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

TaxFacts Intelligence: December 7, 2022

Posted by William Byrnes on December 7, 2022

The Texas A&M Master and LL.M. programs (e.g. international tax, transfer pricing, wealth management, or risk management) are accepting applications from financial professionals and from lawyers. Over 850 enrolled, the enrollment for a course’s section is kept to between 20 and a 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. https://law.tamu.edu/distance-education

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

Today’s market conditions have created challenges for individuals and business owners across the board.  Rising interest rates may soon create a headache for defined benefit plan sponsors that offer lump sum distributions–some of which could potentially increase options offered to current plan participants.  We also have a different perspective for employers interested in offering crypto investment options for employees–and a reminder for clients who have taken advantage of the six-month tax filing extension.  Read on for more.

Can 401(k) Crypto Investment Options Add Value for Employers? There are been much controversy surrounding the availability of cryptocurrency investments in 401(k)s, especially in light of the DOL’s hard-line approach to crypto options and a precipitous drop in the market value since March 2022.  However, many employers are also looking at the other side of the equation and evaluating ways that their business and retirement plan might benefit from allowing crypto investments.  Cryptocurrency investment options could help employers attract and retain talented employees who want a wider range of modern investment options.  In fact, studies show that three out of five people support cryptocurrency investment options for 401(k)s–and about 50% of millennials already own some type of cryptocurrency.  Many also expect that allowing cryptocurrency in retirement plans could encourage more younger taxpayers to contribute to the plan–which could boost the overall health of the retirement plan and help the employer satisfy the IRS’ strict nondiscrimination testing requirements. On the other hand, cryptocurrency is at best an alternative high risk investment, and at worst, a repeat of the 1636 Dutch tulip bubble (that popped in 1637). For more information on the tax treatment of cryptocurrency generally, visit Tax Facts Online.  Read More

Rising Interest Rates May Create Problems for DB Plan Sponsors.  Many defined benefit plans offer a lump sum payment option to participants.  The value of those lump sum payments fluctuates with interest rates.  With lower interest rates, the participant will receive a larger lump sum payment.  With higher rates, the value of the payment decreases.  Plans are required to update the interest rate on a monthly, quarterly or annual basis.  Now that interest rates are rising (and are expected to continue rising), many participants may elect to take a lump sum now, before interest rates rise further (and may elect to leave employment sooner than expected to take advantage of today’s rates).  That may increase the plan’s liquidity needs and also decrease the plan’s funding status.  A significant decrease in funding status could subject the plan to IRC Section 436’s prohibition or limitations on paying lump sums at all.  It’s important for plan sponsors to start planning now–and for advisors to expect these plans to start offering additional non-lump sum options, including in-service distributions for clients who satisfy certain age and service requirements.  For more information on the lump sum distribution option, visit Tax Facts Online.  Read More 

IRS Reminded Taxpayers With October Filing Extensions that Hurricane Ian Victims Have More Time.  Taxpayers with a six-month tax filing extension had until October 17, 2022 to file their 2021 tax returns. But Hurricane Ian victims (throughout Florida) have until February 15, 2023, to file various federal individual and business tax returns and make tax payments, According to the IRS’ announcement, taxpayers who are waiting for their 2020 returns to process because of IRS backups in its workload, can enter “$0” for their 2020 AGI on their 2021 return in order to file sooner.  The IRS also encourages taxpayers to file electronically in order to ensure their return is processed quickly and to use direct deposit to receive their refunds as soon as possible.  For more information on the federal tax filing requirements, visit Tax Facts Online.  Read More

Look in your Tax Facts Online app for our continuing analysis of 2022 and 2023 legislative and regulatory updates, weekly intelligence, and the impact on planning for a client’s wealth preservation and growth.

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 of law schools and is ranked in the top 10 for the employment of its graduating law students among U.S. law schools.

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