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New 2022 Health and Welfare Benefits Limits: In Time for Open Enrollment?

The IRS published increased limits for 2022 for various health and welfare benefits, including: Health flexible spending account limit increased to $2,850 (from $2,750); Qualified transportation fringe benefit limit for parking and transit each increased to $280 (from $270); Adoption assistance program limit increased to $14,890 (from $14,400); and Qualified Small Employer Health Reimbursement Arrangement limit increased to $5,450 for individual coverage and $11,050 for family coverage (from $5,300 and $10,700, respectively). An employer that wants to incorporate these increased limits into its plans should determine whether the plans are drafted to automatically reflect the increased limits or whether amendments would be required. If a plan (including a health flexible spending account) is drafted to automatically incorporate any increased limits, the plan sponsor should communicate the increased limits to participants to permit changes during open enrollment for the upcoming plan year. The list of 2022 plan limits can be found in… Continue Reading

IRS Proposed Regulations Address the Elimination of the Deduction for Certain Qualified Transportation Fringe Expenses

On June 23, 2020, the IRS released proposed regulations regarding the deduction of certain employer-provided transportation and commuting benefits to reflect changes made to Section 274 of the Internal Revenue Code by the Tax Cuts and Jobs Act (the ?Ç£TCJA?Ç¥). The TCJA eliminated deductions by employers for qualified transportation fringe (?Ç£QTF?Ç¥) expenses for amounts paid or incurred in the taxable years beginning after December 31, 2017. Key issues addressed in the proposed regulations include: (i) the amount of parking expenses that is not deductible when an employer owns or leases the parking facility; (ii) the amount of QTF expenses that is not deductible when an employer pays a third party to provide QTF benefits; (iii) the amount of certain expenses or reimbursements relating to transportation between an employee?ÇÖs residence and place of employment that is not deductible; and (iv) the application of exceptions that may allow certain QTF expenses to… Continue Reading

Employee Compensation and Benefits Changes Under the Tax Cuts and Jobs Act

The following post is a general summary of the changes to the Internal Revenue Code made by the recently enacted Tax Cuts and Jobs Act (the ?Ç£Act?Ç¥) that affect employee compensation and benefits: Executive Compensation Updates Loss of Deduction for Compensation in Excess of $1 Million Currently, Section 162(m) of the Internal Revenue Code limits the ability of publicly held corporations to deduct annual compensation paid to a ?Ç£covered employee?Ç¥ in excess of $1 million, with an exception to this limit for certain performance-based compensation. Beginning on and after January 1, 2018, the Act amends Code Section 162(m) to eliminate the exception for ?Ç£qualified performance-based compensation?Ç¥ (which includes stock options, stock appreciation rights, and compensation paid upon the attainment of pre-established performance goals) and commissions. There is limited grandfathering relief available under the Act that preserves the deductibility of existing arrangements that pay out after 2017, provided the ?Ç£written binding… Continue Reading

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