tax reform Archives - Page 2 of 5 - 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 Reform Changes to Employee Compensation and Benefit Deductions

by Diane Morgenthaler | Apr 10, 2018 | Employee Benefits, Executive Compensation, Health and Welfare Plans

Partner Diane Morgenthaler presented at this year’s first Tax in the City® meeting on March 15, 2018. Below is a recap of the key takeaways from the event.

Employee Benefits impacts of federal tax reform:

Alter procedures to ensure no 2018 employer deduction is taken for qualified transportation fringe benefits, except for bicycle transportation subsidies.
Alter procedures to ensure no 2018 employer deduction is taken for “entertainment” and its related travel and meal expenses, including sporting events, theatre, golf, and other activities.
Analyze 2018 financial effect to your employer of any proposed gross ups for loss of moving expense deduction for employer and employee.
If your employer is a US publicly traded company, a foreign issuer with US publicly traded American Depository Receipts (ADRs), or a private company with US publicly traded debt, then careful legal and financial planning is recommended to try to utilize the grandfather exception to the $1M compensation deduction limit under Code section 162(m).

View full presentation.

Benefits Emerging Leaders Working Group

by Jacob Mattinson | Mar 1, 2018 | Benefit Controversies, Employee Benefits, Employee Stock Ownership Plans (ESOPs), Employment, Executive Compensation, Fiduciary and Investment Issues, Health and Welfare Plans, Labor, Privacy and Data Security, Retirement Plans

McDermott’s Benefits Emerging Leaders Working Group provides benefit professionals with tools to better serve employees in an ever-changing and evolving benefits landscape.

Presentations will tackle the latest benefits hot topics and best practice solutions, supplemented with important networking opportunities aimed to connect tomorrow’s benefit leaders with a broad network of professionals.

Planned agenda topics include:

What’s Happening in Washington?
Lessons from an RFP
Lunch Discussion: Changing Behavior through Benefits Communication
Global Benefit Plans
Moderated Group Discussion (including Voluntary Benefits)

Register Now.

Tax Reform Surprises and Strategies with the New 162(m) Rules

by Andrew Liazos and Diane Morgenthaler | Feb 27, 2018 | Employee Benefits, Executive Compensation

Section 162(m) of the Internal Revenue Code (Code) previously limited the tax deduction to $1M annually for covered employee compensation paid by a company that is publicly traded, subject to some important exceptions. The Tax Cuts and Jobs Act modified the reach of Code Section 162(m) in several significant ways.

Expanding the number of companies to which Section 162(m) will apply, including non-public companies that register debt or equity securities with the Securities and Exchange Commission, like foreign companies publicly traded through American depositary receipts (ADRs);
Expanding the number of covered employees to five and including the chief financial officer, with a provision that any covered employee after 2016 permanently remains a covered employee;
Eliminating performance-based and commission-based exceptions to the $1M deduction limit; and
Grandfathering certain compensation provided under a written and binding agreement in effect on November 2, 2017, if no material changes are made to such agreement.

These changes will have a significant effect not just on performance-based compensation, but also on stock options, stock appreciation rights and even nonqualified deferred compensation plans and supplemental executive retirement plans. To navigate these changes, Andrew Liazos stressed the importance of understanding the new grandfathering provisions under Section 162(m) and their corresponding planning opportunities at the Mid-Year Meeting of the American Bar Association’s Tax Section on February 10, 2018 in the attached slides.

Update on Tax Reform’s Impact on Fringe Benefits

by Anthony A. Bongiorno and McDermott Will & Emery | Feb 20, 2018 | Employee Benefits, Health and Welfare Plans

Partners Judith Wethall and Finn Pressly discuss the impact of tax reform on popular fringe benefit programs including relocation costs and pre-tax transportation programs.

Access our Tax Reform Resource Center for more of our Tax Takes video series, along with other strategies and tools that will continue to help you lead your organization through the opportunities and risks brought about by the new legislation.

Live Webinar: Tax Reform and Your Employee Benefit Plans

by Anthony A. Bongiorno and McDermott Will & Emery | Jan 30, 2018 | Employee Benefits, Employee Stock Ownership Plans (ESOPs), Employment, Health and Welfare Plans

The Tax Cuts and Jobs Act of 2017 was signed into law last year. From biking benefits to leave tax credits, we’ll discuss the employee benefit provisions and strategies for compliance, as well as opportunities your company won’t want to miss! Join the McDermott team on Friday, February 2 for a discussion of how the new law impacts fringe benefit plans, executive compensation and retirement plans.

Friday, February 2, 2018
10:00 – 10:45 am PST
11:00 – 11:45 am MST
12:00 – 12:45 pm CST
1:00 – 1:45 pm EST

Register Here.

Capital Markets & Public Companies Quarterly: 2018 Proxy Season Pointers, Disclosing the “Tax Cuts and Jobs Act,” Shareholder Proposals and ICOs

by Eric Orsic, Gary Emmanuel, Heidi J. Steele, Mark J. Mihanovic, Robert H. Cohen, Thomas P. Conaghan, Thomas J. Murphy and William Hadler | Jan 25, 2018 | Executive Compensation

The end of a year and beginning of the next generally starts the countdown to the public company proxy season. But before moving into 2018, registrants would be well served by first looking back to the guidance that came out of the SEC at the end of 2017.

During the last quarter, the SEC staff had their hands full preparing for new standards impacting registrants’ filings this year, keeping pace with tax reform, tweaking the shareholder proposal process and corralling a burgeoning cryptocurrency market.

How the Tax Act Upsets the Board/Executive Compensation Committee Dynamic

by Michael W. Peregrine and Ralph E. DeJong | Jan 23, 2018 | Executive Compensation

Michael Peregrine and Ralph DeJong wrote this bylined article about what they called the “enormous consequences” for tax-exempt hospital senior executive compensation due to the new Tax Cuts and Jobs Act provisions that place an excise tax on executive compensation and benefits. “From a corporate governance perspective, the significance of these new provisions carries the potential for recalibrating the relationship between the board and its executive compensation committee,” the authors wrote.

Originally published in Bloomberg BNA’s Health Law Reporter, January 2018.

Fringe Benefits: What Tax Reform Means to the Employer

by Anthony A. Bongiorno and Todd Solomon | Jan 18, 2018 | Employee Benefits, Health and Welfare Plans

The new tax reform legislation includes important changes to the tax treatment of employer-sponsored benefit programs, including transportation benefit programs and moving expense reimbursements. The law also creates a new tax credit for employers who provide paid family and medical leave to their employees.

Tax Reform Results in Only Minor Changes for Retirement Plans

by Jeffrey Holdvogt and Sarah L. Engle | Jan 4, 2018 | Employee Benefits, Retirement Plans

The Tax Cuts and Jobs Act made significant changes to the tax code and will have a significant impact on businesses and individual taxpayers. However, although initial proposals included potentially significant changes to employer-sponsored retirement plans, the impact of the final bill on employer sponsored retirement plans will be relatively minor.

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