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[Guidance Overview]

IRS: Most Price Protection Payments Received by ESOP Participants Are Currently Taxable

"[In a Generic Legal Advice Memo (GLAM 2019-003), the IRS] has ruled that when, as a result of a price protection agreement, an ESOP participant receives payment for distributed shares in excess of the shares' current fair market value, the excess amount must be treated as ordinary income from employment. As a result, the excess portion of the distribution cannot be rolled over to an IRA or another employer's plan, and employment taxes must withheld by the employer. The IRS describes an alternative approach to price protection that will permit favorable tax treatment, but the posited approach is unlikely to be feasible in most situations."

Holland & Knight

[Guidance Overview]

Massachusetts Advances Regulations Imposing Fiduciary Duty on Broker-Dealers

"In November 2019, the Commonwealth of Massachusetts issued revised regulations imposing a fiduciary standard upon broker-dealers, although the regulations would not apply to a broker-dealer who is a fiduciary under ERISA, a status currently in limbo since the invalidation ... of the [DOL's] conflict of interest/fiduciary rule.... Massachusetts indicated that in its view the SEC's Reg BI provided inadequate relief to investors[.]"

The Wagner Law Group

NAIC Committee Passes Best Interest Annuity Rules

"The National Association of Insurance Commissioners moved one step closer today to sending a best-interest annuity model law to the states for adoption in 2020.... The model articulates a best-interest standard through the following four obligations: care, disclosure, conflict of interest and documentation."

NAIC Committee Approves Revised Suitability in Annuity Transactions Model Regulation

"The next procedural step before individual states may consider it for adoption is approval by the full NAIC ... The NAIC proposal also includes IRI-recommended language to provide a safe harbor for all insurance producers who are subject to, and actually comply with, equivalent or greater standards such as Regulation Best Interest or the Investment Advisers Act. This will avoid duplicative compliance requirements for those who already comply with rigorous standards."

Insured Retirement Institute [IRI]

Excessive Fee Suit Settlement Involves More Than Money

"M&T Bank or its insurers will pay a gross settlement amount of $20,850,000 into a common fund for the benefit of Class Members. And, while it amounts to what the plaintiffs described as a 'significant recovery,' and one 'well within the range of negotiated settlements in similar ERISA cases,' it also provided a 'to do' list for the M&T defendants." [In re M&T Bank Corp. ERISA Litig., No. 16-375 (W.D.N.Y. memo in support of motion for preliminary settlement approval Dec. 26, 2019)]

National Association of Plan Advisors [NAPA]

'Clock is Ticking' for Tax Exempt Organizations to Meet 403(b) Plan Document Deadline

"Tax exempt organizations (other than designated church plans) have until March 31, 2020, to adopt a pre-approved prototype document to ensure consistency and compliance. ... [T]ransferring and reviewing the data to adopt the IRS plan ... typically averages at least 15 or more hours of labor for each plan sponsor."


New Spending Package Includes Several Retirement Plan Changes

"[If] you currently name a trust as the beneficiary of your IRA, this new tax provision might significantly alter your distribution plan.... Consider naming a [charitable remainder trust (CRT)] as a beneficiary of a retirement plan. A CRT is exempt from income tax and therefore could receive IRA benefits in a lump sum without any tax consequences.... You may also consider withdrawing funds from your IRA, which could then be used to purchase insurance.... Converting a traditional IRA to a Roth could become more popular[.]"

WithumSmith+Brown, PC

Remembering 1962: The Cuban Missile Crisis and How Required Minimum Distributions Became Keyed to Age 70-1/2

"[T]he half-year convention was adopted 'to accord with usual insurance practice which treats the maturity date of an annuity, endowment or life insurance contract as falling on the anniversary date of the policy nearest to the insured's birthday.' (Remember, back in 1962 pensions providing lifetime income were the predominant form of retirement benefit.) And for those of us born in the first half of the year, ... this change to age 72 actually gives us a little extra boost -- a 2-year deferral of our RMD date!"


