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Puerto Rico to Allow Rollovers from the Government Plan for Puerto Rico Employees to Qualified Retirement Plans

On January 20, 2021, the Puerto Rico Department of Treasury released Administrative Determination No. 21-01 (?Ç£AD 21-01?Ç¥), allowing for direct and indirect rollovers of lump-sum distributions from the defined contribution government plan for Puerto Rico employees to a plan that is qualified under Section 1081.01(a) of the Puerto Rico Internal Revenue Code of 2011, as amended (the ?Ç£Code?Ç¥), maintained by a private-sector employer. Such rollovers would be considered exempt transactions and would not be subject to income tax withholding under Section 1081.01(b) of the Code. The provisions of AD 21-01 are effective immediately. AD 21-01 is available here.

IRS Releases Proposed Rule on Executive Compensation for Tax-Exempt Organizations; Relief for Certain Employees Who Volunteer

On June 11, 2020, the IRS published a proposed rule under Section 4960 of the Internal Revenue Code (the ?Ç£Code?Ç¥), which was added to the Code by Section 13602 of the Tax Cuts and Jobs Act. Under Section 4960 of the Code, during a taxable year, an applicable tax-exempt organization (?Ç£ATEO?Ç¥) that pays to certain of its highest compensated employees remuneration in excess of $1,000,000 or any excess parachute payments would be subject to a 21% excise tax on the excess remuneration and excess parachute payments. Prior to the proposed rule, the IRS issued Notice 2019-09, which provided interim guidance on Section 4960. The proposed rule generally incorporates the guidance in Notice 2019-09. However, in response to comments received on Notice 2019-09, the proposed rule makes certain modifications and clarifications to the initial guidance. Notably, the proposed rule includes an exception so that employees of a related non-ATEO who provide… Continue Reading

Payments for Certain Healthcare Arrangements are Tax Deductible

The IRS recently issued proposed regulations that?áaddress the treatment of amounts paid by an individual for a ?Ç£direct primary care arrangement?Ç¥ or a ?Ç£health care sharing ministry?Ç¥ (collectively, the ?Ç£Arrangements?Ç¥) as being tax-deductible ?Ç£medical care expenses?Ç¥ under Section 213 of the Internal Revenue Code (the ?Ç£Code?Ç¥). Under the proposed regulations, a direct primary care arrangement (?Ç£DPC Arrangement?Ç¥) is defined as a contract between the individual and one or more primary care physicians pursuant to which the physician(s) agree to provide medical care for a fixed annual or periodic fee without billing a third party. A health care sharing ministry (?Ç£Sharing Ministry?Ç¥) is defined as a tax-exempt organization under Section 501(c)(3) of the Code that meets specified requirements, including that its members share a common set of ethical or religious beliefs and share medical expenses in accordance with those beliefs. HSAs and the Arrangements. The preamble to the proposed regulations confirms… Continue Reading

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