IRS Archives - Page 12 of 33 - EMPLOYEE BENEFITS BLOG

IRS Announces HSA Contribution Limit Increase for 2018

by Jacob Mattinson, Megan Mardy and McDermott Will & Emery | May 1, 2018 | Employee Benefits, Health and Welfare Plans

On April 26, 2018, the Internal Revenue Service (IRS) increased the 2018 maximum deductible Health Savings Account (HSA) contribution for taxpayers with family coverage under a High Deductible Health Plan (HDHP) to $6,900.

The $6,900 contribution limit for 2018 was originally published in Revenue Procedure 2017-37, but was reduced earlier this year by $50 to $6,850 in Revenue Procedure 2018-18 due to changes in the inflation indexing measure under the Tax Cuts and Jobs Act. The IRS later increased the limit back to the originally announced amount of $6,900. This relief is published in Revenue Procedure 2018-27 and appears to be the result of pushback from employers, many of whom would face significant administrative costs due to implementing the mid-year change, and governing law requiring the annual HSA limits to be published by no later than June 1 of the preceding calendar year.

Under the guidance, an individual who received a distribution from an HSA in 2018 of an excess contribution based on the previous $50 reduction may repay the distribution to the HSA by April 15, 2019. The repaid amount would not be included in the individual’s gross income or subject to additional taxation. Alternatively, such individual may take no action and treat the $50 HSA distribution as an excess contribution that was timely returned and thus not subject to income inclusion or additional taxation.

Employers who previously lowered their plan’s contribution limit for HSAs to $6,850 should consider how to address the increased limit and whether any changes or employee communications are necessary.

Tax and Benefits Considerations for Service Providers for Family Offices

by Patrick J. McCurry and Todd Solomon | Feb 22, 2018 | Employee Benefits, Employment, Executive Compensation

Patrick McCurry and Todd Solomon wrote this bylined article on how family offices are using sophisticated techniques to compensate their employees in a tax-efficient manner. “We expect to see the continued use of equity to deliver tax-efficient compensation to family office employees while aligning the economic interests and incentives of the family and the family office’s key employees,” the authors wrote.

Originally published in Tax Executive, February 1, 2018.

New VCP Compliance Fees Will Increase the Cost of Correcting Some of the Most Common Plan Errors

by Alan D. Nesburg, PC and McDermott Will & Emery | Feb 6, 2018 | Employee Benefits, Retirement Plans

Last month, the Internal Revenue Service (IRS) published Revenue Procedure 2018-4, which modified the user fee schedule for submissions under the IRS’s Voluntary Correction Program (VCP).

Under the new fee schedule, all VCP compliance fees are now based on the total net plan assets reported on a plan’s annual Form 5500-series return. This means that for VCP submissions filed on or after January 2, 2018, compliance fees will be:

$1,500 for plans with assets of $500,000 or less;
$3,000 for plans with assets of over $500,000 to $10,000,000; and
$3,500 for plans with assets of over $10,000,000.

Prior to January 2, 2018, compliance fees were generally based on the total number of plan participants reported on a plan’s Form 5500, and ranged from $500 (for plans with 20 or fewer participants) to as much as $15,000 (for plans with 10,000 or more participants). In addition, special reduced compliance fees applied to VCPs involving some of the most common plan failures (e.g. certain plan loan and required minimum distribution failures). However, under the new fee schedule, most reduced fees have been eliminated. Only the reduced user fee for group submissions and the special fee waiver for terminating orphan plans remains unchanged.

Ultimately, for many large plan sponsors, the new asset-based fee schedule could significantly reduce the VCP compliance fee for correcting certain plan errors. However, for small plans covering fewer than 100 participants, the cost of correcting plan errors will increase to at least $1,500 (and perhaps even more, depending on the total net assets held by the plan). In addition, for all plan sponsors, the cost of correcting many of the most common plan errors will actually increase significantly.

Fridays with Benefits — ACA: Reporting Boot Camp and Enforcement Update

by McDermott Will & Emery | Nov 20, 2017 | Employee Benefits, Employment, Health and Welfare Plans

After spending a year on the brink of repeal, the Affordable Care Act is alive and well. ACA reporting is just around the corner, so join McDermott partners Judith Wethall and Finn Pressly for a refresher course on everything you need to know about the Forms 1094-C and 1095-C. The 45-minute conversation will also include up-to-the-minute updates on the government’s ACA enforcement activity, including a review of the IRS’s procedures for appealing employer mandate penalty assessments.

