The Tax of Life

This alert should interest sponsors of retirement plans subject to IRC sections 401(k), 403(b), or 457(b) that authorize hardship distributions (often called “unforeseeable emergency distributions” in 457(b) plans). This is not a general summary of the recent changes,[i] but a focused explanation of our concern with one particular aspect that could increase plan sponsor liabilities. Cause of Concern Among the changes made is an allowance for participants to ... Keep Reading »

With U.S. student loan debt totaling $1.5 trillion, employers are seeking ways to ease the burden of repayment for their employees and prospective employees. These have included signing bonuses and direct repayment of outstanding loans. Now, employers appear able to make matching-type contributions to retirement plans based on student loan repayments instead of on salary deferrals alone. On Aug. 17, the IRS publicly released a private letter ruling, allowing an employer ... Keep Reading »

Federal contractors subject to the Service Contract Act might appreciate knowing that the IRS understands that they must generally offer a cash payment to employees who decline coverage. While that would ordinarily be treated as making coverage less affordable and more likely to violate the Affordable Care Act’s affordability requirements, the IRS will not necessarily treat it this way; particularly in light of the 2017 executive order directing the IRS to exercise ... Keep Reading »

All entities, including governmental entities, are now potentially liable for penalties[1] due to overpaying employees. For-profit companies have been at risk for losing their tax deduction for excessive salaries, with publicly-traded companies subject to a specific $1 million limit that the Tax Cuts & Jobs Act (Act) just made easier to exceed,[2] and certain nonprofit organizations have been at risk for “intermediate sanctions,”[3] but the Act also created a new ... Keep Reading »