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We Are Family – IRS Regulations Fix the “Family Glitch” in Connection with ACA Coverage

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by Elizabeth Nedrow

One of the key remaining features of the Affordable Care Act (ACA) is that certain employers must offer their employees medical coverage, or else pay a penalty. The details of that “employer shared responsibility payment” (ESRP) are many. One of those details is that the employer coverage must be “affordable.” Affordability looks at how much of an employee’s household income goes toward premiums.

As originally implemented, affordability was measured by reference to the premiums charged for employee-only coverage. The premium cost for family or other tiers of coverage wasn’t taken into account. Some critics called this the “family glitch.” Starting in 2023, that changes. New IRS regulations require that in 2023, affordability is measured by looking at the employee’s premium cost for family coverage. Read more

The Times They Are A-Changin’…IRS Provides Further Retirement Plan Amendment Deadline Relief

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by Benjamin Gibbons

The IRS has picked up where it left off last month with additional retirement plan amendment deadline extensions. As you may recall from our August 5, 2022 blog post, Time Is On My Side: Some Retirement Plan Amendment Deadlines Pushed Back, the IRS recently extended certain SECURE Act, Miner’s Act, and CARES Act amendment deadlines for retirement plans but notably did not extend the deadline for coronavirus-related distributions and loan plan loan relief under the CARES Act. While it is unclear whether those omissions were intentional or an oversight, the IRS has rendered that question moot in IRS Notice 2022-45. Read more

Time Is On My Side: Some Retirement Plan Amendment Deadlines Pushed Back

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by Brenda Berg

The IRS has given plan sponsors more time to adopt some – but apparently not all – retirement plan amendments reflecting law changes in the Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE Act), the Bipartisan Miners Act of 2019 (Miners Act), and the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). Notice 2022-23, issued August 3, 2022, generally provides that the deadline to adopt these amendments is extended to December 31, 2025. This is the deadline for qualified plans regardless of the plan year, and this deadline also applies to 403(b) plans and collectively bargained plans. Governmental plans generally have until 90 days after the third regular legislative session of the body with the authority to amend the plan that begins after December 31, 2023. Read more

Take A Chance On Me? Could We Finally See Legislation Expanding Section 1042 Deferral to S Corp ESOPS?

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by Elizabeth Nedrow

One of the most popular incentives for small business owners to establish an ESOP (employee stock ownership plan) is the ability to defer tax on the gain they will receive in the sale through the Section 1042 deferral. If certain requirements are met (most notably that the ESOP must end up owning at least 30% of the company), the selling shareholders can defer tax on their gain by investing the proceeds in certain types of “qualified replacement property.” Read more

Old MacDonald Had a Farm…EIN Confusion?

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by Becky Achten

The trusts maintained to hold assets of ERISA plans are separate tax entities from the employers sponsoring the plans. Therefore, each is required to have its own federal tax ID number. Knowing when and where to use whose EIN can be confusing. Here are a few tidbits of information on that topic. This information applies to single employer plans. Multi- and multiple-employer plans may have different rules. Read more

B-Side – Dual Status Issues with Partnership LTI

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By Kevin Selzer

Long term incentive plans offered by an entity that is taxed as a partnership present an additional problem compared to their corporate A-side counterparts.  If an employee is given an equity interest in the partnership, the individual will generally no longer be considered an employee for tax purposes.  Instead, that individual is considered a partner in a partnership, will receive a K-1 for future pay (rather than a W-2), must pay estimated taxes, becomes ineligible for certain benefits, etc.  This dual status issue is generally nonexistent within corporate entities – indeed, it is commonplace for employees to also be shareholders, perhaps as a result of a traditional restricted stock or option grant. Read more

It’s So Easy To … Put Your Employees’ HSAs at Risk

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by Elizabeth Nedrow

Whether you’re a fan of the Buddy Holly version or Linda Ronstadt’s, you’ve got to admit “It’s so easy to fall in love” is a catchy tune. Just as it’s easy to get that song stuck in your head, it’s also easy to put your employee’s health savings accounts (HSAs) at risk!

HSAs are one of the many “consumer directed” programs that are touted as putting employee’s health care within their own control. The idea is that if consumers have an amount of money to spend on their own healthcare, they’ll be savvy about what services they seek and how much they spend on them, with the ultimate goal of making the healthcare marketplace more efficient. Congress gives tax advantages to accounts that qualify as HSAs in order to encourage employers to offer and employees to maintain them. Read more

Bye Bye Bye . . . Or Not. Rehiring Retirees in Pay Status

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by Leslie Thomson

If your qualified pension plan does not provide for in-service distributions and has commenced benefit distributions to a retiree who experienced a bona fide retirement, the IRS says your plan may be able to rehire that retiree and let him or her continue to receive benefit payments upon rehire. Read more

Free Fallin’…With a Golden Parachute

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by Benjamin Gibbons

For those who have been involved in the sale of a company, Section 280G of the Internal Revenue Code may sound familiar. Section 280G governs what the IRS considers to be “golden parachute payments” and is generally applicable when a corporation is undergoing a change in control (including both stock sales and asset sales). At a high level, Section 280G imposes on disqualified individuals a 20% excise tax on excess parachute payments paid and a corresponding loss of deduction on such payments by the corporation. Read more

No More Mister Nice Guy…No More “Good-Faith” Relief for ACA Reporting Requirements

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by Becky Achten

The good news is that the deadline to furnish individuals with the Form 1095-C or Form 1095-B reporting health care coverage in 2021 has been extended to March 2, 2022. The bad news is that the days of good-faith relief are over. You better get them right this year!

Contrary to its stance taken in Notice 2020-76, the Internal Revenue Service (IRS) issued proposed regulations to permanently extend the due date for providing the Form 1095-C (applicable to large employers) and the Form 1095-B (generally applicable to insurance carriers) to participants. Employers and insurers can take advantage of the extension for the 2021 reporting season before the regulations become final. This does not, however, change the deadline for filing the forms with the IRS, which remains February 28, 2022 for paper submissions and March 31, 2022 for electronic filings. Read more