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William Byrnes (Texas A&M) tax & compliance articles

Archive for April, 2022

TaxFacts Intelligence: When does COVID-19 Qualifies as a Employee’s Protected Disability?

Posted by William Byrnes on April 25, 2022


The Texas A&M graduate program for tax, wealth, and risk management is accepting applications from financial professionals with at least five years of industry experience for the summer. Even though our graduate program has grown to over 750 enrollment, the enrollment for a course section is between 20 and the maximum of 30 so that each student receives meaningful feedback throughout the course from the full-time academic faculty and renowned professional case study leaders, and each other via teamwork and peer review. Learn more about how we educate and position the industry’s leaders: https://law.tamu.edu/distance-education

Prof. William H. Byrnes         Robert Bloink, J.D., LL.M.

The April 18th tax filing deadline has passed and it’s already time to plan for this tax year of 2022. You’ll want to make sure you are prepared with the most up-to-date tax knowledge as you. We want you to have access to the 2022 Tax Facts books and the weekly intelligence newsletter – the reference solution that helps answer critical tax questions with the latest tax developments. Save 15% off any 2022 Tax Facts print or eBook by using Code TFN15 now through the end of the month.

In tax news, we have a mixed bag of updates for both individual and small business clients this week.  The IRS released proposed regulations offering clarity on what clients who are interested in the MEP option can expect in situations where the “one bad apple” rule might have applied pre-SECURE Act.  The EEOC has clarified whether and when COVID-19 itself can qualify as a disability for ADA purposes. Business clients should also be advised of the return to the Trump-era test for determining independent contractor status.

EEOC Offers Clarity on When COVID-19 Qualifies as a Disability The EEOC has recently introduced clarifying guidance on when COVID-19 will qualify as a disability for federal anti-discrimination law purposes. In some cases, COVID-19 will qualify as a disability under the Americans with Disabilities Act (ADA)–often, based on side effects associated with the virus, rather than the infection itself.  If an employee is diagnosed with COVID-19, experiences symptoms and recovers from those symptoms in a few weeks, the employee would not be considered disabled for ADA purposes (so would not be entitled to reasonable accommodation).  The EEOC also reminds employers that employees aren’t automatically entitled to reasonable accommodation even if they do experience symptoms of “Long COVID” or other COVID-related health issues.  The employee is only entitled to accommodation if the disability requires the accommodation and it is not an undue hardship for the employer.  For more information on the tax credit that is available for employee medical leave, visit Tax Facts Online. Read More

Court Reinstates Trump-Era Independent Contractor Test.  The Trump-era rule was designed to make it easier for employers to classify workers as independent contractors, rather than traditional employees, by focusing on whether workers are economically dependent upon an employer—or in business for themselves.  The Trump-era test prioritizes two key factors, including (1) the worker’s degree of control over the work performed, and (2) the worker’s opportunity for profit or loss.  Under the Biden administration, the DOL stated that prioritizing these factors for determining employment status under the FLSA undermined the longstanding balancing approach of the economic realities test and court decisions requiring a review of the totality of the circumstances related to the employment relationship.  The Trump DOL rule would result in many workers’ losing FLSA protections, including minimum wage and overtime benefits.  Several business groups filed a lawsuit in federal court to challenge the Biden administration’s acts.  The court vacated the Biden administration’s acts and reinstated the Trump-era rule, determining that the DOL’s delay of the effective date for the Trump-era rule violated the Administrative Procedure Act by providing only a 19-day period for notice and comments (rather than the 30-day minimum).  The court also found that the DOL limited the content of the responses to whether the effective date should be delayed (so unduly limited the scope of the comments received, making the decision to rescind the Trump-era rule “arbitrary and capricious”).  The court determined that the Trump rule became effective March 8, 2021.  For more information, visit Tax Facts Online.  Read More

IRS Clarifies Exception to the “One Bad Apple” Rule for MEPs. The IRS proposed a new rule implementing the SECURE Act exception to the one bad apple rule—also known as the unified plan rule.  Under the proposed rule, the MEP must describe the procedures the plan will follow if one participant fails to satisfy the qualification rules.  Those procedures must outline the notices that will be sent and when those notices will be sent. The MEP must also disclose the actions that it will take if the non-qualifying participant fails to take action or initiate a spinoff to separate the MEP within 60 days after the date the final notice is sent. The proposed rules provide that the plan may be required to provide up to three notices to a participating employer that does not respond to the initial notice.  The final notice must be provided to the DOL and all impacted participants.  The non-qualifying employer has two options upon receipt of a notice: (1) take remedial action or (2) initiate a spinoff within 60 days of the final notice.  If the employer does neither, the MEP administrator must stop accepting contributions from the non-compliant employer and participants.  The MEP must also provide notice to the impacted participants and give them an election with respect to the treatment of their accounts.  Participants could elect to remain in the plan or transfer their funds to another retirement plan.  The IRS notes that it intends to publish guidance that contains model language for MEP plan administrators.  For more information, visit Tax Facts Online. Read More 

Look in your Tax Facts Online app for our continuing analysis of 2022 legislative and regulatory updates, weekly intelligence, and the impact on planning for a client’s wealth preservation and growth.