Register Here

Date
Friday December 1, 2017

Time
12:00 pm – 12:45 pm CDT
1:00 pm – 1:45 pm EDT

Mark your calendars for the first Friday of every month! McDermott’s Employee Benefits Group will be delivering timely topics in our “Fridays With Benefits” monthly webinar series.

Employer Mandate Penalty Notices Are Imminent

by Anthony A. Bongiorno and Megan Mardy | Nov 16, 2017 | Employee Benefits, Health and Welfare Plans

The IRS has taken actions indicating that employer mandate penalties under the ACA are about to be enforced. The recently updated Questions and Answers on Employer Shared Responsibility Provisions Under the Affordable Care Act includes the section, “Making an Employer Shared Responsibility Payment,” which expands specifically upon the soon-to-be-issued Letter 226J and what that will include. Continue Reading.

Staying Out of Trouble: How to Avoid IRS and DOL Audits

by Jeffrey Holdvogt and Maggie McTigue | Sep 14, 2017 | Employee Benefits, Health and Welfare Plans, Retirement Plans

The Internal Revenue Service (IRS) and the Department of Labor (DOL) conduct different types of benefit plan audits, such as retirement plans and health and welfare plans, and for various reasons. In a presentation, Jeffrey Holdvogt and Maggie McTigue discuss IRS and DOL audit triggers, the process for each and what to do if your plan is audited. They also discuss the top audit issues and actionable steps companies can take to avoid audits and compliance issues.

Internal Revenue Service Updates Golden Parachute Payments Audit Technique Guide, Signaling Key Items IRS May Review on Audit

by Andrew Liazos, Joseph K. Urwitz and McDermott Will & Emery | Aug 24, 2017 | Employee Benefits, Executive Compensation

In early 2017, the IRS updated its Golden Parachute Payments Audit Technique Guide for the first time since its 2005 issuance. While intended as an internal reference for IRS agents conducting golden parachute examinations, the Audit Technique Guide offers valuable insight for both public and private companies, and recipients of golden parachute payments, into how IRS agents are likely to approach golden parachutes when conducting an audit.

Proposed Changes to § 409a Regulations: Greater Clarity and Better Planning Alternatives

by Andrew Liazos and Allison Wilkerson | Jun 22, 2017 | Employee Benefits, Executive Compensation

Andrew Liazos and Allison Wilkerson wrote this bylined article on Tax Code Section 409A’s deferral and payment requirements for nonqualified deferred compensation plans. Recent IRS Section 409A guidance makes “several helpful changes that employers will want to consider and take advantage of,” the authors wrote, and they warned employers that they ignore final IRS “at their peril…in light of the more limited ability to correct errors.”

Read the full article.

Originally published in The Practical Tax Lawyer, Spring 2017

Supreme Court Rules in Favor of Church-Affiliated Hospitals in Church Plan Litigation

by Joseph K. Urwitz and Mary K. Samsa | Jun 8, 2017 | Employee Benefits, Retirement Plans

In a major victory for church-affiliated hospitals, the US Supreme Court overturned three appellate court rulings and decided unanimously that church-affiliated hospitals can maintain their pension plans as “church plans” exempt from the Employee Retirement Income Security Act of 1974, as amended (ERISA), regardless of whether a church actually established the plan. Impacted health systems, and especially their management, should evaluate how best to document and demonstrate their common religious bonds and convictions with the church.

Read the full article.

IRS Implementation of ACA’s Employer Shared Responsibility Provision Falls Short Based on the Results of a Recent Audit

by McDermott Will & Emery | May 3, 2017 | Employee Benefits, Health and Welfare Plans

Based on a recent audit conducted by the Treasury Inspector General for Tax Administration (TIGTA), the IRS’ processes and procedures to ensure compliance with the employer information reporting requirements mandated by the employer shared responsibility provision (the play or pay rules) of the Affordable Care Act (ACA), have fallen short of their intended goals. (see Audit Report No. 2017-43-027). According to TIGTA, due to faulty processes, the IRS did not have “accurate and complete data for use in its compliance strategy to identify noncompliant employers potentially subject to the employer shared responsibility payment.” System errors also resulted in the agency being unable to process paper information returns “timely and accurately,” TIGTA noted. Approximately 16,000 paper Forms 1094-C and 1.4 million paper Forms 1095-C had not been processed as of five months after May 31 (the deadline). The TIGTA offered several recommendations to the IRS to improve management practices. The IRS agreed with all but one of these recommendations and is developing a more accurate system for identifying employers that are not complying with the employer shared responsibility requirements.

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