The IRS announced cost of living adjustments affecting dollar limitations for employer plans for tax year 2019. The IRS issued technical guidance detailing these items in Notice 2018-83, in addition to previous guidance in Rev. Proc. 2018-30. Many, but not all, of the limitations will change because the increase in the cost-of-living index met the …
When to Call Your ERISA Benefits Attorney
If you are responsible for the administration of your company’s retirement plan, you probably reach out to the plan’s record-keeper and investment advisor on a frequent basis. With the extensive bundled services offered by many record-keepers, you may wonder why you even need the name of an ERISA benefits attorney in your contacts list. An …
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IRS Releases Draft W-4 to Comply with Tax Law Changes: Four Things Employers Need to Know Now
The Tax Cuts and Jobs Act (“TCJA”) has created many changes for individuals and employers, including the way that employers calculate wage withholding for their employees. Employers need to be aware of the new methodologies for calculating individual income tax withholding, and need to prepare for the use of new forms. To that end, the …
IRS Permits the Use of Forfeitures for QNECs, QMACs and Safe Harbor Contributions
Many employers had long assumed that they could fund contributions to qualified plans made to avoid violating nondiscrimination rules from employee forfeiture accounts. Recently, the IRS finalized helpful new guidance to employers clarifying that forfeitures can be used fund these contributions. QNECs, QMACs and Safe Harbor Contributions Tax-qualified defined contribution plans (e.g., 401(k) and profit …
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Time for Non-Profits to Update Their 403(b) Retirement Plans
Non-profit entities, including schools and universities, that sponsor 403(b) retirement plans should begin the process of restating their plans to comply with current law. This is the first restatement cycle since the December 31, 2009 deadline for sponsors of 403(b) plans to adopt written plan documents. A 403(b) plan is similar to a 401(k) plan …
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Signs Point to Yes: The IRS Advisory Committee Drops Hints That the Qualified Retirement Plan Determination Letter Program Might Return in Some Form
For many years, plan sponsors could regularly get a determination letter from the IRS to ensure that their individually-designed qualified retirement plan met all of the requirements for favorable tax treatment. However, in 2017 the IRS ended that practice. Since that time, plan sponsors have had no mechanism by which to confirm that their plans …
ACA Employer Penalty Tax Update: Responding to Letter 227
Many applicable large employers received an unpleasant surprise earlier this year when they received Letter 226-J, which imposed an employer shared responsibility payment (ESRP) under Section 4980H of the Internal Revenue Code on Forms 1094-C and/or 1095-C filed for the 2015 calendar year. Employers were required to respond to Letter 226-J within a short 30-day …
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Employers Beware: Misclassification Cases are Costly and Common
Many employers erroneously classify workers who should be employees as independent contractors, due to the significant tax savings. However, misclassification cases present major risks. The independent contractor status for a worker is not favored by the IRS, the Department of Labor (DOL), the states, and many agencies within the states including those enforcing workers’ compensation …
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Confidential Settlements of Sexual Harassment Claims Are No Longer Deductible by a Company Under the Tax Act
Companies generally are allowed to deduct all ordinary and necessary expenses paid during the year to carry on a trade or business, including most expenses related to settlement of a lawsuit or claim relating to the business. But expenses such as illegal bribes and fines paid to the government for violation of any law are …
IRS Scrutiny of Plan Loans Increases, but IRS Provides Helpful Guidance
The Internal Revenue Service (“IRS”) has increased its level of scrutiny on the limitations imposed on participant loans from defined contribution retirement plans. Internal Revenue Code (“IRC”) Section 72(p) generally limits a participant’s plan loans to the lesser of: $50,000, or 50% of the participants vested account balance. Additionally, if the participant already took out …
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