Wealth & Risk Management Degree for Industry Professionals – learn about the graduate degree here: https://law.tamu.edu/distance-education

Texas A&M, operating budget of $9.6 billion (FY2022) and capital budget of $1.9 billion, is #1 for U.S. public universities, one of only 60 accredited U.S. universities of the American Association of Universities (R1: Doctoral Universities – Highest Research Activity) and one of only 17 U.S. universities that hold the triple U.S. federal grant of Land, Sea, and Space! The law school, ranked in the 1st tier, has the #1 bar passage in Texas, and #1 for employment in Texas (and top 10 in U.S.)

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TaxFacts Intelligence: Wednesday, April 20

Posted by William Byrnes on April 20, 2022


The Texas A&M graduate program for tax, wealth, and risk management is accepting applications from financial professionals with at least five years of industry experience for the summer. Even though our graduate program has grown to over 750 enrollment, the enrollment for a course section is between 20 and the maximum of 30 so that each student receives meaningful feedback throughout the course from the full-time academic faculty and renowned professional case study leaders, and each other via teamwork and peer review. Learn more about how we educate and position the industry’s leaders: https://law.tamu.edu/distance-education

Prof. William H. Byrnes         Robert Bloink, J.D., LL.M.

Although many tax changes have not made it through the Democrat’s discussions for a spring or summer final bill to show voters before November’s election, two that seem to have traction are the proposals to impose a minimum tax on corporations with $1 billion in profits and another to impose a minimum tax on wealthy individuals (basically, require mark to market of assets each year, like a wealth tax). Now that tax season is over, time to turn our attention to inflation-adjusted 2022 limits such as health FSAs and qualified transit benefits.

2022 Contribution Limits for FSAs, Transportation Benefits. In 2022, taxpayers will be entitled to contribute a maximum of $2,850 to their health FSAs (up from $2,750 in 2021).  The health FSA carryover amount also increased to $570 (up from $550 in 2021).  For dependent care FSAs, the annual contribution limit will be $5,000 per married couple in 2022 (the limit was temporarily increased to $10,200 for 2021).  The limit on tax-preferred transit/parking benefits also increased from $270 to $280 per month in 2022.  Employers who offer these types of benefits should update their plan documents and communicate the increased limits to employees.  For more information on the types of tax-preferred transportation benefits that employers can offer employees, visit Tax Facts Online. Read More

IRS Updates FAQ on Unemployment Compensation Exclusion and 2020 Tax Credit Eligibility The IRS recently updated its FAQ for the 2020 unemployment compensation exclusion.  As background, many taxpayers file their 2020 income tax returns before the IRS announced that $10,200 in unemployment compensation would be excluded from 2020 taxable income. Because the IRS automatically made the changes to exclude $10,200 in unemployment compensation from taxpayers’ 2020 income, many clients may be eligible for the additional child tax credit or the earned income credit. The IRS announced that it is sending CP08 and CP09 notices to individuals who did not claim the credit on their return but may now be eligible for it. The notices will be sent in November and December of 2021. Receiving the notice is not a confirmation that the taxpayer is eligible for these tax credits—and taxpayers are not required to file an amended return to claim the tax credits if they simply reply to the CP08 notice or CP09 notice. The IRS will calculate the amount available and treat it as an overpayment.  For more information on the available tax credits, visit Tax Facts Online. Read More

Understanding the New Corporate Profits Minimum Tax Proposal

The proposal to revive the corporate alternative minimum tax, that the Tax Cuts & Jobs Act repealed, is now oriented for corporations with at least $1 billion in profits (as reported to shareholders). These corporations would need to pay at least a 15 percent minimum tax on those profits.  If enacted, the tax would be effective in tax years beginning after 2022. The tax would apply to corporate taxpayers (but not to S corporations, RICs or REITs) that satisfy certain annual minimum income requirements over a three-year period.  Income of controlled foreign corporations and non-consolidated entities would also be included—and any deductions for U.S. or foreign income taxes would be removed in calculating income.  It’s estimated that this tax would apply to about 200 corporations and raise hundreds of billions of dollars in revenue.  Like many taxes that start as a thin edge of the wedge, this one may expand to include more taxpayers and at a higher rate, over time. For more information on the current corporate income tax structure, visit Tax Facts Online. Read More

Look in your Tax Facts Online app for our continuing analysis of 2022 legislative and regulatory updates, weekly intelligence, and the impact on planning for a client’s wealth preservation and growth.

