The IRS has announced the 2022 cost of living adjustments to qualified plan limits. As expected, many of the limits increased significantly compared with prior years. Below are the highlights, and our full historical chart can be found here for easy reference.
401(k), 403(b), Profit-Sharing Plans, etc.
2022
2021
2020
Annual Compensation
305,000
290,000
285,000
Elective Deferrals
20,500
19,500
19,500
Catch-up Contributions
6,500
6,500
6,500
Defined Contribution Limit
61,000
58,000
57,000
ESOP Distribution Limits
1,230,000
245,000
1,165,000
230,000
1,150,000
230,000
Defined Benefit Limit
245,000
230,000
230,000
HCE Threshold
135,000
130,000
130,000
Key Employee
200,000
185,000
185,000
457 Elective Deferrals
20,500
19,500
19,000
Taxable Wage Base
147,000
142,800
137,700
https://www.employeebenefitslawblog.com/wp-content/uploads/2022/10/logo_vertical-v2.png00adminhttps://www.employeebenefitslawblog.com/wp-content/uploads/2022/10/logo_vertical-v2.pngadmin2021-11-05 10:01:242021-11-05 10:01:24Easy Money…2022 IRS Limits Announced Today
On a frequent question of how to structure incentives for LLC entities, we find that many of our clients decide to use profits interests for only a few key employees (making them partners subject to partnership taxation) and a cash-based bonus plan for the majority of the employees. The issue of being treated as a partner involves receiving K-1 income, not W-2, so there is no withholding and the partners must deal with self-employment taxes, quarterly estimated taxes, and items like employer contributions to health plan premiums are taxable. But profits interests can receive capital gains treatment. Read more
https://www.employeebenefitslawblog.com/wp-content/uploads/2022/10/logo_vertical-v2.png00adminhttps://www.employeebenefitslawblog.com/wp-content/uploads/2022/10/logo_vertical-v2.pngadmin2021-10-28 15:42:192021-10-28 15:42:19Romeo Finds a Streetlight, Steps Out of the Shade, and Says Something Like, LLC Compensation, How About It?
With the exception of certain small businesses, being an employer generally means offering an array of benefits to remain competitive in the worker marketplace. As the employer grows, typically so does the list of employee benefit plans being offered. This naturally translates into more service providers, and for good reason. Employers typically don’t possess the knowledge and skillset to offer these benefits in-house, and ERISA, which applies to most employee benefit arrangements, requires the plans to be administered in accordance with some of the highest standards of care under law. As a result, employers are frequently hiring and replacing service providers.
Today’s post focuses on some tips for employers in a sometimes-overlooked aspect of the process of hiring a service provider – the contract between the employer and the provider. In concept, the service provider agreement is relatively simple – it needs to set out each party’s role and responsibility in delivering the employee benefit. As always though, the devil is in the details. Below are some tips for employers:
In June 2020, the IRS issued Notice 2020-42 providing temporary relief from the physical presence requirement for certain participant distribution and beneficiary designation elections required to be witnessed by a notary public or plan representative. This temporary relief was scheduled to expire June 30, 2021, and now has again been extended by the IRS.
As the COVID-19 pandemic continues, the IRS issued Notice 2021-40, again extending the temporary relief through the 12-month period ending June 30, 2022, as long as the prior requirements are met. See our January 25, 2021 blog posting for a summary of the requirements. Read more
https://www.employeebenefitslawblog.com/wp-content/uploads/2022/10/logo_vertical-v2.png00adminhttps://www.employeebenefitslawblog.com/wp-content/uploads/2022/10/logo_vertical-v2.pngadmin2021-09-21 13:59:162021-09-21 13:59:16Oh Won’t You Stay…A Little Bit Longer…Because There’s No Need to Sign Your Distribution Form in Person
The COBRA subsidy from COVID-19 stimulus bill – The American Rescue Plan Act of 2021 (ARPA) – is nearing an end and in many cases requires employers to provide notices by September 15. The COBRA subsidy covered 100% of COBRA premiums for assistance-eligible individuals for periods of coverage beginning on or after April 1, 2021 through September 30, 2021. We previously covered the details of the subsidy in these posts: These Boots Are Made For Walking…But If You Quit, You Might Not Get the COBRA Subsidy and Lean on Me…New Guidance on Federal COBRA Subsidy. Because eligible individuals have 60 days to elect COBRA, there are still a couple months of coverage periods for which individuals may still be able to elect the subsidy. Read more
https://www.employeebenefitslawblog.com/wp-content/uploads/2022/10/logo_vertical-v2.png00adminhttps://www.employeebenefitslawblog.com/wp-content/uploads/2022/10/logo_vertical-v2.pngadmin2021-09-13 08:42:532021-09-13 08:42:53This is the End: Employers Must Provide Notice of the Expiring COBRA Subsidy Period
Employers are impacted in many ways by the COVID-19 pandemic, not the least of which are employee health and safety. For the last several months, employers have used mostly soft-sell approaches to encourage their employees to get vaccinated. With the FDA’s approval, employers are showing a willingness to move beyond incentives like gift cards. One of the more notable examples in the headlines lately is Delta Airlines’ decision to implement a premium surcharge on unvaccinated workers. Employees who don’t get the jab will have to pay more in premiums under the Airlines’ medical plan. Read more
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Earlier this year, the Personal Health Investment Today Act of 2021 (the PHIT Act) was introduced in the U.S. Senate, where the legislation remains currently pending. If enacted, the PHIT Act would amend the Internal Revenue Code of 1986 to include “qualified sports and fitness expenses” among the expenses that may be deducted as tax-deductible medical expenses. In addition, individuals would be able to pay for “qualified sports and fitness expenses” using pre-tax dollars through their health savings account (HSA) or health care flexible spending account (Health FSA). Read more
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Easy Money…2022 IRS Limits Announced Today
/in 401(k) Plans, 403(b) plans, 457(b) plans, Defined Benefit Plans, ESOPs, IRS, Retirement Plansby Lyn Domenick
The IRS has announced the 2022 cost of living adjustments to qualified plan limits. As expected, many of the limits increased significantly compared with prior years. Below are the highlights, and our full historical chart can be found here for easy reference.
