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PSCA Executive Reports

June 28, 2018

Update on IRS Guidance Projects

On May 9, IRS and Treasury updated the current “guidance priority list” for the current year. The update added 13 projects, mainly to reflect the recent tax legislation. Meanwhile, we understand that very few of the substantive projects affecting retirement and executive compensation are likely to be released by the June 30 “deadline.” Recent speeches by IRS and Treasury personnel indicate the following items of possible interest on future guidance.

Executive Compensation – Guidance on the effective date changes in the $1 million deduction limit (Code sec. 162(m)) is a priority, and could be released soon. Guidance on the new 21% excise tax on tax-exempt employers (Code sec. 4960) paying compensation over $1 million is a priority, too.

Qualified Plans – IRS has made progress on a number of the pension projects, but the release of much guidance in the very near term is unlikely. Projects in this category include:

  • final rules providing limited nondiscrimination relief (Code sec. 401(a)(4)) for closed defined benefit plans, 
  • final rules updating the regulations for determining the “present value” of pension distributions (Code sec. 417(e)), 
  • “soft guidance” on missing participants, and 
  • while no guidance is expected, Employee Plans may initiate a second round of “compliance checks” on partial plan terminations because of the many errors identified on the first round of checks several years ago. 

Determination Letter Program – The IRS recently asked for comments on areas where it should re-open the qualified plan determination letter program for ongoing plans. In recent remarks, a senior IRS official indicated that IRS staff continues to work to clear the existing case backlog and that staffing levels remain stagnant. This suggests that the benefits community should not set its expectations very high. The comment period was open until June 4.

IRS Regulation Process Generally – A senior Treasury official recently indicated that Treasury may start issuing notices requesting comments on issues to be addressed in proposed rules before the proposed rules are actually released for comment. This follows the recent OMB-Treasury memo giving OMB the authority to review more tax rules – a development generally expected to further slow the process of issuing regulations.

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