Wealth & Risk Management Degree for Industry Professionals – learn about the graduate degree here: https://law.tamu.edu/distance-education

Texas A&M, operating budget of $9.6 billion (FY2022) and capital budget of $1.9 billion, is #1 for U.S. public universities, one of only 60 accredited U.S. universities of the American Association of Universities (R1: Doctoral Universities – Highest Research Activity) and one of only 17 U.S. universities that hold the triple U.S. federal grant of Land, Sea, and Space! The law school, ranked in the 1st tier, has the #1 bar passage in Texas, and #1 for employment in Texas (and top 10 in U.S.)

Posted in Retirement Planning, Taxation, Wealth Management | Leave a Comment »

TaxFacts Intelligence: 1040s due today Monday April 18

Posted by William Byrnes on April 18, 2022


The Texas A&M graduate program for tax, wealth, and risk management is accepting applications from financial professionals with at least five years of industry experience for the summer. Even though our graduate program has grown to over 750 enrollment, the enrollment for a course section is between 20 and the maximum of 30 so that each student receives meaningful feedback throughout the course from the full-time academic faculty and renowned professional case study leaders, and each other via teamwork and peer review. Learn more about how we educate and position the industry’s leaders: https://law.tamu.edu/distance-education

Prof. William H. Byrnes         Robert Bloink, J.D., LL.M.

The IRS deadline for 2021 tax returns is today–and, for this year, the IRS is reminding taxpayers about recent changes that will make this year’s filing season a bit different than past years.  Similarly, the DOL has recently introduced changes to Form 5500 that will impact MEPs, PEPs and other small business retirement plans for 2022.  We also have coverage this week on how business owners should proceed now that the Supreme Court has weighed in on OSHA’s “vaccinate-or-test” mandate.

IRS: Tax Tips for a Smooth 2022 Tax Filing Today The IRS’ last day to accept 2021 1040s as filed by the deadline is today – electronically, or by postmark. Because of the Emancipation Day holiday in Washington, D.C., the 2022 tax filing deadline moved this year from April 15 Friday to today April 18 (April 19 for taxpayers who live in Maine or Massachusetts).  The IRS encourages taxpayers to file electronically today to ensure fast processing–and notes that the average refund will be received within 21 days if the taxpayer files electronically, signs up for direct deposit and has no issues with their return.  Taxpayers may need the information from the IRS’ Letter 6419 that provides information about advance child tax credit payments, and the IRS’ Letter 6475 that provides information about the third economic impact payment – these were received by taxpayers in January and February.  Taxpayers who received these funds will need these letters to complete their tax returns today – otherwise, request the automatic extension today (if must be requested today, it cannot be requested afterward).  Taxpayers who received advance child tax credits can also obtain information about those payments using the online portal at irs.gov. Taxpayers who received the child tax credit or earned income tax credit should also remember that the IRS cannot issue their refund before mid-February.  For more information on federal tax filing information, visit Tax Facts Online. Read More

U.S. Supreme Court Reinstates Stay of Enforcement on OSHA ETS Near the end of 2021, the Sixth Circuit ruled to dissolve an existing stay of OSHA’s emergency temporary standard (ETS) that would have required employers with at least 100 employees to require employees to receive the COVID-19 vaccine or submit to weekly testing.  In response, the Supreme Court considered the issue and opted to reinstate the enforcement stay—so that OSHA cannot enforce its ETS until further notice.   The Court reasoned that the ETS was overly broad and failed to consider the risks associated with different industries.  The ETS will now be sent back to the Sixth Circuit for a decision—and, if the Sixth Circuit rules in favor of enforcing the ETS, the Supreme Court may again be asked to review that decision.  For now, employers should begin to comply with state laws on the issue.  If the state requires vaccination-or-testing, employers should comply with that law.  Employers can now also safely comply with state laws that prohibit employers from imposing vaccine mandates–but should stay tuned for the Sixth Circuit’s next ruling.  For more information on the tax credit for employers who offer paid time off for employee vaccination, visit Tax Facts Online. Read More

DOL Introduces Form 5500 Changes for PEPs The SECURE Act created a new kind of multiple employer plan (MEP), called a pooled employer plan (PEP) for employers that didn’t qualify to participate in a MEP under pre-existing rules.  PEPs allow unrelated employers to pool together to offer retirement benefits to employees.  PEPs are required to report their aggregate account balances for every employer-participant starting with the 2021 plan year and must also report certain information about the plan provider.  MEPs are also now subject to new reporting requirements, which they will file in an attachment to Form 5500 for the 2021 plan year.  The MEP must report year-end account balances for each employer-participant, but the DOL has clarified that this requirement doesn’t apply to MEPs that function as defined benefit plans.  The revised Form 5500 provides information on these reporting requirements, and is also updated for post-SECURE Act retirement plans that were adopted retroactively.  For more information on MEPs, visit Tax Facts Online. Read More

Look in your Tax Facts Online app for our continuing analysis of 2022 legislative and regulatory updates, weekly intelligence, and the impact on planning for a client’s wealth preservation and growth.

