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IRS Penalties for Information Returns Have Doubled

"Examples of information returns affected by the new law are Forms W-2, 1098, 1099 series and 1042. Under the [ACA], providers of minimum essential coverage are required to file Forms 1095-B and 1094-B and failures are subject to the penalty.... The burden of the penalty increase is duplicated when one considers that the penalty applies to both the failure to file the information return with the IRS and the failure to furnish the payee's copy of the return to the payee.... Each inaccurate Form 1099 will then cost a payor $500. The penalty is doubled if the failure to file/furnish is intentional."

Patient-Centered Outcomes Research Fee on Health Plans Is Due July 31

"The PCOR fee is assessed based on the number of employees, spouses and dependents that are covered by the plan. The fee is $1 per covered life for plan years ending before Oct. 1, 2013, and $2 per covered life thereafter, subject to adjustment by the government. For plan years ending between Oct. 1, 2014, and Sept. 30, 2015, the fee is $2.08. The Form 720 instructions are expected to be updated soon to reflect this increased fee."

New Reinsurance Fee Under the ACA

"A plan sponsor of a self-insured plan may use any of ... four methods to determine the number of covered lives in the plan for the nine-month period of Jan. 1 through Sept. 30. Plan sponsors must use only one method for any calendar year; however, they are not required to use the same method from one year to the next and do not need to use the same method for calculating the reinsurance fee and the PCOR fee. Since the different counting methods can produce different results, it is advisable for an employer to do the computations under more than one method to determine which one produces the lowest fee."

Prohibited Transactions with Parties-in-Interest: Implementing Controls and Procedures

"[T]hree areas related to party in interest transactions ... are subject to regular evaluation by the DOL upon examination.... [1] the timeliness of deposit of employee salary deferrals or loan payments; [2] participant loan programs; and [3] the reasonableness of service provider fees.... [T]his article examines in depth the types of processes and procedures that should be in place in each of those common areas."

New Information Reporting Requirements Under the ACA

"The new information reporting systems will be similar to the current Form W-2 reporting systems in that an information return (Form 1095-B or 1095-C) will be prepared for each applicable employee, and these returns will be filed with the IRS using a single transmittal form (Form 1094-B or 1094-C). Electronic filing is required if the employer files at least 250 returns. Employers must file these returns annually by Feb. 28 (March 31 if filed electronically)."

Supreme Court Ruling Means Asset Protection Planning Is Needed for IRAs

"The big winners of this decision are the certified financial planners, accountants and trust attorneys who will advise the millions of IRA account owners as to how to protect the beneficiaries of their IRA accounts from creditors in the coming months and years.... Currently, seven states have enacted statutes exempting inherited IRAs in bankruptcy.... Although receiving considerable ink in the Clark briefs and discussed at several points in the oral argument, neither this disparate treatment nor the resulting chaos was mentioned by the Court in its opinion. It is likely, nonetheless, the new frontier for the debate over inherited IRAs and bankruptcy exemption." [Clark v. Rameker, No. 13-299 (U.S. June 12, 2014)]

IRS Defers Effective Date of Bobrow Decision to 2015 Distributions

"The IRS will not apply the new one rollover per 12-month rule to any rollover that involves a distribution occurring before Jan. 1, 2015.... [T]he IRS indicated it had received comments about 'the administrative challenges' presented by the Bobrow interpretation of section 408(d)(3)(B). The announcement affords trustees and custodians time to alter their internal processing of IRA rollovers."

U.S. Tax Court Changes the Game on IRA Rollovers

"It does not appear that the taxpayer cited the IRS's proposed regulation as authority for its position. It remains unclear why the IRS chose this time and this taxpayer to assert a position that runs contrary to more than 30 years of its own issued guidance. However, unless the taxpayer chooses to appeal this decision and is successful in having the decision overturned, IRA owners are now on notice that the IRA rollover game has changed." [Bobrow v. Commissioner, T.C. Memo. 2014-21 (Jan. 28, 2014)]

Does Bankruptcy Protection Extend to Inherited IRAs? (PDF)

"If an inherited IRA will not get favorable retirement fund treatment in bankruptcy, trust arrangements should be explored to achieve asset protection.... Implementing trust planning with clients could avoid or at least mitigate the harsh effects of accelerated payout periods and reduced asset protection for retirement funds. [In this article, these] planning opportunities will also be reviewed and analyzed under the American Taxpayer Relief Act of 2012 (ATRA) and the new tax on accumulated trust investment income under the Affordable Care Act."

Changes Coming in 2014 for Small Business Health Care Tax Credit

"Employers will only be eligible for the credit if they purchase health insurance through the new Small Business Health Options Program (SHOP).... Other upcoming changes include: [1] The maximum credit increases to 50 percent (35 percent for tax-exempt organizations); [2] The $50,000 and $25,000 average annual dollar amounts will be indexed for inflation; and [3] The credit is based on the lesser of the employer's actual premium payments or the average premiums in the small group market in its employees' rating area."

Are Private Equity Funds Engaged in Business for ERISA or Tax Purposes?

"There is no clear definition of trade or business either for ERISA purposes or for income tax purposes.... Tax advisors to PE funds should carefully evaluate the potential effects of the [Sun Capital] decision on their ERISA liabilities and the tax treatment of their investors and managers. The only apparent positive consequence of trade or business status for tax purposes would be that the expenses of the PE fund would be deemed ordinary deductions under section 162 rather than expenses of generating profit under section 212. The other consequences are generally negative."

Changes Coming for Small Business Health Care Tax Credit

"In 2014, the credit will continue to be available, but with significant modifications. Employers will only be eligible for the credit if they purchase health insurance through the new Small Business Health Options Program (SHOP).... Other upcoming changes include: [1] The maximum credit increases to 50 percent (35 percent for tax-exempt organizations); [2] The $50,000 and $25,000 average annual dollar amounts will be indexed for inflation; [3] The credit is based on the lesser of the employer's actual premium payments or the average premiums in the small group market in its employees' rating area; [4] The credit is only available for two consecutive tax years after 2013, but it can be carried back or carried forward."

Proposed Concepts for Measurement of Assets and Liabilities

"The GASB is proposing two approaches to measuring assets and liabilities -- initial amounts and remeasured amounts. Initial amounts are the transaction price or amount assigned when an asset is acquired or a liability is incurred, including subsequent modifications to that price or amount, such as through depreciation or impairment. Remeasured amounts are determined anew as of the date of each year's financial statements. The GASB also is proposing four measurement attributes, which are defined as the feature or characteristic of an asset or liability that is being measured[.]"

Implications of FASB's Accounting Standards Update 2011-4 for Sponsors of ESOPs

"[FASB] believes the disclosures are valuable to the intended users of the financial statements, but the fact that this information is public on the DoL's database is problematic. The Board voted to propose an indefinite deferral of the quantitative portion of these disclosures until such time as the employee benefit plan community could work with the DoL to resolve this issue. The FASB's exposure draft is expected to be released at the end of April and will be subject to a 30-day comment period before being finalized."

Compensation, Retirement and Benefits Trends Report for 2012-13

"Looking ahead, employers plan to maintain compensation, health and welfare benefits and retirement levels. This stability marks an improvement from the drastic cuts made during the crisis and its immediate aftermath. Many employers are looking at the competitive landscape and shifting to pay-for-performance to drive compensation decisions. Further, companies are increasing their focus on employee retention by offering more retirement and benefit choices and differentiating compensation levels to motivate employees -- a sign that employers are committed to finding a balance between controlling costs and sustaining and nurturing the workforce."