The Consolidated Appropriations Act provides tax relief for workers who socked away pre-tax money into flexible spending accounts (FSAs) for 2020 and couldn’t use it because of the coronavirus pandemic. Now employees may be able to carry over all of their unused funds to use later. Even ex-employees might get more time to spend down unused money instead of forfeiting it.
In a recent article in Forbes, McDermott partner Jacob Mattinson speaks to the employer perspective on FSA carryovers.
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.
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.
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