Wealth & Risk Management Degree for Industry Professionals – learn about the graduate degree here: https://law.tamu.edu/distance-education

Texas A&M, operating budget of $9.6 billion (FY2022) and capital budget of $1.9 billion, is #1 for U.S. public universities, one of only 60 accredited U.S. universities of the American Association of Universities (R1: Doctoral Universities – Highest Research Activity) and one of only 17 U.S. universities that hold the triple U.S. federal grant of Land, Sea, and Space! The law school, ranked in the 1st tier, has the #1 bar passage in Texas, and #1 for employment in Texas (and top 10 in U.S.)

Posted in Retirement Planning, Taxation, Wealth Management | Leave a Comment »

TaxFacts Intelligence: Foreign Asset Reporting Obligations Due by Monday April 18

Posted by William Byrnes on April 15, 2022


The Texas A&M graduate program for tax, wealth, and risk management is accepting applications from financial professionals with at least five years of industry experience for the summer. Even though our graduate program has grown to over 750 enrollment, the enrollment for a course section is between 20 and the maximum of 30 so that each student receives meaningful feedback throughout the course from the full-time academic faculty and renowned professional case study leaders, and each other via teamwork and peer review. Learn more about how we educate and position the industry’s leaders: https://law.tamu.edu/distance-education

Prof. William H. Byrnes         Robert Bloink, J.D., LL.M.

The NLRB is considering changing the way independent contractor status is determined, which can impact a host of employment-related issues.  And by Monday, April 18th – help your clients avoid confusion (and penalties) this tax season by brushing up on the reporting rules for foreign assets and accounts and by making last minute IRA contributions still deductible for the 2021 tax year.

FBAR vs. Form 8938: Do Clients Need to File Both? FBAR and Form 8938 are two of the foreign tax filing forms that clients most commonly have to deal with.  The two forms are similar in that both require taxpayers with certain foreign assets and accounts to report information about those accounts to the IRS.  While Form 8938 was introduced later, it doesn’t actually replace the FBAR.  In some situations, a client may have to file both forms.  Form 8938 is actually a part of the client’s federal income tax return, while FBAR is a form that is filed electronically, directly with FinCEN.  Form 8938 is a much more wide-ranging form, meaning that many clients that don’t have FBAR filing obligations may nonetheless be required to file Form 8938 (foreign assets beyond mere financial accounts are included in the Form 8938 reporting obligations).  Taxpayers should be careful to ensure they meet the individual filing deadlines.  Because Form 8938 is part of the client’s tax return, any automatic extension that applies to that tax return will also apply.  The same isn’t true of the FBAR filing, which is subject to its own set of deadlines and extension rules.  For more information on FBAR filing requirements, visit Tax Facts Online. Read More

Deadline for 2021 IRA Contributions is Fast Approaching.  Clients should be reminded that, though it’s hard to believe, the April 18 tax filing deadline for 2021 tax returns is right around the corner.  That also means that April 18, 2022 is the deadline for making 2021 IRA contributions.  The April 18 deadline is not extended even if the client takes advantage of the six-month tax filing extension and files a return by October 15, 2022.  It’s important that clients who are making 2021 contributions in 2022 clearly state that the contribution should be counted for 2021–or risk their IRA custodian reporting the contribution as a 2022 contribution, which can create a tax headache down the road.  If the contribution is a nondeductible contribution, the client must also file Form 8606 with their 2021 tax return (and should be advised to keep track of their tax basis in the account for purposes of determining tax liability on future distributions).  Note also that the deadline for establishing and funding a SEP IRA is the business’ tax filing deadline (which may or may not be the same as the individual deadline).  For more information on the IRA contribution rules, visit Tax Facts Online. Read More

NLRB Considers Implementing New Standard for Determining Independent Contractor Status The National Labor Relations Board (NLRB) recently announced that it will be considering a change to the standard it uses to determine whether a worker is an employee or an independent contractor.  Typically, independent contractors are exempt from protections under most federal employment laws.  For example, independent contractors can’t form or join a union.  The NLRB is considering whether to continue applying the approach developed under the Trump administration in 2020, which generally makes it easier for employers to classify workers as independent contractors.  Many expect that, under the Biden administration, the NLRB will adopt an approach that restricts an employer’s ability to classify workers as independent contractors further.  It’s also expected that the NLRB will determine whether misclassifying a worker as an independent contractor, rather than an employee, can be sufficient to violate the National Labor Relations Act (NLRA).  For more information on the standards used to classify workers as employees or independent contractors, visit Tax Facts Online. Read More

Look in your Tax Facts Online app for our continuing analysis of 2022 legislative and regulatory updates, weekly intelligence, and the impact on planning for a client’s wealth preservation and growth.

