IRS Releases Information on 2020 Projects

Recently, the Department of Treasury and the Internal Revenue Service released the 2019-2020 Priority Guidance Plan that identifies projects on which Treasury and the IRS will be focused during the period from July 1, 2019 through June 30, 2020. Additionally, the IRS' Tax Exempt and Government Entities ("TE/GE") Section recently released its fiscal year 2020 Program Letter. On both project lists, the IRS confirms it is continuing to prioritize projects related to the implementation of the Tax Cuts and Jobs Act of 2017. For our governmental retirement systems and governmental retirement plan clients, the following projects are of interest and should continue to be watched for possible developments:
 

• Section 1 – 2019-2020 Priority Guidance Plan. 
  • Regulations under Internal Revenue Code ("Code") § 162(m) related to employee remuneration in excess of one million dollars.
  • Regulations under Code § 402(c) regarding qualified plan loan offset amounts.
  • Final regulations on the application of the normal retirement age regulations under Code § 401(a) specific to governmental plans.
  • Guidance relating to certain IRS TE/GE employee plans programs, including the pre-approved plan program, the determination letter program and the Employee Plans Compliance Resolution System ("EPCRS").
  • Regulations regarding IRAs under Code §§ 219, 408, 408A and 4973.
  • Regulations regarding required minimum distributions under Code § 401(a)(9) to update life expectancy and distribution period tables and to address certain other issues.
  • Final regulations on hardship distributions under Code § 401(k) (which were published on September 23, 2019).
  • Guidance on student loan payments and qualified retirement plans and plans under Code § 403(b).
  • Guidance on missing participants, including guidance on uncashed checks (published on September 3, 2019 as Rev. Rul. 2019-19). 
  • Guidance on the timing of amendments to 403(b) plans (published on October 15, 2019 as Rev. Proc. 2019-39).
  • Regulations on the definition of governmental plan under Code § 414(d).
  • Guidance regarding the aggregation rules under Code § 414(m).
  • Final regulations under Code § 417(e) which update the minimum present value requirements for defined benefit plans.
  • Regulations regarding reporting requirements under Code § 6057.
  • The Guidance Plan also states that there will be a notice issued in November 2019 regarding required amendment deadlines for 401(a) plans with respect to changes in qualification requirements (the "required amendments list").
  • The IRS anticipates the Notice setting forth the cost of living adjustments effective January 1, 2020 will be issued in November 2019.
  • Finally, the Guidance Plan also identified a number of projects related to executive compensation, health care and other benefits and employment taxes, such as:
    • Guidance regarding health FSAs,
    • Guidance on HSAs (published August 5, 2019 as Notice 2019-45),
    • Regulations on income inclusion and various other issues under Code §409A,
    • Regulations and other guidance relating to welfare benefit funds, including VEBAs, and
    • Regulations under Code § 457(f)
• TE/GE Program Letter
  • The TE/GE Compliance Governance Board has identified certain priority work for compliance. Listed among the projects are:
    • Determining whether employee stock in an ESOP has been properly valued,
    • Whether the annual allocation of employee stock meets the nondiscrimination requirements, and
    • Whether employer loans follow the conditions and terms of the plan document.
  • For 403(b) and 457 plans, whether 403(b) plans are in compliance with the universal availability rules, whether there have been excessive contributions or improper use of catch-up contributions under Code § 414(v) to the 403(b) plan and whether 457(b) plans have excess contributions or there has been improper use of the special three-year catch-up.
  • Also identified for compliance are whether Forms W-2/1099 match to determine if income should have been subject to FICA tax and income tax withholding.
  • Based upon the use of data in queries to select work based on quantitative criteria, TE/GE will continue to evaluate federal, state and local governments for noncompliance with employment taxes.
  • In terms of referrals which allege noncompliance, TE/GE will continue to pursue referrals received from internal and external sources which allege possible noncompliance by a retirement plan.
  • With regard to determination letters, the Exempt Organizations section of TE/GE will continue to consider process efficiencies related to determination letters and expects to hire more revenue agents to address the current work demands and to offset anticipated attrition losses. 
  • Finally, TE/GE will continue to work to ensure that the VCP program provides quality and consistency of technical positions and timely assistance to plan sponsors.

Of course, if you have any questions or comments regarding either the IRS' Priority Guidance Plan for 2020 or TE/GE's Fiscal Year 2020 Program Letter, please do not hesitate to contact a member of our team: Robert L. Gauss, Audra Ferguson-Allen, Christopher S. Sears, Tara S. Sciscoe, Lisa Erb Harrison, Lindsay Knowles or the Ice Miller lawyer with whom you most closely work.

This publication is intended for general information purposes only and does not and is not intended to constitute legal advice. The reader should consult with legal counsel to determine how laws or decisions discussed herein apply to the reader’s specific circumstances.