News

There has been a focus on Health Savings Accounts (HSA) in recent years. This is a valuable vehicle that extends even beyond the "triple-tax-free" benefit that most employers are aware of. HSAs can reduce taxable income in retirement, which may affect Medicare premiums and the portion of Social Security benefits subject to federal income tax.

Earlier this year the proposed regulations updating deadlines and ending good faith relief for Affordable Care Act (ACA) reporting became law. (See Federal Register : Information Reporting of Health Insurance Coverage and Other Issues)

Among other things, the regulations require that:

• The deadline for furnishing IRS Forms 1095-C to employees will be March 2 (or March 3 in a leap year) – which is 30 days more than what was previously allowed; and
• The transitional “good faith relief” for employer ACA reporting would no longer apply to tax years after 2020.

When an employee who has a balance in their health reimbursement arrangement (HRA) terminates from the plan (either due to termination of employment or any other reason that would cause them to lose eligibility, like a reduction in hours), the employer is not permitted to “cash out” the HRA. In other words, the employer is not allowed to provide cash or other benefits in an amount equal to some or all of the HRA balance. This is because cashing out would trigger taxation of all HRA distributions, even if they were used to pay qualified medical expenses.

On June 22, 2022, Philadelphia Mayor Jim Kenney, signed the Employee Commuter Transit Benefit ordinance. The ordinance takes effect on December 31, 2022, and requires employers with 50 or more covered employees to provide commuter transit benefits for their workers.

Flexible Spending Account (FSA) plans must be designed to meet the requirements defined in federal tax code, but employers have several opportunities to choose features that best fit the needs of their organization.

September 27, 2022

In light of the security and privacy incidences we hear about in the news on a daily basis, it seems to be a good time to highlight Cyber Security in this quarter’s Compliance Watch. On March 21, 2022, President Joe Biden gave an official statement regarding Russian cyberattacks against the U.S. — making his most prominent alert yet about what he called new intelligence concerning the Putin regime’s plans.

The IRS has released a draft 2022 Form 8606, Nondeductible IRAs. Form 8606 is filed by taxpayers who have made nondeductible Traditional IRA contributions for 2022, and by taxpayers who have made nondeductible Traditional IRA contributions in previous years and have taken distributions from a Traditional, SEP, or SIMPLE IRA in 2022 or converted part of their Traditional, SEP, or SIMPLE IRAs to Roth IRAs in 2022.

Senators Ron Wyden (D-OR) and Mike Crapo (R-ID), Senate Finance Committee Chair and Ranking Member, have introduced S.4808, the Enhancing American Retirement Now (EARN) Act. As previously announced, the Senate Finance Committee unanimously approved the bill in June based upon an outline released at that time.

Changes in the legislative text from the June outline include:

• Individuals age 60 or older could start making higher catch-up contributions in 2025 (versus 2024).
• Employees with wages below $100,000 could make catch-up contributions on a pretax or Roth basis. Employees with wages exceeding $100,000 would still be required to be make catch-up contributions on a Roth basis.
• The option to treat employer contributions as Roth contributions would be available starting in 2023 (versus 2024).

While it is unclear whether the bill will be brought to a stand-alone vote with the Senate’s limited number of sessions for the remainder of the year, congressional observers anticipate that the EARN Act will be consolidated with the Senate Health, Education, Labor and Pensions (HELP) committee’s RISE & SHINE Act and the Securing a Strong Retirement Act of 2022, which was passed by the House of Representatives. It appears that a final bill will likely receive a vote this year after the November mid-term elections.

The IRS has announced the postponement of certain tax-related deadlines for victims of severe storms in Arizona. The tax relief postpones various tax filing deadlines that began July 17, 2022. Affected individuals and households who reside or have a business in the Salt River Pima-Maricopa Indian Community, as well as taxpayers with records located in the covered area that are needed to meet covered deadlines, qualify for relief.

In addition to extending certain tax filing and tax payment deadlines, the relief includes completion of many time-sensitive, tax-related acts described in IRS Revenue Procedure 2018-58 and Treasury Regulation 301.7508A-1(c)(1). Affected taxpayers with a covered deadline on or after July 17, 2022, and before November 15, 2022, will have until November 15, 2022, to complete the acts. This includes filing Form 5500 series returns that are required to be filed on or after July 17, 2022, and before November 15, 2022.

“Affected taxpayer” automatically includes any individuals who live, and businesses whose principal place of business is located, in the covered disaster area. Those who reside or have a business located outside the covered disaster area, but have been affected by the disaster, may contact the IRS to request relief.

The Department of Labor (DOL) is extending the comment period for receiving written comments related to prohibited transaction class exemption 84-14 (the Proposed QPAM Amendment) to October 11, 2022. The DOL also intends to hold a public hearing on November 17, 2022, at which time a supplementary comment period will begin, and close approximately 14 days after the hearing transcript is posted on the EBSA’s web page.

Details of the proposed amendment were previously announced.