Wealth & Risk Management Degree for Industry Professionals – learn about the graduate degree here: https://law.tamu.edu/distance-education

Texas A&M, operating budget of $9.6 billion (FY2022) and capital budget of $1.9 billion, is #1 for U.S. public universities, one of only 60 accredited U.S. universities of the American Association of Universities (R1: Doctoral Universities – Highest Research Activity) and one of only 17 U.S. universities that hold the triple U.S. federal grant of Land, Sea, and Space! The law school, ranked in the 1st tier, has the #1 bar passage in Texas, and #1 for employment in Texas (and top 10 in U.S.)

Posted in Retirement Planning, Taxation, Wealth Management | Leave a Comment »

TaxFacts Intelligence: RMDs for 2021 missed? It’s possible to avoid the 50% penalty

Posted by William Byrnes on April 13, 2022


The Texas A&M graduate program for tax, wealth, and risk management is accepting applications from financial professionals with at least five years of industry experience for the summer. Even though our graduate program has grown to over 750 enrollment, the enrollment for a course section is between 20 and the maximum of 30 so that each student receives meaningful feedback throughout the course from the full-time academic faculty and renowned professional case study leaders, and each other via teamwork and peer review. Learn more about how we educate and position the industry’s leaders: https://law.tamu.edu/distance-education

Prof. William H. Byrnes         Robert Bloink, J.D., LL.M.

For clients who missed 2021 RMDs, it’s not too late to fix the mistake and potentially avoid stiff penalty taxes. We also have information on the newly revised forms that plan participants may receive to document retirement distributions beginning in 2022–and a summary of a new case that limits the rights of non-plan participants to sue under ERISA.

Clients Still Have Opportunities to Correct Missed RMDs for 2021 As most clients know, the IRS requires retirement plan participants to begin taking periodic distributions from IRAs and 401(k)s once the owner reaches age 72. Missing an RMD has steep consequences. The owner will be subject to a 50% penalty and the plan could lose its qualified status.If the RMD failures are no more than three years in the past, the owner can use a self-correction program (SCP) to correct the mistake. The SCP is only available until the last day of the third plan year following the plan year when the missed RMD occurred. The RMD will have to be distributed with earnings that accrued on the missed RMD during the failure period. The participant can also use Form 5329 to request a waiver of the penalty tax. In all cases, use of the SCP should be documented and the plan should document steps taken to prevent future missed RMDs. Along with Form 5329, the participant must file a letter stating that the error was due to reasonable cause and that reasonable steps have been taken to prevent future errors. For more information on the penalty for failure to comply with the RMD rules, visit Tax Facts Online. Read more

IRS Releases Revised Form W-4P and Form W-4R for 2022 The IRS recently released a revised Form W-4P (Withholding Certificate for Periodic Pension or Annuity Payments) and a new Form W-4R (Withholding Certificate for Nonperiodic Payments and Eligible Rollover Distributions) for use beginning in 2022. Now, individuals will receive different forms depending on the type of payments involved. Only individuals receiving periodic pension or annuity payments will receive the revised Form W-4P. Plan participants receiving nonperiodic payments, lump sum distributions, IRA distributions or certain rollover distributions will receive the Form W-4R going forward. In the past, those individuals would also have received Form W-4P. The forms can be used beginning in 2022. However, the IRS is not requiring plan administrators to make the change until January 1, 2023. For more information on the withholding requirements for annuity and retirement distributions, visit Tax Facts Online. Read more

Misclassified Independent Contractor Can’t File ERISA Lawsuit A California court recently ruled that a worker who claimed he was misclassified as an independent contractor could not file a lawsuit under ERISA for retirement plan benefits. The worker claimed that he was mistakenly excluded from the defendant’s retirement plans because he should have been properly classified as an employee. The court found that because the worker was not a plan participant, beneficiary or fiduciary, he lacked standing to sue under ERISA. In order to qualify as a plan participant, the plaintiff would must have a colorable claim to plan benefits. Here, the worker merely alleged that he should have been entitled to participate in the employer’s plan. As a result, the court dismissed the worker’s claims entirely without determining whether he should have been classified as an employee. For more information on the consequences of worker misclassification, visit Tax Facts Online. Read more

Look in your Tax Facts Online app for our continuing analysis of 2022 legislative and regulatory updates, weekly intelligence, and the impact on planning for a client’s wealth preservation and growth.

Wealth & Risk Management Degree for Industry Professionals – learn about the graduate degree here: https://law.tamu.edu/distance-education

Texas A&M, operating budget of $9.6 billion (FY2022) and capital budget of $1.9 billion, is #1 for U.S. public universities, one of only 60 accredited U.S. universities of the American Association of Universities (R1: Doctoral Universities – Highest Research Activity) and one of only 17 U.S. universities that hold the triple U.S. federal grant of Land, Sea, and Space! The law school, ranked in the 1st tier, has the #1 bar passage in Texas, and #1 for employment in Texas (and top 10 in U.S.)

