CURRENT DEVELOPMENTS IMPACTING

GOVERNMENTAL PLANS AND EMPLOYERS

New Form 1099-R Instructions Released

            Governmental plans will want to review the recently released instructions for the 2010 Form 1099-R, available here.  The instructions for this year's Form 1099-R explain the reporting treatment for certain changes in the law that became effective January 1, 2010.  These changes include permitting participants to roll over non-Roth amounts in a qualified plan to a Roth IRA (known as "Roth conversions") and the 20 percent mandatory withholding on all eligible rollover distributions from an employer's plan paid directly to a nonspouse beneficiary.  The instructions also permit (but do not require) masking a recipient's social security number (SSN) on the Form 1099-R to provide greater privacy by only including the last four digits of the SSN.  The instructions further clarify issues relating to loss reporting and making corrections under the Employee Plans Compliance Resolution System.  

State and Local Government Compliance Verification Checklist

            The Internal Revenue Service Advisory Committee on Tax Exempt and Governmental Entities (ACT), Federal, State, Local Government Subcommittee is currently pre-testing its new State and Local Government Compliance Verification Checklist.  We know that many governmental plan attorneys learned of this initiative earlier this year at the NAPPA Winter Meetings.  This is a reminder that the comment period will close March 15, 2010.  However, in our experience, comments are often accepted beyond the deadline.

            The purpose of the checklist is to assist public employers in complying with the federal employment tax laws and regulations that apply to them, including social security coverage issues, fringe benefits and reporting and withholding requirements.  You can view and pre-test the checklist by clicking here.  You can post your comments to the checklist by responding to the online evaluation form at http://www.surveymonkey.com/s/825RHY5. 

            If you would like more information on either the changes to the Form 1099-R or the State and Local Government Compliance Verification Checklist, you may contact Terry A. M. Mumford, Mary Beth Braitman, Katrina M. Clingerman or your Ice Miller LLP employee benefits attorney.