Archives: Dealing with the IRS on Employee Benefit Issues

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IRS Publishes Guidance Allowing Taxpayers to Self-Certify An Excuse from the 60-day Rollover Rule in Specified Hardship Scenarios

If you ask, plan administrators will tell you that for every deadline or specified time limit that is imposed by law upon plan participants for taking action with respect to an employee benefit plan, there are always a significant number of participants who come forward with one or more “excuses” why they could not meet … Continue Reading

Employers Wonder How to Respond to Marketplace Notices

Many employers have begun receiving Health Insurance Marketplace notices – letters stating that a particular employee reported that he or she wasn’t offered affordable minimum value coverage for one or more months during 2016.  The letter states that the employee has been determined to be eligible for subsidized Marketplace coverage.  This means, if the employer … Continue Reading

Will Your Forfeiture Account Disqualify Your 401(k) Plan?

In the last six months, several clients called me regarding substantial balances in a so-called “forfeiture account” in their 401(k) plans.  A few of these clients have forfeiture accounts that violate the ERISA requirements.  It is imperative that forfeitures be handled properly since both the IRS and the Department of Labor (DOL) on audit generally … Continue Reading

THE RETROACTIVE AMENDMENT FIX FOR PLAN OPERATIONAL FAILURES

Frequently a plan sponsor’s operational failure to follow the terms of its 401(k) or other qualified plan can be corrected under the IRS’s Employee Plans Compliance Resolution System (“EPCRS”) (described at http://www.irs.gov/Retirement-Plans/EPCRS-Overview) with a retroactive amendment instead of a sometimes expensive financial correction. This possibility should not be surprising, given that the maintenance of qualified … Continue Reading

Employers Take Note! IRS Improves Certain Retirement Plan Correction Procedures

The Internal Revenue Service encourages employers and other retirement plan sponsors to voluntarily and timely correct plan failures to help ensure the plans’ ongoing tax-qualified status (and tax-favored treatment). However, in some cases, the IRS’ Employee Plans Compliance Resolution System (“EPCRS” – most recently restated in Revenue Procedure 2013-12) correction method for minor errors results … Continue Reading

Outsourcing Payroll? IRS Guidance Helps Employers Understand Their Rights and Responsibilities

Many employers decide to outsource their payroll administration to third-party vendors. Many employers who decide to hire a third-party vendor anticipate that the vendor understands how to fill out the forms necessary to the reporting of income and employment taxes; comply with the Patient Protection and Affordable Care Act reporting obligations; and to properly calculate … Continue Reading

Employee Relief Charities – The Unbenefit That Keeps On Giving

Especially during the holidays, but also throughout the year, both employers and employees often seek a means of financially assisting distressed coworkers and their families. The various methods of targeting relief to employees are summarized in IRS Publication 3833, DISASTER RELIEF, PROVIDING ASSISTANCE THROUGH CHARITABLE ORGANIZATIONS at http://www.irs.gov/pub/irs-pdf/p3833.pdf.  Some employers establish a “donor-advised fund” or … Continue Reading

Affordable Care Act Employer Penalties – Another Reason to Make Sure Workers are Properly Classified as Employees or Independent Contractors

Beginning next year, an applicable large employer that does not offer affordable minimum value group health coverage to its fulltime employees (and their children up to age 26) will be vulnerable to employer shared responsibility penalties under Internal Revenue Code §4980H.  Whether an employer is an “applicable large employer” depends on its number of fulltime … Continue Reading

IRS Rules: All Legal Same-Sex Marriages Will Be Recognized for Federal Tax Purposes

The Internal Revenue Service issued Revenue Ruling 2013-17 answering some, but not all, questions for employers in the wake of the US Supreme Court’s opinion that invalidated the federal law that confined marriage to a legal union between one man and one woman as husband and wife – United States v. Windsor, No. 12-307 (June … Continue Reading

IRS Updates Correction Procedures for Employer-Sponsored Retirement Plans

The Internal Revenue Service issued updated correction procedures for employer-sponsored retirement plans on New Years’ Eve. Revenue Procedure 2013-12 updates the Employee Plans Compliance Resolution System (“EPCRS”) previously set forth in Revenue Procedure 2008-50.  Now, nonprofit employers sponsoring 403(b) plans can correct document failures with the IRS’s blessing. A 403(b) plan document failure can be corrected … Continue Reading

IRS Extends Deadline to Amend Certain Defined Pension Plans

The IRS has extended the deadline for amending many defined benefits pension plans under Internal Revenue Code Section 436. Section 436 was added by the Pension Protection Act of 2006 (“PPA”) and provides a series of limitations on the accrual and payment of benefits under an underfunded plan. (For more information, see Your Defined Benefit … Continue Reading

IRS Voluntary Classification Settlement Program – Watch Your Step!

The Internal Revenue Service has announced its Voluntary Classification Settlement Program (“VCSP”) offering relief to certain employers from unpaid employment taxes, penalties and interest that may result from misclassification of workers.  The IRS’s September 21, 2011, Announcement 2011-64 and “Frequently Asked Questions” (published on September 30) explains that the VCSP allows employers to correct misclassification … Continue Reading

Plan Participants May be Assessed Penalties as a Result of DOJ Suit Against Welfare Benefit Plan

Participants in the Professional Benefits Trust (“PBT”) may be in danger of having to pay the United States Treasury 50% of their assets in penalties for each year of participation in PBT. The assets of the purported welfare benefit plan were moved off shore and deposited into the Mavin foreign insurance company and into Acadia annuities. … Continue Reading

Plan Trustees & Committees With FBAR Reporting Obligations – June 30th Deadline

Reports required under Foreign Bank Account Reporting or “FBAR” laws and regulations must be submitted to the U.S. Department of the Treasury on or before June 30, 2011. Individuals with a financial interest in foreign financial accounts (including foreign bank accounts, securities and certain insurance and annuities) or with signatory or other authority over such accounts … Continue Reading

New IRS User Fee Schedule for Determination Letter Requests Takes Effect

Effective February 1, 2011, IRS Revenue Procedure 2011-8 has changed the IRS’s user fees for filing for determination letters for tax-qualified retirement plans. The fee changes include those for filing Form 5300, Application for Determination for Employee Benefit Plan, and Form 4461, Application for Approval of Master or Prototype or Volume Submitter Defined Contribution Plans. … Continue Reading

New Rules on Making Deferred Compensation Subject to Signing a Release

IRS Notice 2010-6 previously provided guidance concerning how to make payment of nonqualified deferred compensation that is subject to the signing of a release complaint with Section 409A.  Essentially, it provides that a plan may not allow an employee to delay or accelerate the timing of a payment as a result of the employee’s actions … Continue Reading
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