Posted in Retirement Planning, Taxation, Wealth Management | Leave a Comment »

TaxFacts Intelligence: Properly Reporting Crypto Transactions by April 18

Posted by William Byrnes on April 11, 2022


The Texas A&M graduate program for tax, wealth, and risk management is accepting applications from financial professionals with at least five years of industry experience for the summer. Even though our graduate program has grown to over 750 enrollment, the enrollment for a course section is between 20 and the maximum of 30 so that each student receives meaningful feedback throughout the course from the full-time academic faculty and renowned professional case study leaders, and each other via teamwork and peer review. Learn more about how we educate and position the industry’s leaders: https://law.tamu.edu/distance-education

Prof. William H. Byrnes         Robert Bloink, J.D., LL.M.

Within the more than 2,000 pages of the Consolidated Appropriations Act of 2022 is an important provision that allows HSA and HDHP participants to continue accessing remote healthcare services without jeopardizing HSA eligibility.  The DOL also shone a spotlight on cryptocurrency investments this week by making it clear that plan fiduciaries would be asked to justify any decisions related to crypto investments in retirement accounts.  Finally, we have a summary of the IRS’ warning to taxpayers regarding proper reporting of crypto transactions on their 2021 tax returns.  Read on for more.

Consolidated Appropriations Act Extends HDHP Telehealth Relief.  The recently enacted Consolidated Appropriations Act of 2022 (CAA 2022) extends prior CARES Act relief for high deductible health plans (HDHPs) that provide remote care services.  HDHPs will be permitted to provide first-dollar telehealth services from April 2022 through December 2022 (regardless of the plan year) without jeopardizing HDHP status.  The remote services do not have to be related to COVID-19 or preventative in nature in order to qualify.  In other words, HDHPs can waive the deductible for telehealth services without jeopardizing a plan participant’s eligibility to make HSA contributions.  Plans and participants should note that if the HDHP is a calendar year plan, the usual rules regarding the plan deductible will apply between January 2022 and March 2022.  For more information on the HDHP rules, Read More

DOL Releases Warning on Cryptocurrency in 401(k)s.  The Department of Labor (DOL) issued a compliance assistance release that warns retirement plan fiduciaries about allowing participants to invest in either cryptocurrencies or products that are related to cryptocurrency.  The guidance comes in response to President Biden’s executive order that directed agencies to study the risks and benefits of cryptocurrency.  The DOL release warned that in the eyes of the DOL, cryptocurrency poses significant risks and challenges for participants, including the risk of fraud, theft and loss.  The release is clear that plan fiduciaries who allow cryptocurrency investment options should expect to be questioned about how those decisions could comply with their duties of prudence and loyalty.  Plan fiduciaries should pay close attention and carefully evaluate whether allowing crypto-related products in their investment lineup is worth the risk, given the DOL’s sweeping statements and indication that it will presume that a fiduciary who offers cryptocurrency products has acted imprudently.  For more information on the current DOL fiduciary standard and new prohibited transaction exemption, visit Tax Facts Online. Read More 

IRS Reminds Taxpayers of Virtual Currency Reporting Obligations.  The IRS released a reminder for taxpayers who have engaged in virtual currency transactions during the 2021 tax year. The 2021 Form 1040 due next Monday (April 18) contains a question at the top that asks about these virtual currency transactions.  Taxpayers should check “yes” if they have engaged in any disposition, sale or exchange of a financial interest in virtual currency.  That includes the receipt of virtual currency for goods and services, receipt of cryptocurrency for free (if the receipt does not qualify as a bona fide gift), receipt of cryptocurrency through mining or staking activities or hard forks.  Exchanges or trades of cryptocurrency for other cryptocurrency, property goods or services must also be reported, as must sales of virtual currency.  Taxpayers who held the cryptocurrency as a capital asset should use Form 8949 to determine gain or loss (which is reported on Schedule D of Form 1040).  Taxpayers who received cryptocurrency as compensation should report the income as they would any other type of income.  For more information on reporting obligations related to virtual currency transactions, visit Tax Facts Online.  Read More 

Look in your Tax Facts Online app for our continuing analysis of 2022 legislative and regulatory updates, weekly intelligence, and the impact on planning for a client’s wealth preservation and growth.

Wealth & Risk Management Degree for Industry Professionals – learn about the graduate degree here: https://law.tamu.edu/distance-education

Texas A&M, operating budget of $9.6 billion (FY2022) and capital budget of $1.9 billion, is #1 for U.S. public universities, one of only 60 accredited U.S. universities of the American Association of Universities (R1: Doctoral Universities – Highest Research Activity) and one of only 17 U.S. universities that hold the triple U.S. federal grant of Land, Sea, and Space! The law school, ranked in the 1st tier, has the #1 bar passage in Texas, and #1 for employment in Texas (and top 10 in U.S.)

