Loans under the Payroll Protection Program (PPP) are eligible for forgiveness depending upon whether and when the loan proceeds are used for qualified business expenses. Congress provided that the forgiveness of PPP loans are not includible in income. However, the Internal Revenue Service (IRS) currently takes the position that expenses funded by PPP loans are not deductible. On December 14, US lawmakers unveiled a draft of the Bipartisan Emergency COVID Relief Act of 2020, which includes a provision allowing deductions for PPP expenses that result in PPP loan forgiveness.
The Internal Revenue Service (IRS) recently issued practical and helpful guidance in a question-and-answer format for tax-qualified retirement plans and for an Individual Retirement Arrangement (IRA), regarding the legislative changes under the Setting Every Community Up for Retirement Enhancement Act of 2019 (the “SECURE Act”) and the Bipartisan American Miners Act of 2019 (the “Miners Act”).
Teal Trujillo, an incoming associate in our Chicago office, also contributed to this On the Subject.
The Internal Revenue Service (IRS) recently announced the cost-of-living adjustments to the applicable dollar limits for various employer-sponsored retirement and welfare plans for 2021. Nearly all of the dollar limits currently in effect for 2020 will remain the same, with only a few amounts experiencing minor increases for 2021.
With mass layoffs commonplace during the COVID-19 pandemic, employers asked the Internal Revenue Service for advice on how to deal with the partial termination rule relating to employer contributions to their employees’ 401(k) workplace retirement accounts.
It’s an obscure issue, but it’s a big deal for the employees that it affects: It could mean thousands of dollars more credited to an employee’s 401(k) account. It’s also important that employers get it right. In a recent article by Forbes, McDermott Will & Emery partner Jeff Holdvogt advises that IRS auditors can catch this issue looking back at prior years.
“This is a complicated rule, and it’s not top of mind, so we could absolutely see employers realizing, ‘Hey, it turns out we incurred a partial termination. We have to go back and provide additional vesting,’” Holdvogt says.
Employers considering President Trump’s plan to allow deferred payment of payroll taxes face a series of costs, uncertainties and headaches. The president wants employers to stop collecting the 6.2% levy that is the employee share of Social Security taxes for many workers, starting September 1 and going through the end of the year. The president’s plan doesn’t change how much tax employees and employers actually owe. Only Congress can do that.
In a recent article by The Wall Street Journal, David Fuller, a tax lawyer at McDermott in Washington, DC, said, “We’re looking at a crystal ball not knowing what we’re going to see.”
New Internal Revenue Service (IRS) guidance expands the availability of Coronavirus Aid, Relief and Economic Security Act (CARES Act) distributions and loans under eligible retirement plans, and it provides important clarifications regarding how to administer and report CARES Act distributions and loans. The guidance also provides welcome relief for a participant who receives a CARES Act distribution, allowing the participant to revoke an otherwise irrevocable salary deferral election under a nonqualified deferred compensation plan. Finally, consistent with prior guidance, the new IRS guidance confirms that CARES Act provisions are optional, meaning that plan sponsors may choose whether to implement CARES Act changes.
In response to the administrative difficulties faced by plan administrators due to the ongoing COVID-19 pandemic, the Internal Revenue Service (IRS) recently issued Notice 2020-35, which extends additional retirement plan deadlines for 2020 not previously extended under IRS Notice 2020-23. The IRS also stated that this relief applies for purposes of ERISA if the tax code deadline has a corresponding ERISA provision.
The US Department of the Treasury has released long-expected proposed regulations regarding the section 4960 excise tax on certain remuneration or separation amounts paid to the five highest paid employees of a tax-exempt organization. The new proposed regulations continue the tough approach previously taken on section 4960 issues, while also providing some new exceptions and important clarifications.
Under the recently published final rule issued by the US Department of Labor, retirement plan administrators can choose to deliver required disclosures electronically by complying with the conditions of a new safe harbor. The final rule represents an opportunity for retirement plans to save costs and enhance participant access to disclosure documents.
To help cafeteria plan participants address challenges arising from the COVID-19 crisis, the Internal Revenue Service recently issued guidance allowing employers to make a number of participant-friendly changes under their cafeteria plans. While employer adoption of these more flexible rules is voluntary, plan sponsors should work with third-party administrators, insurance providers and legal advisors to ensure that the new provisions are properly adopted, documented and communicated.