For 2020, legislation enacted in December of 2019 dramatically increases penalties imposed by the Internal Revenue Code (the Code) for late filing of certain employee benefit plan notices and reports. In addition, a final rule published by the Department of Labor (DOL) makes inflation adjustments to a wide range of penalties. Learn the penalty amounts that apply beginning in 2020.
Public companies would have a harder time evading a stricter limit on deductions for compensation paid to top executives under an IRS proposal. The proposed regulations (REG-122180-18) implement a 2017 tax law provision that expanded the scope of tax code Section 162(m), which prevents public companies from getting a tax deduction for executive compensation exceeding $1 million. The rules target a workaround under which corporations could potentially skirt the limit by paying certain top executives part of their compensation through a partnership.
McDermott’s Andrew C. Liazos contributes to a Bloomberg Law article that takes a look at how the IRS is working to curb the workaround of the limit on executive pay tax break.
Originally published on Bloomberg Law, December 2019
Student loan debt skyrocketed in the past decade, topping $1.5 trillion among millions of Americans. The crisis has prompted US employers to address it in their benefits programs.
McDermott’s Jeffrey M. Holdvogt contributes to a Plan Sponsor article that provides a review of how employers can help employees break free from the bind student loan debt has on financial wellbeing and retirement savings.
Originally published on Plan Sponsor, December 2019
Corporations looking to use partnerships to avoid the executive compensation deduction limitation may be out of luck. The new proposed regs (REG-122180-18) on the section 162(m) executive compensation deduction limitation include a rule on compensation paid by a partnership to an executive of a publicly held corporation that’s subject to the limitation.
McDermott’s Andrew C. Liazos contributes to a Tax Notes article that takes a look at these new regulations and what they mean for partnership arrangements.
Originally published on Tax Notes, December 2019
Recently, the Department of Labor (DOL) published final rules clarifying the circumstances under which “bona fide” groups or associations of employers and professional employer organizations (PEOs) may be permitted to sponsor single defined contribution multiple employer plans (MEPs). Concurrently, the Internal Revenue Service (IRS) published proposed rules detailing an exception to the “one bad apple” rule for defined contribution MEPs, which rule provides that the failure of one employer to meet established qualification requirements results in the disqualification of the MEP for all participating employers.
The Internal Revenue Service (IRS) expanded the temporary relief for frozen defined benefit plans to include nondiscrimination requirements relating to benefits, rights and features, available for plan years beginning before 2021. The expanded relief enables frozen pension plans to satisfy the nondiscrimination requirements that apply to benefits, rights or features.
The Treasury Department and the IRS recently finalized new hardship distribution rules applicable to defined contribution plans. Plan sponsors should prepare for operational changes to comply with the new regulations, including some beginning January 1, 2020.
Recently the Internal Revenue Service (IRS) and the Social Security Administration announced the cost-of-living adjustments to the applicable dollar limits on various employer-sponsored retirement and welfare plans and the Social Security wage base for 2020. In the article linked below, we compare the applicable dollar limits for certain employee benefit programs and the Social Security wage base for 2019 and 2020.
The Department of Labor (DOL) issued a proposed rule that, if finalized, would expand its existing guidance and liberalize rules for electronic disclosure of retirement plan notices under ERISA. The proposed rule, which sets forth a notice and access safe harbor, would permit electronic disclosure as the default method of delivery while permitting participants to opt out and continue to receive paper disclosures.
The IRS recently issued guidance on the tax treatment, withholding and reporting for required distributions from tax-qualified retirement plans. Plan sponsors should contact their retirement vendors and trustees to ensure that they implement the tax requirements of the new guidance appropriately for their tax-qualified retirement plans.
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