Posted in Retirement Planning, Taxation, Wealth Management | Leave a Comment »

TaxFacts Intelligence: Required Minimum Distribution Regs Explained and Analyzed

Posted by William Byrnes on April 7, 2022


The Texas A&M graduate program for tax, wealth, and risk management is accepting applications from financial professionals with at least five years of industry experience for the summer. Even though our graduate program has grown to over 750 enrollment, the enrollment for a course section is between 20 and the maximum of 30 so that each student receives meaningful feedback throughout the course from the full-time academic faculty and renowned professional case study leaders, and each other via teamwork and peer review. Learn more about how we educate and position the industry’s leaders: https://law.tamu.edu/distance-education

Prof. William H. Byrnes         Robert Bloink, J.D., LL.M.

The IRS has released long-anticipated proposed regulations on changes made to the required minimum distribution rules under the SECURE Act.  The proposed regs contained a few surprises that will impact any client who inherits a retirement account–especially those who have inherited an account from an individual who was already taking RMDs.  The regulations are detailed, and it is very possible that they will be modified in response to comments, which are due by May 25, 2022. 

IRS Releases Proposed Regulations on SECURE Act RMD Changes.  The IRS released proposed regulations on changes to the required minimum distribution (RMD) rules effective beginning in 2020.  In a surprise move, the regulations require most designated beneficiaries to take annual RMDs within the ten-year distribution period if the original account owner died after the required beginning date (the SECURE Act is silent with respect to whether annual distributions are required).  However, the IRS has yet to release guidance for clients who inherited accounts after the SECURE Act’s effective date and before the regulations were issued.  In other words, they don’t address whether a client may be required to take a retroactive RMD for 2021.  The proposed regulations themselves are effective January 1, 2022 (the existing regulations must be applied for 2021).  For more information on the RMD rules that apply after an account owner’s death, visit Tax Facts Online.  Read More 

IRS Proposed RMD Regs Clarify Eligible Designated Beneficiary Definitions.  The proposed regulations also clarify a few points with respect to the new definition of “eligible designated beneficiary”.  An eligible designated beneficiary is entitled to continue using the life expectancy distribution method even post-SECURE Act.  Under the proposed regulations, the “age of majority” for eligible designated beneficiaries who are minor children is age 21 (many expected that an age 18 limit would apply).  Defined benefit plans that use the definition of “age of majority” under the existing regulations can continue to do so (meaning that those plans can treat a child as being under the age of majority if that child has not completed a course of education and is under age 26).  Spousal beneficiaries will also be required to elect to treat the deceased spouse’s IRA as their own by the later of (1) December 31 of the year following the year of the owner’s death or (2) age 72.  Additionally, the regulations propose a rule that would treat an account owner as having no eligible designated beneficiary if the owner has multiple designated beneficiaries and one of those beneficiaries is not an eligible designated beneficiary.  In situations involving multiple designated beneficiaries, the life expectancy of the oldest beneficiary will be used (under prior regulations, the shortest life expectancy was used).  For more information on the RMD rules, visit Tax Facts Online.  Read More. 

Post-SECURE Act Guidance on Trusts as Inherited Account Beneficiaries.  Under the general rule for employees dying on or after January 1, 2020, beneficiaries of a trust may be treated as having been designated as beneficiaries of the employee under a qualified plan for purposes of determining the period over which RMDs must be made.   Beneficiaries of a see-through trust can continue to be treated as designated beneficiaries under regulations proposed in 2022.  The regulations continue to apply the requirement that the trust beneficiaries be identifiable.  Beneficiaries of a valid see-through trust will be taken into account if they could receive amounts in the trust representing the participant’s interest in the retirement plan that are not contingent upon, or delayed until, the death of another trust beneficiary who predeceases the plan participant.  Those beneficiaries with only remote interests will be disregarded.  For more information on the rules governing see-through trust beneficiaries, visit Tax Facts Online. Read More 

Look in your Tax Facts Online app for our continuing analysis of 2022 legislative and regulatory updates, weekly intelligence, and the impact on planning for a client’s wealth preservation and growth.

Wealth & Risk Management Degree for Industry Professionals – learn about the graduate degree here: https://law.tamu.edu/distance-education

Texas A&M, operating budget of $9.6 billion (FY2022) and capital budget of $1.9 billion, is #1 for U.S. public universities, one of only 60 accredited U.S. universities of the American Association of Universities (R1: Doctoral Universities – Highest Research Activity) and one of only 17 U.S. universities that hold the triple U.S. federal grant of Land, Sea, and Space! The law school, ranked in the 1st tier, has the #1 bar passage in Texas, and #1 for employment in Texas (and top 10 in U.S.)

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TaxFacts Intelligence: Court Defines ‘Retirement’

Posted by William Byrnes on April 4, 2022


Robert and I have an exciting announcement for our Tax Facts subscribers. In February, our publisher ALM will be launching Tax Facts Premium, a new add-on product that provides valuable tools and content, including:

  • calculators (tax, retirement income, investment, personal finance, business, and more)
  • practice aids (buy sell agreements, as well as documents related to business life insurance, estate planning, retirement planning, and employee benefits)
  • soft skills (practical guidance on how to build and maintain clients)
  • archives (archived content including featured articles and the intelligence weekly).

