Almost all plan documents contain some level of administrative provisions outlining how the plan is intended to operate (e.g., number of committee members, quorum, etc.).Ā Plan sponsors often view these provisions as “boilerplate” with little or no meaning.Ā In actuality, these are substantive provisions of the plan and failure to follow those provisions can have substantial consequences. The Consequences Failure to follow the terms of the plan document is a potential qualification issue under IRS…
After an abrupt mid-year change, the IRS recently released Revenue Procedure 2018-27, which provides relief for employees with family coverage under a High Deductible Health Plan who also contribute to a Health Savings Account (HSA), by permitting such employees to use the previously announced $6,900 contribution limit for 2018 contributions. In May 2017, the IRS released Revenue Procedure 2017-37 which provided the annual inflation adjusted contribution limits for HSAs and stated that the 2018 contribution…
As part of the tax reform process, Congress proposed several changes to qualified retirement plans that were cut from the final bill. One of these proposals, making changes to the rules governing 401(k) hardship distributions, found a new home in the Bipartisan Budget Act of 2018, signed by the President on February 9, 2018 (the āActā).Ā The Act also made qualified retirement plan changes which provide additional relief to employees impacted by the California wildfires…
On December 22, 2017, the Tax Cuts and Jobs Act was signed into law bringing significant changes to US tax law. One provision of the Act may further incentivize individuals to work as independent contractors instead of as traditional employees. The new provision allows for independent contractors, and for service providers structured as a partnership or other flow-through entities, the potential to deduct up to 20% of their revenue from their taxable income. And while…
On January 11, 2018, the IRS issued Notice 1036, which provides the percentage method tables for income tax withholding in 2018. Key developments include: The flat withholding rate on supplemental wages, such as equity awards, of $1 million dollars and under a year is now 22% ā down from 25%. As anticipated, the mandatory supplemental withholding rate for compensation in excess of $1 million is now 37% ā down from 39.6%. The backup withholding rate…
The IRS has issued guidance inĀ Notice 2017-46 (the āNoticeā) relaxing the rules applicable to U.S. financial institutions that require the collection of foreign taxpayer identification numbers (Foreign TINs) from U.S. nonresident aliens. Under anticipated amendments to temporary regulations that are described in the Notice, withholding agents will be required to collectĀ a Foreign TIN and date of birth (in the case of an individual account holder) on a foreign personās beneficial owner withholding certificate (e.g., a…
The IRS, DOL and PBGC recently provided various forms of relief intended to help employees and employers impacted by Hurricanes Harvey and Hurricane Irma.Ā In this second blog post we review funding and reporting relief and take a brief look at Vacation/PTO donation programs. To read our first post on loans and hardship distributions from qualified plans, click here. Defined-Benefit Plan Funding Relief IRS Notice 2017-49 provides single defined-benefit plan sponsors or employers covering more…
The IRS, DOL and PBGC recently provided various forms of relief intended to help employees and employers impacted by Hurricanes Harvey and Hurricane Irma.Ā Due to the extent of the relief provided we are covering this information in two blog posts – the first of which will focus on loans and hardship distributions from qualified plans and the second of which will look at the various reporting and funding extensions available. Plan Loans and Hardship…
As most employers are aware, the obligation to report non-qualified deferred compensation (NQDC) that complies with Internal Revenue Code (IRC) Section 409A is currently suspended, but non-compliant NQDC is required to be reported in Box 12 of an employeeās Form W-2. Employers should also be aware of the additional Form W-2 reporting requirements that may apply to NQDC, including equity awards that are considered NQDC, such as deferred restricted stock units: the obligation to report…
On April 21, 2017, the Trump Administration issued Executive Order 13789, which instructed the IRS to review all āsignificant tax regulationsā issued on or after January 1, 2016 to identify as targets for modification, rescission or delayed effectiveness any regulations that (i) impose an undue financial burden on U.S. taxpayers; (ii) add undue complexity to the Federal tax laws; or (iii) exceed the statutory authority of the IRS. Having completed this review, earlier this month,…