Best and Worst Tax States in 2019: A Quick List Retirees Need to See

"With no individual or corporate income tax rates, low property taxation and a reasonable sales tax rate, Wyoming captured the top spot for tax-friendly states in 2019.... Illinois residents have faced property taxes that have grown faster than the national average, and only New Jersey has higher property taxes today. Illinois also has high income taxes for corporations, high sales taxes, and high estate taxes."

Young Research and Publishing, Inc.

Benefits in General

[Official Guidance]

Text of IRS Notice 2020-05: 2020 Standard Mileage Rates (PDF)

"The standard mileage rate for transportation or travel expenses is 57.5 cents per mile for all miles of business use ... The standard mileage rate is 14 cents per mile for use of an automobile in rendering gratuitous services to a charitable organization under Section 170.... The standard mileage rate is 17 cents per mile for use of an automobile: [1] for medical care described in Section 213; or [2] as part of a move for which the expenses are deductible under Section 217(g).... For automobiles a taxpayer uses for business purposes, the portion of the business standard mileage rate treated as depreciation is 24 cents per mile for 2016, 25 cents per mile for 2017, 25 cents per mile for 2018, 26 cents per mile for 2019, and 27 cents per mile for 2020."

Internal Revenue Service [IRS]

Executive Compensation
and Nonqualified Plans

[Guidance Overview]

Editor's Pick IRS Issues Proposed Regulations Under Code Section 162(m)

"The new rules became effective for tax years beginning after Dec. 31, 2017. However, the 2017 Tax Act provided that compensation paid pursuant to a 'written binding contract' in effect on Nov. 2, 2017, and not materially modified thereafter, is grandfathered and can continue to qualify for the performance-based compensation exception,  ... [A chart summarizes] the key aspects of the proposed regulations[.]"


Selected Discussions
on the BenefitsLink Message Boards

Trying to Make a DFVCP Payment But Web Page Won't Accept It

"I have been trying for two days to pay online a $750 payment under delinquent filer and the page does not come up. Anyone else having issues?"

BenefitsLink Message Boards

Who Is Listed as a Participant on Form 5500-C/R?

"This question goes to the definition of 'active participant' in the Form 5500 instructions for a pension plan. My client received a $2 million age 70 415 lump sum in 2012 under the C-limit, but he continues to work and is still accruing service and comp credits, BUT it's unlikely that he will ever be able to accrue additional benefits. His comp is $350k per year. I ran a MASD analysis and he's still about 10% away from ability to accrue. Should he be listed as a participant on the Form Form 5500-C/R? On the SB he would not be listed as a participant because he has no current benefits."

BenefitsLink Message Boards

Applying Top Heavy Test to Initial Plan Year

"A plan is top heavy in its initial plan year. If the plan makes a discretionary match to NHCEs, is this employer contribution included in the top heavy ratio for the first year? Or does it have to specifically be a non-elective contribution as specified in the plan document?"

BenefitsLink Message Boards

Must File Form 8822-B to Register a Change in Plan Name or Administrator's Address?

"I don't know about anyone else, but I never knew about this form until I read Ilene Ferenczy's SECURE Act review: 'Last but not least, a little-known provision of the Code requires plan administrators to file Form 8822-B to register a change in plan name or plan administrator name/address. The penalty for nonfiling of that form will increase from $1 per day to $10, up to a maximum that is going up from $1,000 to $10,000.' "

BenefitsLink Message Boards

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Summary of the SECURE Act (PDF)
Roberts & Holland LLP, Inc.
1298 Minnesota Avenue, Suite H
Winter Park, Florida 32789
(407) 644-4146

Lois Baker, J.D., President
David Rhett Baker, J.D., Editor and Publisher
Holly Horton, Business Manager

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BenefitsLink Retirement Plans Newsletter, ISSN no. 1536-9587. Copyright 2019, Inc. All materials contained in this newsletter are protected by United States copyright law and may not be reproduced, distributed, transmitted, displayed, published or broadcast without the prior written permission of, Inc., or in the case of third party materials, the owner of those materials. You may not alter or remove any trademark, copyright or other notices from copies of the content.

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