IRS Issues Updated Tax Notice for Qualified Retirement Plan Distributions

The Internal Revenue Service (“IRS”) recently released guidance that contains two updated safe harbor notices that retirement plans may use to satisfy the requirements of the Internal Revenue Code (the “Code”) to provide an advance notice to a participant prior to the date on which the participant receives a distribution that meets the requirements for an eligible rollover distribution.  This notice is commonly referred to as the “402(f) Notice” after the relevant section of the Code that requires the notice to be provided.

The IRS guidance contains two model notices, one that may be used when distributions are not from a Roth account and a second model notice that may be used for distributions that are from a Roth account. Read More ›

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Hardship Distribution Changes – Tax Reform May Have Unintended Consequences

When tax reform proposals were floating around in the fall of 2017, several early proposals to the Tax Cuts and Jobs Act (the “Act”) included changes to the hardship distribution rules for qualified retirement plans. However, the final version of the Act did not make any direct changes to hardship distributions.  Nevertheless, the Act, perhaps unintentionally, made a significant change to the circumstances under which a participant can request a hardship for a personal casualty loss.

Personal Casualty Loss

The Act changed to the definition of a “personal casualty loss” under Section 165 of the Internal Revenue Code (the “Code”). Under the revised definition of 165, a personal casualty loss is only deductible if it is attributable to a federally declared disaster (i.e. Read More ›

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Public Companies Should Consider Shareholder Reapproval of Section 162(m) Performance Compensation Plans Approved in 2012

As public companies continue to prepare for the 2017 proxy season, we wanted to provide a final reminder of an executive compensation related item that might require shareholder approval in 2017.  As reported in Part 1 of our End of Year Plan Sponsor “To Do” Lists, Section 162(m) of the Internal Revenue Code limits the deduction a public company may take for compensation payable to “covered employees” to $1,000,000 per year. “Performance-based compensation” that meets the requirements of Section 162(m) is not subject to this limitation. The Section 162(m) regulations require that, if the Compensation Committee has the discretion to select among a variety of performance goals, those goals must be reapproved by shareholders every five years.  Read More ›

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