Reporting Developments Affecting Employee Benefits and Executive Compensation

Section 162(m) Final Regulations

On December 18, 2020, the Internal Revenue Service (IRS) released final regulations (the “Final ‎Regulations”) under Section 162(m) of the Internal Revenue Code, as amended by the Tax Cuts and ‎Jobs Act of 2017 (“TCJA”). Section 162(m) generally limits the deductibility of compensation paid in ‎any tax year to “covered employees” of a publicly held corporation to $1 million. ‎

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IRS Announces 2021 Retirement Plan Limits – Most Limits Remain Unchanged

The Internal Revenue Service announced the 2021 cost-of-living adjustments to the dollar ‎limitations for qualified retirement plans and other benefits, and the Social Security ‎Administration announced its own cost-of-living adjustments for 2021. Most of the dollar limits, ‎including the elective deferral contribution limit for 401(k), 403(b) and 457(b) plans and the ‎dollar limit for catch-up contributions (if age 50 or older), will remain unchanged from 2020 ‎limits.‎

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Has Your Retirement Plan Experienced a Partial Plan Termination?

The economic uncertainty of the COVID-19 pandemic has forced many employers to furlough or layoff a significant percentage of their workforce.  These workforce reductions may inadvertently cause a “partial termination” of the employer’s qualified retirement plan triggering a requirement that all affected participants become 100% vested in their plan accounts.

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Locke Lord QuickStudy: Initial Thoughts Regarding the IRS’ Employee Payroll Tax Deferral Guidance in IRS Notice 2020-65

On August 8, 2020, President Trump issued the Presidential Memorandum on Deferring Payroll ‎Tax Obligations in Light of the Ongoing COVID-19 Disaster (the “Executive Order”). The ‎Executive Order instructed the Treasury Department to provide guidance authorizing employers ‎to defer the collection and deposit of employee payroll tax obligations.

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The New Carried Interest Proposed Regulations, Profits Interests, and Revenue Procedures ‎‎93-27 and 2001-43‎

On July 31, 2020, the Internal Revenue Service and the U.S. Treasury Department issued ‎Proposed Treasury Regulations (the “Proposed Regs”) providing guidance under the ‎‎“carried interest” rules of Section 1061 of the Internal Revenue Code of 1986, as amended ‎‎(the “Code”).  Please see our Quick Study “IRS Issues Carried Interest Guidance” for more detail.‎

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IRS Issues COVID-19 Relief on Mid-Year Changes to Safe Harbor 401(K) Plans

The Internal Revenue Service (IRS) issued helpful guidance to plan sponsors of safe harbor 401(k) plans that are considering reducing or suspending safe harbor employer matching contributions or safe harbor nonelective contributions as a result of the COVID-19 pandemic.  As explained below, IRS Notice 2020-52 provides temporary relief from certain requirements that would otherwise apply for making mid-year amendments to safe harbor 401(k) plans.

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Helpful FAQ Guidance Issued to Assist Group Health Plans With Implementing COVID-19 Coverage Requirements of the FFCRA and CARES Act

The Departments of Labor, Health and Human Services, and the Treasury jointly ‎released additional frequently asked questions (“FAQs”) regarding implementation of ‎the health coverage provisions of the Families First Coronavirus Response Act ‎‎(“FFCRA”); the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), and ‎other health coverage issues related to COVID-19.‎

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IRS Issues Guidance on Waiver of 2020 Required Minimum Distribution

The Internal Revenue Service (“IRS”) issued Notice 2020-51 which provides much needed guidance concerning the waiver of 2020 required minimum distributions (“RMDs”) under the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”).  The Notice also includes transition relief for plan administrators regarding the change to the required beginning date for RMDs under the Setting Every Community Up for Retirement Enhancement Act of 2019 (“SECURE Act”).

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