IRS Issues Additional Guidance on Determination Letter Program

As was previously announced in 2015, effective as of January 1, 2017, the Internal Revenue Service (“IRS”) is eliminating its five year staggered determination letter cycle for individually designed retirement plans. Plans in the current cycle (Cycle A) still may submit their plans for determination letters on or before January 31, 2017.  Pursuant to Revenue Procedure 2016-37, going forward, individually designed plans will only be permitted to submit a determination letter application on initial plan qualification, plan termination and in certain other circumstances as announced by the IRS.

The IRS did not provide much guidance on the other circumstances in which existing plans would be permitted to seek determination letters in the future, other than to provide that it will give consideration to significant changes in the law, new approaches to plan design and the IRS’ current case load and resources. Read More ›

Posted in Employee Benefits, Executive Compensation, Health & Welfare Plans, Qualified Retirement Plans | Tagged , , , , , , ,

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IRS Audit Techniques Guide Provides Helpful Reminders for Sponsors of NQDC Arrangements

Last summer the Internal Revenue Service updated its Audit Techniques Guide (“ATG”) for nonqualified deferred compensation arrangements.  While the ATG provides little instruction on how the IRS will review nonqualified deferred compensation arrangements for compliance with Section 409A of the Code, it provides a helpful reminder of some of the other rules applicable to nonqualified deferred compensation arrangements. Among other things, the ATG reminds sponsors of nonqualified deferred compensation plans to be attentive to the following issues:

  • Deferred compensation arrangements must be in writing.
  • Immediate taxation to a participant could arise if the deferred compensation is not subject to substantial limitations or restrictions (e.g., immediate taxation will arise if the participant can draw on the deferred compensation at any time or if the participant can borrow against the deferred compensation).
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Posted in Employee Benefits, Executive Compensation | Tagged , , , , , , , , ,

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