245,000
230,000
230,000
Romeo Finds a Streetlight, Steps Out of the Shade, and Says Something Like, LLC Compensation, How About It?
/in Equity Compensation, Executive CompensationTips for Structuring LLC Incentives
by John Ludlum
On a frequent question of how to structure incentives for LLC entities, we find that many of our clients decide to use profits interests for only a few key employees (making them partners subject to partnership taxation) and a cash-based bonus plan for the majority of the employees. The issue of being treated as a partner involves receiving K-1 income, not W-2, so there is no withholding and the partners must deal with self-employment taxes, quarterly estimated taxes, and items like employer contributions to health plan premiums are taxable. But profits interests can receive capital gains treatment. Read more
Stronger . . . Services Agreements for Benefit Plans
/in Benefits Plan Creation, ERISA, Health & Welfare Plans, Retirement PlansBy Kevin Selzer
With the exception of certain small businesses, being an employer generally means offering an array of benefits to remain competitive in the worker marketplace. As the employer grows, typically so does the list of employee benefit plans being offered. This naturally translates into more service providers, and for good reason. Employers typically don’t possess the knowledge and skillset to offer these benefits in-house, and ERISA, which applies to most employee benefit arrangements, requires the plans to be administered in accordance with some of the highest standards of care under law. As a result, employers are frequently hiring and replacing service providers.
Today’s post focuses on some tips for employers in a sometimes-overlooked aspect of the process of hiring a service provider – the contract between the employer and the provider. In concept, the service provider agreement is relatively simple – it needs to set out each party’s role and responsibility in delivering the employee benefit. As always though, the devil is in the details. Below are some tips for employers:
Read more
Oh Won’t You Stay…A Little Bit Longer…Because There’s No Need to Sign Your Distribution Form in Person
/in 401(k) Plans, Defined Benefit Plans, ERISA, IRS, Retirement Plansby Elizabeth Nedrow and Becky Achten
In June 2020, the IRS issued Notice 2020-42 providing temporary relief from the physical presence requirement for certain participant distribution and beneficiary designation elections required to be witnessed by a notary public or plan representative. This temporary relief was scheduled to expire June 30, 2021, and now has again been extended by the IRS.
As the COVID-19 pandemic continues, the IRS issued Notice 2021-40, again extending the temporary relief through the 12-month period ending June 30, 2022, as long as the prior requirements are met. See our January 25, 2021 blog posting for a summary of the requirements. Read more
This is the End: Employers Must Provide Notice of the Expiring COBRA Subsidy Period
/in DOL, ERISA, Health & Welfare Plans, IRS, Legislationby Brenda Berg
The COBRA subsidy from COVID-19 stimulus bill – The American Rescue Plan Act of 2021 (ARPA) – is nearing an end and in many cases requires employers to provide notices by September 15. The COBRA subsidy covered 100% of COBRA premiums for assistance-eligible individuals for periods of coverage beginning on or after April 1, 2021 through September 30, 2021. We previously covered the details of the subsidy in these posts: These Boots Are Made For Walking…But If You Quit, You Might Not Get the COBRA Subsidy and Lean on Me…New Guidance on Federal COBRA Subsidy. Because eligible individuals have 60 days to elect COBRA, there are still a couple months of coverage periods for which individuals may still be able to elect the subsidy. Read more
Delta Dawn, What’s that Surcharge You’re Adding On? Employers Consider Raising Premiums for Unvaccinated Workers
/in ERISA, Health & Welfare Plansby Beth Nedrow
Employers are impacted in many ways by the COVID-19 pandemic, not the least of which are employee health and safety. For the last several months, employers have used mostly soft-sell approaches to encourage their employees to get vaccinated. With the FDA’s approval, employers are showing a willingness to move beyond incentives like gift cards. One of the more notable examples in the headlines lately is Delta Airlines’ decision to implement a premium surcharge on unvaccinated workers. Employees who don’t get the jab will have to pay more in premiums under the Airlines’ medical plan. Read more
Let’s Get Physical – Proposed PHIT Act Would Make Certain Sports and Fitness Expenses Tax Deductible
/in Cafeteria Plans, Fringe Benefits, Health & Welfare Plansby Alex Smith
Earlier this year, the Personal Health Investment Today Act of 2021 (the PHIT Act) was introduced in the U.S. Senate, where the legislation remains currently pending. If enacted, the PHIT Act would amend the Internal Revenue Code of 1986 to include “qualified sports and fitness expenses” among the expenses that may be deducted as tax-deductible medical expenses. In addition, individuals would be able to pay for “qualified sports and fitness expenses” using pre-tax dollars through their health savings account (HSA) or health care flexible spending account (Health FSA). Read more