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IRS Announces Enforcement Relief from Fiduciary Rule

Previously, the DOL, in Field Assistance Bulletin 2017-01, announced its temporary enforcement policy for the new fiduciary duty rule and related exemptions (the ?Ç£Fiduciary Rule?Ç¥). The IRS recently published Announcement 2017-4, stating excise taxes will not be assessed for violations of the Fiduciary Rule for the periods for which the DOL announced enforcement relief in Field Assistance Bulletin 2017-01. Excise taxes will not be assessed during the following periods: (i) if the DOL issues a final rule after April 10 delaying the effective date of the Fiduciary Rule, excise taxes won?ÇÖt be assessed for non-compliance with the rule during the ?Ç£gap?Ç¥ period between April 10 and the date a delay is implemented, and (ii) if the DOL decides not to delay the effective date of the rule, excise taxes won?ÇÖt be assessed for non-compliance occurring between April 10 and a ?Ç£reasonable?Ç¥ period after publication of the DOL?ÇÖs decision. View Announcement… Continue Reading

IRS Releases Memo Addressing Hardship Withdrawal Substantiation Requirements for 403(b) Plans

The IRS recently released a memorandum (the “403(b) Memo“) directed to its Employee Plan Examinations agents regarding the documentation they should obtain from plan administrators in order to determine whether distributions from 403(b) plans were made on account of an immediate and heavy financial need. The 403(b) Memo follows a similar memorandum that was recently released by the IRS that related to hardship substantiation requirements for 401(k) plans (the “401(k) Memo“). The 403(b) Memo states that since hardship distributions from a 403(b) plan are subject to the same rules that apply to such distributions from a 401(k) plan, 403(b) plan administrators and recordkeepers should follow the same steps as outlined in the 401(k) Memo to substantiate a participant’s claimed hardship, namely the plan administrator or recordkeeper should, prior to making the distribution, (1) obtain source documents from the employee substantiating the hardship or (2) obtain a summary of the information… Continue Reading

IRS Publishes First Operational Compliance Checklist

The IRS recently published the first Operational Compliance Checklist (the ?Ç£Checklist?Ç¥), which lists changes in qualification requirements that became effective during the 2016 and 2017 calendar years. Examples of items listed on the Checklist include, among others: mid-year changes to safe harbor 401(k) plans; proposed regulations regarding QNECs and QMACs in defined contribution plans; final regulations regarding cash balance/hybrid plans; and the extension of temporary nondiscrimination relief for closed defined benefit plans. The Checklist is only available online and will be updated periodically to reflect new legislation and IRS guidance. The Checklist does not, however, include routine, periodic changes such as cost-of-living increases, spot segment rates, and applicable mortality tables, which can instead be found on the IRS?ÇÖs Recently Published Guidance webpage. View the Checklist

IRS Publishes First Required Amendments List

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?ÇÖs 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?ÇÖs bankruptcy. The deadline for adopting any required amendments described in this year?ÇÖs Required Amendments List is December 31, 2018. View Notice 2016- 80.

IRS Announces 2017 Qualified Retirement Plan Limits

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?ÇÖs 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 ?Ç£key employee?Ç¥ in a top heavy plan: increased to $175,000. Compensation dollar limit for defining a ?Ç£highly compensated employee?Ç¥: remains unchanged at $120,000. The full list of 2017 plan limits can be found in IRS Notice 2016-62.

IRS Releases Final Instructions for Forms 1094-B/1095-B and 1094-C/1095-C

IRS Releases Final Instructions for Forms 1094-B/1095-B and 1094-C/1095-C

The IRS recently released final instructions for the 2016 Forms 1094 and 1095.?á Highlights of the changes and clarifications included in the final instructions are provided below. While a of the few items are ?Ç£neutral?Ç¥ 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, ?Ç£Do not attach to your tax return. Keep for your records.?Ç¥ 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

IRS, DOL, and PBGC Announce Disaster Relief in Response to Severe Storms and Flooding in Texas

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?ÇÖs Form 5500 filing relief. In addition, PBGC is waiving certain penalties and extending certain deadlines. PBGC?ÇÖs 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?áhere. The DOL announcement is… Continue Reading

ID Protection Services Not Taxable to Victims of a Data Breach

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?ÇÖs compensation or benefits package; or proceeds actually received under an identity theft insurance policy. Announcement 2015-22 is available here.

IRS Announces that Employee Plans Will No Longer Answer Legal Questions via E-mail

The IRS announced that, effective October 1, 2015, Employee Plans (?Ç£EP?Ç¥) 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?ÇÖs specific set of facts. The IRS announcement is available here.

IRS Section 409A Audit Initiative

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.

October 2021