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IRS Provides Guidance on Long-Term, Part-Time Employee Eligibility for 403(b) Plans

"[Notice 2024-73] addresses the conditions under which part-time employees may be excluded from making elective deferrals and the inclusion of long-term, part-time employees in plan eligibility requirements pursuant to new Employee Retirement Income Security Act (ERISA) section 202(c). It also explains that employers can exclude these employees from certain nondiscrimination testing and employer contributions."

IRS Reiterates That Benefits Provided by Certain Wellness Plans Are Subject to Employment Taxes

"The IRS released final regulations dated April 3, 2024, and a related fact sheet, regarding short-term, limited-duration insurance and the consumer notice required for certain fixed indemnity coverage.... [T]he IRS reiterated its concern regarding fixed indemnity policies and other arrangements where premiums for the coverage are paid pretax and cash payments are made even though no medical expenses are incurred or the medical expenses are reimbursed through other coverage. It explained that these payments generally are taxable wages subject to FICA, FUTA and FITW."

What the Connelly Supreme Court Ruling Means for Your Business

"For businesses, especially closely held entities, this decision underscores the importance of understanding how life insurance proceeds used for share redemptions are treated for estate tax purposes. In certain situations, this answer could decrease the amount passed to your heirs by up to 40% of the total life insurance proceeds." [Connelly v. IRS, No. 23-146 (S. Ct. Jun. 6, 2024)]

IRS Releases Guidance on Roth Catch-Up Contributions Under SECURE 2.0

"[Notice 2023-62] confirms that catch-up contributions are here to stay and were not eliminated. Also, the transition period for the mandatory treatment of Roth contributions for high-income individuals shows the IRS's intent to issue further guidance on unresolved issues surrounding implementation of that provision."

IRS Provides Guidance for Required Minimum Distributions

"Notice 2023-54 ... announced that the Department of the Treasury and the IRS intend to issue final regulations related to RMDs under section 401(a)(9) which will apply no earlier than the 2024 distribution calendar year. The notice also provides guidance related to certain provisions of 401(a)(9) that apply for 2021, 2022 and 2023 as well as rollover relief for plan and IRA distributions made in the first half of 2023, that would have been RMDs, if not for changes made in SECURE 2.0."

IRS Says That Certain Wellness Plans Are Subject to Employment Taxes

"[IRS Chief Counsel Memorandum 202323006] discusses whether wellness indemnity payments under an employer-funded, fixed-indemnity insurance policy (including those where the premium for coverage is paid by the employee through a cafeteria plan under section 125) are includible in the gross income of the employee if the employee has no unreimbursed medical expenses related to the payment."

IRS Issues Guidelines Regarding Substantiation of Expenses for Cafeteria Plans

"Chief Counsel Advice Memorandum 202317020 ... confirmed that it is not a compliant practice for employers to allow employees to self-certify or use certain other 'shortcut' mechanisms to substantiate that their medical expenses qualify for reimbursement."

IRS TE/GE Program Letter Highlights FY 22 Compliance Initiatives

"Among the priorities for 2022, TE/GE will focus on the following compliance activities: ... Employee stock ownership plans (ESOPs) ... Private foundation and retirement plan audits for high-income taxpayers.... [T]he webpage indicates that TE/GE will continue to pursue the compliance program described in program letters for prior years ... [A] number of initiatives have been removed [including] ... Employee plans: Inflated assets [and] Employee plans: Partial termination/partial vesting."

IRS Updates the Employee Plans Compliance Resolution System (EPCRS)

"Two new overpayment corrections for defined benefit plans ... Threshold amount for overpayments not requiring correction is increased from $100 to $250 ... Elimination of the requirement that self-correction by plan amendment must affect 'all eligible participants' ... Extension of safe-harbor correction method for some missed elective deferrals."

IRS Extends Relief for Leave-Based Donation Programs

"In general, the employee's donated time does not need to be treated as wages for income or payroll tax purposes if ... [1] the payment is made to a section 170(c) organization for the relief of victims of the COVID-19 pandemic in the affected geographic areas; and [2] the payment is paid to the section 170(c) organization after Dec. 31, 2020 and before Jan. 1, 2022."