Employee Benefits Law Report

Reporting on recent legal developments and trends affecting employee benefits

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…
The Coronavirus Aid, Relief and Economic Security (CARES) Act has provided a wide range of programs that affect employee benefit plans, employers and employees. One benefit that has flown under the radar is a new, temporary tax-qualified student loan repayment plan. Section 2206 of the CARES Act allows employers to claim a tax deduction for repayments of employee student loans, and allows employees to exclude these payments from taxable income, in amounts up to $5,250…
The Coronavirus Aid, Relief and Economic Security (CARES) Act, authorizes employers to make changes to their qualified retirement plans to increase loan limits, delay loan repayments, and make distributions to plan participants experiencing certain COVID-19 related circumstances. Due to a lack of guidance from the IRS, there’s confusion among third-party administrators (TPAs) about how to administer these changes, resulting in potential issues with forms used by TPAs to approve these CARES Act loan and distribution…
Employers may claim the Employee Retention Tax Credit and the tax credits available under the Families First Coronavirus Response Act (FFCRA) for relief during the COVID-19 pandemic. They do this first, by reducing the employer portion of Social Security taxes, and then, by reducing the employer’s payroll deposits in an amount equal to the refundable portion of the accrued credits, instead of depositing said amount with the IRS.…
Since the passage of the Coronavirus Aid, Relief and Economic Security Act (CARES Act), the Small Business Administration (SBA) and the U.S. Treasury Department have released a series of interim final rules and updated Frequently Asked Questions (FAQs) (as of April 8, 2020) regarding Paycheck Protection Program (PPP). These updates provide critical guidance and information to borrowers and lenders alike in the implementation of the highly sought after program. This blog describes some of the…
Certain government programs, including SBA loan programs, are reserved for “small businesses.” In order to qualify for those programs, a business must satisfy both the SBA’s definition of a “small business concern” as well as the size standards for a small business.…