At long last, the Department of the Treasury and Internal Revenue Service published final regulations to explain how changes to Internal Revenue Code Section 162(m) under the Tax Cuts and Jobs Act of 2017 (TCJA) affect the deductibility (or lack thereof) of compensation in excess of $1 million paid to covered employees. We have blogged about these changes and made recommendations to public companies in the past about how to manage these changes. For the…

Public company nonqualified plans and incentive plans may need to be amended to avoid a potential violation of Internal Revenue Code (IRC) Section 409A as a result of changes to IRC Section 162(m) under the Tax Cuts and Jobs Act. This amendment most likely is required for employers that mandated deferrals of amounts that exceeded the limit under IRC Section 162(m) but not those whose plans permitted but did not require deferrals of such amounts.…

Much of the employee benefits news this year has related to the Coronavirus Aid, Relief, and Economic Security (CARES) Act, particularly with respect to the greater flexibility it provided 401(k) plan participants with respect to requesting in-service distributions and loans. That is not a surprise during this year of economic upheaval. Updating plan administrative procedures to reflect these CARES Act terms has kept employers busy, but it is important that employers remember that they will…

On May 22, 2020, the IRS released an Office of Chief Counsel Memorandum that addresses (i) the date that fair market value is determined and when gross income and federal income tax withholding liability arises for stock-settled awards and (ii) the timing for remitting FICA taxes for such awards. This question comes up frequently and has not always had a clear answer, and so the memo provides important guidance for employers who sponsor equity award…

Once a taxpayer reaches age 72 (or age 70 ½ if the taxpayer reached age 70 ½ prior to 2020), the Internal Revenue Code requires owners of most retirement accounts to withdraw minimum distributions (RMDs) from those accounts. To provide relief from the increased tax burden often associated with RMDs, the Coronavirus Aid, Relief and Economic Security (CARES) Act waived RMDs for 2020. The CARES Act, however, was not made law until March 27, 2020…

An Employee Stock Ownership Plan (ESOP) can be a great option for small business owners looking for a tax-advantaged way to sell their business. My colleague, Greg Daugherty, recently appeared on an episode of the podcast, “The ESOP Guy: The Journey to an ESOP.” Greg spoke with host Phil Hayes about the seller’s perspective and key management in evaluating the benefits and options of an ESOP. Listen to the podcast here.…

Employers generally must withhold income taxes on behalf of employees based on where the employee works. Typically this determination is simplified by the location of the employer’s offices. The COVID-19 pandemic and corresponding stay-at-home orders have altered the working situations for most Americans. Only time will tell what things will look like moving forward. Employers must now consider the impact of employees working remotely and confirm that income tax withholding is properly executed given these…