Posts Categorized: Tax Issues

IRS Issues Proposed Regulations under Sections 457(f) and 409A

in Executive Compensation, Section 409A, Tax Exempt Entities, Tax Issues

On June 22, 2016, the IRS issued long-awaited proposed regulations on Section 457(f) plans, as well as additional proposed regulations under Section 409A.  As expected, the Section 457(f) rules have many similarities to the existing Section 409A rules; however, there are some welcome differences including the possibility of a noncompete agreement creating a substantial risk of forfeiture for purposes of Section 457(f).  While the proposed rules under Section 409A include several welcome clarifications, changes to the proposed income inclusion regulations narrow the ability to make changes to unvested benefits.

Reminder: Cash Rewards for Participating in a Wellness Program are Taxable

in Health Benefits, Tax Issues, Wellness Programs

The IRS Office of Chief Counsel has released a memorandum (Number 201622031) confirming that the following rewards and incentives result in additional taxable wages to the employee: – Cash rewards payable to an employee for participating in a wellness program (such as a program providing health screening); – The value of certain fringe benefits, such as gym memberships, for participating in a wellness program; and – Reimbursements of premiums for participating in a wellness program when the premiums were originally paid pre-tax through a cafeteria plan (this is similar to the issue previously addressed in Revenue Ruling 2002-3). Although the… Continue Reading

IRS Announces Future Determination Letter Guidance in Notice 2016-03

in IRS Examinations, Qualified Plans, Retirement Plans, Tax Issues

In Notice 2016-03, the IRS provides an overview of guidance it intends to release to implement certain aspects of its decision to end the regular determination program, effective January 1, 2017, which it previously announced in Announcement 2015-19. (See this entry). Notably, employers may rely on the guidance issued in Notice 2016-03 until further guidance is issued. Notice 2016-03 provides that: • Controlled group members, including affiliated service group members, that maintain more than one plan may file for determination letters during the Cycle A submission period beginning February 1, 2016 and ending January 31, 2017, provided a Cycle A… Continue Reading