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Groom Law Group Recommendation for IRS Priority Guidance Plan: Expand 'Dependent' Definition for VEBA Purposes

"The Treasury regulations governing VEBAs were published nearly 45 years ago. Since that time, the provisions regarding who qualifies as a 'dependent' for VEBA purposes have become outdated.... This letter briefly summarizes [the] rationale for requesting this change and recommends an approach to modify the VEBA regulations to include expanded family relationships, similar to other areas of the law."

Groom Law Group Comments on FBAR Filing Requirement for Pension Plans (PDF)

20 pages. Excerpt: We write to respond to the Treasury's request for comments regarding FBAR and the accompanying instructions. As noted in our July 29, 2009 letter and discussed in more detail below, the policy goals of FBAR ? to detect and prevent taxpayers from hiding assets offshore toavoid income taxes or launder money ? are not advanced by requiring U.S persons to file an FBAR with respect to 'foreign financial accounts' held by or for the benefit of Plans. Nevertheless, Treasury may expect at least a 40 percent increase in annual FBAR filings (nearly 75,000 additional filings) from Plans qualified under Code section 401(a), which would test IRS's already limited resources to indentify violators. Thus, we respectfully make the following recommendations[.]

Tax-Exempt Employers May Owe New Excise Tax for 2018 Tax Year (PDF)

"Although parts of the interim guidance likely will require taxpayers to go through additional administrative hurdles and compliance steps, the notice appears relatively taxpayer-friendly and may even minimize the impact of section 4960."

Harmonizing 'Tax Home' Concepts with Evolving Remote Work Arrangements (PDF)

"An important issue that arises is whether an employer should reimburse employees for the associated travel costs to the [employer's physical location] to ease the transition -- or provide incentives for returning to traditional work locations. [The authors] highlight the historic federal tax rules regarding commuting and travel expenses; identify issues raised as more employers and employees transition to modified work arrangements; and offer recommendations for sensible interim policies in this area."

VEBA Rules Should Be Updated to Reflect Expanded Relationships (PDF)

"Treasury and the IRS published an initial round of proposed regulations in 1969 that addressed some basic definitional issues for VEBAs. But it wasn't until the early 1980s that the regulations established specific parameters regarding the employment-related common bond and what types of employee relatives can receive VEBA benefits.... While the VEBA membership rules have remained stagnant for 40 years, social policies in key areas have outpaced the VEBA limitations."

IRS Final Regs Retain RMD 10-Year Rule (PDF)

"Since the initial proposal, there have been repeated calls from policy groups and employee benefits practitioners for the IRS to revise its interpretation of the 10-year rule and remove the simultaneous application. A common complaint was that the interpretation was contrary to the congressional intent of the rule.  The IRS said it reviewed the comments expressing concerns about the 10-year rule but 'determined that the final regulations should retain the provision in the proposed regulations requiring such a beneficiary to continue receiving annual payments.' "

Medical Loss Rebates: Fiduciary and Tax Implications (PDF)

"In deciding on how to apply the rebates, the DOL guidance notes that a plan 'may properly weigh the costs to the plan and the ultimate plan benefit as well as the competing interests of participants or classes of participants provided such method is reasonable, fair and objective.' The guidance goes on to provide some helpful examples of reasonable methods for allocating MLR rebates that are plan assets, which plans and their sponsors should consult in deciding how to allocate and apply MLR rebates that are plan assets."

Benefit Plans and Plan Distributions Exempt from New 'Net Investment Income' Tax (PDF)

"Highlights of the final rules are summarized [in this article], in question-and-answer format, as they apply to compensat[ion]-related and retirement income items (and earnings thereon). The final rules carry forward the general exemption of all benefit plan related income, and clarify several issues affecting ESOP distributions.... [T]he recently released draft instructions to new Form 8960 (which is used to calculate the new tax) could do a better job of making this clear -- the exemption for retirement plan amounts is noted only briefly in 19 pages of very dense instructions to the 1-page form."

Church Plan Law Changes as Part of the Omnibus Budget Deal; Church 401(a) and 403(b) Plan Transfers and Mergers Now Permitted (PDF)

"Section 336 of the Protecting Americans from Tax Hikes (PATH) Act (S. 2029) ... contains a number of significant provisions affecting church plans. Though generally technical and narrowly targeted in nature, they are nevertheless important ... As noted in the legislative history to the Act, none of this is intended to have, or appears to have, any impact on the ongoing litigation against church-related hospitals over the church plan definition."

Do Non-ERISA 403(b) Plan Sponsors Have Fiduciary Responsibilities?

David W. Powell, Esq., The Groom Law Group, speaking to attendees at the National Tax Sheltered Accounts Association's (NTSAA) 403(b) Advisor Summit, pointed to the Uniform Management of Public Employee Retirement System Act (UMPERSA), which imposes a prudent standard for the main employee retirement system of states. It excludes 403(b)s, but, Powell noted, as states adopt 403(b)s, such language is used in state law.