One of the more controversial and complex provisions of the Tax Cuts and Jobs Act has been the 21 percent excise tax on certain nonprofit executive compensation. On December 31, 2018, the IRS issued interim guidance that addresses how this tax will apply in various situations that commonly arise for tax-exempt employers. Establishing internal systems
Tax Cuts and Jobs Act
What Employers Need to Know About 162(m)
By Andrew Liazos on
Posted in Employee Benefits, Executive Compensation
Andrew Liazos presented on 162(m) deduction limitations and transition rules at NYU’s 77th Institute on Federal Taxation. Amongst other topics, he discussed key changes for employers under the 2017 Tax Cuts and Jobs Act, the guidance provided under Notice 2018-68 and the potential impact of such changes on incentive compensation practices.
Free Parking Only Exists in Monopoly: New IRS Guidance Makes Employer-Provided Parking More Costly and Burdensome Than You Think
As part of its comprehensive 2017 tax reform bill, Congress repealed deductions for Qualified Transportation Fringes including for employer-provided parking, while also requiring that tax-exempt organizations increase their unrelated business taxable income by the nondeductible parking expenses. Recently released IRS Notice 2018-99 addresses some of the year-end tax filing and tax planning concerns for affected…
New Proposed Regulations Provide Helpful Guidance on Hardship Distribution Changes
By Sarah L. Engle & Alan D. Nesburg, PC on
Posted in Employee Benefits, Retirement Plans
The IRS recently issued proposed amendments to regulations concerning 401(k) plan hardship distributions. The proposed regulations address changes to hardship distribution rules from the Bipartisan Budget Act of 2018 and other legislation.
Though the regulations are only proposed, 401(k) plan sponsors should promptly consider these changes because decisions should be made on applying certain optional…
IRS Issues Long-Awaited Initial Guidance under Section 162(m)
Posted in Employee Benefits, Executive Compensation
On August 21, 2018, the IRS issued guidance regarding recent statutory changes made to Section 162(m) of the Internal Revenue Code. Overall, Notice 2018-68 strictly interprets the Section 162(m) grandfathering rule under the Tax Cuts and Jobs Act.
Public companies and other issuers subject to these deduction limitations will want to closely consider this guidance…
Exec Retirement Vehicle Seen as a Potential Gamble for Employers
By Andrew Liazos on
Andrew Liazos said that it makes sense for companies to consider Q-SERPs in response to the end of the performance-based pay deduction, but he questioned whether the plans would offer much “bang for your buck.” “You first have to deal with the obvious time and effort you have to spend to show it’s not discriminatory,…
IRS Releases FAQs on Paid Family and Medical Leave Credit
By Samantha Souza, David Fuller & Judith Wethall on
The IRS released guidance in April on the new credit for paid family and medical leave. In FAQ form, this guidance helps employers gauge whether their current policies are sufficient, or whether implementation of conforming paid leave policies may be necessary.
Governing Health Podcast Series: Health Care Industry Executive Compensation Trends
By Ralph E. DeJong & Michael W. Peregrine on
Posted in Employee Benefits, Executive Compensation
Executive compensation for the health care industry is always an important topic for the board, made even more critical by the provisions of the Tax Cuts and Jobs Act and recent governance trends. We’re joined by two of the leading health care industry voices on executive compensation practices: Tim Cotter of Sullivan, Cotter and Associates,…
IRS Announces HSA Contribution Limit Increase for 2018
Posted in Employee Benefits, Health and Welfare Plans
On April 26, 2018, the Internal Revenue Service (IRS) increased the 2018 maximum deductible Health Savings Account (HSA) contribution for taxpayers with family coverage under a High Deductible Health Plan (HDHP) to $6,900.
The $6,900 contribution limit for 2018 was originally published in Revenue Procedure 2017-37, but was reduced earlier this year by $50…
Tax Reform Surprises and Strategies with the New 162(m) Rules
By Diane Morgenthaler & Andrew Liazos on
Posted in Employee Benefits, Executive Compensation
Section 162(m) of the Internal Revenue Code (Code) previously limited the tax deduction to $1M annually for covered employee compensation paid by a company that is publicly traded, subject to some important exceptions. The Tax Cuts and Jobs Act modified the reach of Code Section 162(m) in several significant ways.
- Expanding the number of companies
…