Tuesday, January 2, 2018

Provisions in the New Tax Reform Law Affecting Employee Benefits

As compiled by the fine folks over at BenefitsLink. Newest publications are first.

Tax Reform Provisions Affecting Employer-Provided Compensation and Benefits (PDF)
Trucker Huss
Dec. 28, 2017
"[1] Repeal of performance-based compensation exception to $1,000,000 deduction limit ... [2] Excessive compensation of non-profit covered employees subject to a 21% tax penalty ... [3] Limits and phase-out on deduction for employer-operated eating facilities ... [4] Elimination of employer deduction for certain transportation fringe benefits ... [5] Suspension of income exclusion for qualified bicycle commuting reimbursement fringe benefit ... [6] Suspension of income exclusion and employer deduction for qualified moving expense reimbursement ... [7] Extension of rollover period for plan loan offsets ... [8] Employer credit for paid family and medical leave."

The Impact of the 2017 Tax Reforms on Employment-Based Benefits and Executive Compensation (PDF)
Dec. 26, 2017
"[A] new 'Qualified Equity Grant' ... to allow employees of nonpublicly traded companies to elect to defer taxation of stock options and restricted stock units (RSUs) for up to five years after the exercise of such stock options or the vesting of RSUs.... Repeal of 'recharacterization' of Roth IRA conversions ... Extended rollover periods for deemed distributions of retirement plan loans ... Tax relief for retirement plan distributions to relieve 2016 major disasters ... New credit for paid family and medical leave."

Tax Legislation Includes Significant Executive Comp and Employee Benefits Provisions (PDF)

Dec. 22, 2017
27 pages. "The Conference Report confirms that compensation paid pursuant to a plan qualifies for the exception under the transition rule, but only if the right to participate in the plan is part of a written binding contract with the covered employee in effect on November 2, 2017.... Additional questions may arise regarding plans or agreements that may be terminated prospectively and what portion of the deferred compensation accrued under the plan or agreement after the effective date is grandfathered.... The new Section 4960 21% excise tax would add a significant financial and administrative burden on tax-exempt organizations with highly compensated employees."

What the New Tax Law Likely Will and Won't Do to the Nation's Health Care

Association of Health Care Journalists
Dec. 22, 2017
"As many of us have speculated about what insurers will do regarding future exchange participation, Jeff Young from the Huffington Post actually called a bunch of them. None have said they were running straight for the exits, but many sound very cautious about the 'big mess' ahead sans mandate."

Tax Reform Law Includes Paid Leave Provisions
Fisher Phillips
Dec. 22, 2017
"Section 13403 of the Act offers businesses a tax credit if they offer up to 12 weeks of paid family leave to certain eligible workers. Eligible employers must have a written policy that provides not less than two weeks of annual paid family and medical leave for full-time employees, and a pro-rata amount provided at the same ratio for part-time employees. The policy must provide payment at a rate not less than 50 percent of the wages normally paid to employees on leave."

Paid Leave, Other Job-Related Measures Stay in Tax Bill

Bloomberg BNA
Dec. 19, 2017
"Incentives for companies to offer their workers paid leave, in addition to prohibiting deductions related to confidential settlements related to sexual misconduct, are part of the final version of a Republican tax reform bill ... That includes offering businesses a credit for offering up to 12 weeks of paid family leave. The measure, plucked from a stand-alone bill (S. 344) by Sen. Deb Fischer (R-Neb.), also includes incentives for offering medical leave."

Tax Bill: How Four Healthcare Measures Weathered Reconciliation

HealthLeaders Media
Dec. 19, 2017
"[1] Individual mandate repeal included ... [2] Medical expense deduction expansion ... [3] Orphan drug tax credit reduction ... [4] Private activity bonds preserved."

New Deadline for Furnishing Form 1095-C to Employees

1095–C Filing Requirements

Under Section 6056 of the Affordable Care Act, Applicable Large Employers (ALEs) must file information returns with the IRS and furnish statements to full-time employees . Forms are due in the year after the calendar year to which the forms relate. 

IRS Announces Extension of Deadline to Furnish Form 1095-C to Employees

On Dec. 22, 2017, the Internal Revenue Service (IRS) issued Notice 2018-06 which extended the deadline to furnish Forms 1095-C and 1095-B to full-time employees and covered individuals by thirty days. The deadline for furnishing these Forms is now March 2, 2018.  This Notice also extended good faith transition relief for reporting penalties for employers that make a good faith and timely effort to report. 

Notice 2018-06 does not extend the due date for filing forms with the IRS for 2017 and those dates remain February 28, 2018 or April 2, 2018, if filing electronically.  

An ALE may face penalties if it fails to satisfy its Section 6056 reporting obligations. 
These penalties are separate from the ACA’s employer shared responsibility penalties.

For returns required to be filed in 2016 and later, the base penalty amounts under 
Sections 6721 and 6722 were increased. In addition, these amounts are indexed to 
increase with inflation each year. The adjusted penalty amounts are as follows:

Remember, for those employers that use the W-2 safe harbor for affordability, you will need to know an employee’s 2017 W-2 box 1 compensation in order to complete Form 1095-C for that employee.