Topic: IRS

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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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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IRS Takes the Position That No Statute of Limitations for ACA Employer Shared Responsibility Payments

In a surprising memo from the IRS Office of Chief Counsel, the IRS concluded that there is no ‎statute of limitations period on the Employer Shared Responsibility Payments (“ESRP”) under ‎the Affordable Care Act. The IRS reasoned that the filing of Forms 1094-C and 1095-C (“ACA ‎Returns”) does not start the statute of limitations period because such forms do not satisfy the ‎requirements to be considered a tax return.‎

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Employers May Offer Tax-Free Financial Assistance to Employees Affected By Coronavirus under Internal Revenue Code Section 139

On March 13, 2020, President Trump declared a national emergency under the Robert T. Stafford Disaster Relief and Emergency Assistance Act (the “Stafford Act”) in response to the Coronavirus Disease 19, or COVID-19.  This declaration allows employers to make qualified disaster relief payments to employees affected by COVID-19 on a tax-free basis pursuant to Section 139 of the Internal Revenue Code (the “Code”).

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High-deductible Health Plans May Cover COVID-19 (Coronavirus) Costs

To facilitate the nation’s response to the 2019 Novel Coronavirus (COVID-19), also known as the Coronavirus, the Internal Revenue Service advised in IRS Notice 2020-15 that a high-deductible health plan (HDHP), until further notice, is permitted to pay for COVID-19-related testing and treatment, without jeopardizing its status as an HDHP.  Additionally, contributions to an HDHP participant’s health savings account (HSA) will not be adversely affected if the HDHP covering the participant provides for coverage of costs for COVID-19-related testing or treatment‎.

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What Employers Should Know About the New W-4 Form

‎2020 has brought substantial changes to the Form W-4 (Employee’s Withholding Certificate) ‎compared with previous versions of the form. These changes were made by the IRS to comply ‎with new income tax withholding requirements under the Tax Cuts and Jobs Act (Pub. L. 115-‎‎97). ‎

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Overview of Proposed Regulations Under Code Section 162(m) — Grandfather Rules

Our last installment of our overview of the Proposed Regulations under Code Section 162(m) ‎focuses on the transition or grandfather rules (“Grandfather Rules”) under the Proposed ‎Regulations. Our prior installments have focused on the amendments to Code Section 162(m) ‎enacted by the Tax Cuts and Jobs Act of 2017 (“TCJA”) and their effective date.‎

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