In Notice 2016-80, the IRS published the first Required Amendments List, which lists statutory and administrative changes in plan qualification requirements that (i) are first effective in the plan year in which the list is published and (ii) may require a plan amendment. This year’s list included just one item, which related to restrictions on accelerated distributions from underfunded single-employer, collectively-bargained defined benefit plans due to an employer’s bankruptcy. The deadline for adopting any required amendments described in this year’s Required Amendments List is December 31, 2018. View Notice 2016- 80.
The IRS recently announced cost-of-living adjustments for 2017. Below is a list of some of the key annual limits that will apply to qualified retirement plans in 2017: Compensation limit in calculating a participant’s benefit accruals: increased to $270,000. Elective deferrals to 401(k) and 403(b) plans: remains unchanged at $18,000. Annual additions to a defined contribution plan: increased to $54,000. Catch-up contributions for employees aged 50 and over to 401(k) and 403(b) plans: remains unchanged at $6,000. Annual benefit limit for a defined benefit plan: increased to $215,000. Compensation dollar limit for defining a “key employee” in a top heavy plan: increased to $175,000. Compensation dollar limit for defining a “highly compensated employee”: remains unchanged at $120,000. The full list of 2017 plan limits can be found in IRS Notice 2016-62.
The IRS recently released final instructions for the 2016 Forms 1094 and 1095. Highlights of the changes and clarifications included in the final instructions are provided below. While a of the few items are “neutral” and merely reflect pre-programmed changes under the Affordable Care Act that were already known and set to occur, many of the changes and clarifications are welcome news. Form 1094-B Highlights There are no substantive changes for 2016. View the 2016 Form 1094-B here. Form 1095-B Highlights The statement, “Do not attach to your tax return. Keep for your records.” was inserted underneath the main heading, suggesting that the form will continue to not be required for direct substantiation purposes as part of a personal income tax filing in the future. Part I, Lines #2 and #3 and Part IV, columns (b) and (c) have been updated to reflect that TINs may be substituted for SSNs.… Continue Reading
The IRS announced tax relief for victims of severe storms and flooding in the Texas-Houston area. This relief generally extends from April 17, 2016 through September 1, 2016, and covers taxpayers who reside or have a business in Fayette, Grimes, Harris, or Parker Counties. The relief also includes the filing of Forms 5500 with the IRS. The DOL has mirrored the IRS’s Form 5500 filing relief. In addition, PBGC is waiving certain penalties and extending certain deadlines. PBGC’s announcement provides relief relating to PBGC deadlines to persons responsible for meeting a PBGC deadline who are located in the disaster area for which the IRS has provided relief. If the IRS adds additional areas in connection with those filing extensions, any person responsible for meeting a PBGC deadline that is located in those additional areas will also be entitled to that relief. The IRS announcement is available here. The DOL announcement is… Continue Reading
In Announcement 2015-22, the IRS announced that the value of identity protection services, such as credit monitoring, identity theft insurance policies, and identity restoration services, provided to an employee whose personal information may have been compromised in a data breach is not taxable as gross income. The Announcement does not apply to cash received in lieu of identity protection services; identity protection services received for reasons other than as a result of a data breach, such as services received in connection with an employee’s compensation or benefits package; or proceeds actually received under an identity theft insurance policy. Announcement 2015-22 is available here.
The IRS announced that, effective October 1, 2015, Employee Plans (“EP”) will no longer answer technical questions by e-mail. Due to recent staffing changes, EP no longer has the resources to do research and provide answers for legal topics. Instead, the IRS is directing employers to its online resources and recommending that employers request a private letter ruling. A private letter ruling is a written statement that interprets and applies tax laws to a taxpayer’s specific set of facts. The IRS announcement is available here.
The IRS is currently conducting Section 409A audits of certain taxpayers that were selected initially for employment tax audits. To date, fewer than 50 taxpayers have been selected for the Section 409A audits, and those taxpayers were selected based on the probability that the taxpayers would have nonqualified deferred compensation plans. The audits are focusing on the deferred compensation paid during the year under examination and are limiting the review to deferral elections and payouts (including application of the six-month delay rule). Generally, the audits have been limited in scope to the top ten most highly-compensated employees.
The IRS recently released answers to frequently asked questions regarding taxation of same sex couples. In the FAQ, the IRS reinforces its position that provisions of the federal tax law that apply only to married taxpayers or their spouses do not apply to same-sex partners because federal law does not treat same-sex partners as married for federal tax purposes. The FAQ can be found here.
An IRS report details the interim findings from the surveys the IRS issued to plan sponsors and provides information regarding different aspects of 401(k) plans being offered. It also indicates that many plan sponsors are not aware of the resources available to plan sponsors on its website and in general. The summary is available on the IRS website.