Also, the Texas A&M graduate program for tax, wealth, and risk management is accepting applications from financial professionals with at least five years of industry experience for the summer. Even though our graduate program has grown to over 750 enrollment, the typical enrollment for a course section is between 20 and the maximum of 30 so that each student receives meaningful feedback throughout the course from the full-time academic faculty and renowned professional case study leaders, and each other via teamwork and peer review. Learn more about how we educate and position the industry’s leaders: https://law.tamu.edu/distance-education

Prof. William H. Byrnes         Robert Bloink, J.D., LL.M.

This week, we have some important IRS and court updates regarding interpreting the definitions of two key terms that apply in the retirement plan context–“retirement” and “compensation.”  The IRS has also released the limitations that apply under IRC Section 280F for taxpayers with certain luxury passenger auto leases and depreciable passenger automobiles.  Read on for more.

Second Circuit Weighs in on “Retirement” Definition for Defined Benefit Plan Purposes.  The Second Circuit recently affirmed a lower court ruling dealing with the definition of “retirement” in a situation involving a multi-employer defined benefit pension plan.  In Metzgar v. U.A. Plumbers & Steamfitters Local No. 22 Pension Fund, the plan set the normal retirement age at 65 but also contained a special early retirement option for employees after their 55th birthdays.  The special option was available if the employee’s combined age and years of service was at least 85.  For many years, the plan interpreted the rule to not require an employee to stop working to receive plan benefits (the employee only had to stop working in a “disqualifying position”).  So, participants could receive benefits and work in management-related positions at the same time.  Later, the plan changed the rules to require employees to stop working to receive benefits.  The court agreed that the reinterpretation was required to protect the plan’s tax-exempt status, and that the plan did not violate the plan participants’ rights by requiring the employee to stop working in order to continue receiving plan benefits.  For more information on the rules governing multi-employer retirement plans, visit Tax Facts Online. Read More

IRS Releases 2022 Depreciation Limits for Certain Passenger Automobiles.  Revenue Procedure 2022-17 provides the depreciation limits for certain passenger automobiles first placed into service during 2022, and also provides the amounts that must be included in income for taxpayers who lease certain automobiles beginning in 2022. For passenger automobiles purchased after September 28, 2017 and first placed in service in 2022, and to which the extra Section 168 depreciation deduction does apply, the first year limitation is $19,200, decreasing to $18,000 in year two and falling to $10,800 in year three.  For all subsequent years, the limit is $6,460.  If no bonus depreciation applies, the limits are $11,200 in year one, $18,000 in year two, $10,800 in year three and $6,460 in all subsequent years.  For taxpayers with a lease term that begins in 2022, the dollar amounts that must be used to determine income inclusion begin at $56,000 and can be found in Table 3 of Rev. Proc. 2022-17.  For more information on the depreciation rules and limits that apply to passenger automobiles, visit Tax Facts on Insurance and Employee Benefits Online. Read More  

Is Your Lump Sum Payout of Unused Vacation Time “Compensation” for Retirement Plan Purposes?  It’s been a strange couple of years in the workplace.  Many American workers have been unwilling or unable to use their vacation time and are now looking at a situation where their employers may be compensating them in the form of a lump sum payout based on company policies.  That can leave clients wondering whether that payout counts as “compensation” for purposes of determining the retirement plan contribution limits.  Lump sum payments of unused vacation are treated as supplemental wages that are subject to Social Security and Medicare taxes.  That means that a lump sum payout of unused vacation should also be included as “compensation” for retirement plan purposes unless the specific retirement plan actually provides otherwise.  So, unless the payout is specifically excluded by the plan, taxpayers should be entitled to include that compensation when determining their permissible retirement plan contributions for the year.  For more information on the definition of “compensation” and relevance for Section 415 contribution purposes, visit Tax Facts Online. Read More 

Look in your Tax Facts Online app for our continuing analysis of 2022 legislative and regulatory updates, weekly intelligence, and the impact on planning for a client’s wealth preservation and growth.

Wealth & Risk Management Degree for Industry Professionals – learn about the graduate degree here: https://law.tamu.edu/distance-education

Texas A&M, operating budget of $9.6 billion (FY2022) and capital budget of $1.9 billion, is #1 for U.S. public universities, one of only 60 accredited U.S. universities of the American Association of Universities (R1: Doctoral Universities – Highest Research Activity) and one of only 17 U.S. universities that hold the triple U.S. federal grant of Land, Sea, and Space! The law school, ranked in the 1st tier, has the #1 bar passage in Texas, and #1 for employment in Texas (and top 10 in U.S.)

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