notice 2013-74 expands the types of contributions that may be rolled … Continue Reading
Continuing its implementation of the United States Supreme Court decision in U.S. v. Windsor, the Internal Revenue Service (IRS) recently issued Notice 2013-61, which provides guidance for employers to make claims for refunds or adjustments of overpayments of Federal Insurance Contributions Act (FICA) and Federal income tax withholding (employment taxes) for 2013 and prior years … Continue Reading
The IRS recently has reminded plan sponsors to verify and document that hardship distributions comply with their plan document and the law, according to a recent posting by IRS Director of Employee Plans Examinations Monika Templeman on the IRS website, “Examination Tips for Hardship Distributions.” In some cases, allowing participants to apply for loans or … Continue Reading
Last Friday, employers contributing to multiemployer plans received some good news. As expected, the Internal Revenue Service amended the transition rule for 2014 originally set forth in its proposed regulations on the pay or play mandate. (The new text of the rule can be found here). An employer required by a collective bargaining agreement to contribute to … Continue Reading
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