The IRS recently offered an opportunity for 2% shareholders of an S corporation to receive a deduction for health insurance premiums under Sec. 162(l).
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Employee Benefits
Supreme Court Upholds 401(k) Participant’s Right to Sue
The Supreme Court has held that an individual Sec. 401(k) plan participant had a right to sue the plan administrator for breach of fiduciary duty under ERISA.
Restricted Stock in Acquisitions: IRS Provides Much-Needed Guidance
Rev. Rul. 2007-49 provides valuable guidance in determining whether Sec. 83 applies to the receipt of restricted stock in taxable and tax-free reorganizations. However, many questions remain unanswered.
IRS Changes Its Position on Performance-Based Compensation for $1 Million Compensation Limit
The IRS ruled that an incentive plan is not performance-based compensation because it allows payments upon involuntary termination without cause by the employer, voluntary termination by the employee with good reason, or voluntary retirement regardless of whether the performance goals are met.
AICPA Comments on Automatic Contribution Arrangement Proposed Regs.
The Service released proposed regulations on the tax aspects of automatic enrollment of participants in cash or deferred arrangements (REG-133300-07).
Identifying Specified Employees Under Sec. 409A
Employers must understand how to determine whether an employee is a specified employee so that their nonqualified deferred compensation plan is operated in accordance with Sec. 409A.
Early Retirement Payments to Former Tenured Faculty Members Are Subject to FICA
The Third Circuit held that payments under several early retirement plans made by a university to former tenured faculty members were compensation for services subject to the FICA tax.
Substantial Risk of Forfeiture Under Sec. 457(f)
Sec. 457(f) deals with non qualified deferred compen sation (NQDC) plans of governmental and other tax-exempt employer sponsors. Specifically, Sec. 457(f) applies to plans classified as ineligible plans to distinguish them from Sec. 457(b) plans, which are called eligible plans.
Evaluating Whether to Adopt a Retirement Plan
Qualified retirement plans appeal to both employers and employees. In today’s job market, such plans help employers compete with other firms that offer such plans.
Changes to Form 5500
Some significant changes have been made to Form 5500 for plan year 2007.
Self-Directed IRAs: Advantages, Challenges, and Options
A self-directed IRA is simply an account in which the custodian agrees to allow the taxpayer to exercise greater control over investment decisions.
Current Developments in Employee Benefits and Pensions (Part II)
This two-part article covers significant developments in late 2006 and 2007 in employee benefits, focusing on updates and changes to the rules for qualified retirement plans.
Current Developments in Employee Benefits and Pensions (Part I)
This two-part article provides an overview of current developments in employee benefits, including executive compensation, welfare benefits, and qualified plans. Part I focuses primarily on executive compensation and welfare benefits.
IRS Clarifies NQDC Rules for Teachers
Sec. 409A was effective on January 1, 2005, and applies to nonqualified de-ferred compensation (NQDC), that is, compensation earned in one year but not paid until a future year. If NQDC does not meet the requirements of Sec. 409A, it will be subject to additional taxes, including a 20% additional
Suggestions for Complying with Sec. 409A Deferred Compensation Plan Rules
1. Identify arrangements that provide for a deferral of compensation. Identify the service-provider relationships covered by the rules (e.g., employees, independent contractors, board members). Identify arrangements with service providers that are deferrals of compensation. An arrangement provides for a deferral of compensation if a service provider has a legally binding
Benefits Under PPA ’06 Expand to Include Beneficiaries
Editor: Joel E. Ackerman, CPA, MST The IRS has begun to follow through on the Pension Protection Act of 2006, P. L. 109-280 (PPA ’06), to revise the rules for 401(k), 403(b), and 457(b) plans to allow for distributions to beneficiaries on account of hardship or unforeseeable emergency. Hardship Distributions
Nonqualified Deferred Compensation and Sec. 409A Final Regs.
Editor: Joel E. Ackerman, CPA, MST Prior to Sec. 409A, the regulations applicable to deferred compensation plans, particularly nonqualified deferred compensation (NQDC) plans, were somewhat murky. After a number of corporate scandals, Congress legislated restrictions for NQDC plans in 2004. Since the enactment of Sec. 409A, interpretive guidance and proposed
Deductibility of Nonqualified Deferred Compensation in Mergers and Acquisitions
Editor: Frank J. O’Connell, Jr., CPA, Esq Determining the tax treatment and timing of an employer corporation’s deduction for amounts paid under nonqualified deferred-compensation arrangements under Sec. 404 can be a daunting task, depending on the circumstances. Even if such arrangements have not triggered any of the pitfalls in Sec.
Tracking Tax Basis in an S Corp. ESOP
Editor: Frank J. O’Connell, Jr., CPA, Esq. Employee stock ownership plans (ESOPs) currently cover 10 million employees in the U.S. participating in approximately 11,000 plans, according to the ESOP Association. With the number of plans expected to increase, the need for tax accounting and recordkeeping for ESOPs is becoming more
AICPA Comments on FAB 2006-03
The AICPA has submitted comments to the Department of Labor (DOL) regarding Field Assistance Bulletin (FAB) 2006-03. The Pension Protection Act of 2006 (PPA ’06) Section 508(a) revised ERISA’s periodic pension benefit statement requirements. Under prior law, ERISA Sections 105(a) and 502(c)(1) required a qualified retirement plan administrator to
TAX PRACTICE MANAGEMENT
2025 tax software survey
AICPA members in tax practice assess how their return preparation software performed during tax season and offer insights into their procedures.
