Insights

On May 18 and 30, 2018, the IRS released eight new Issue Snapshots (with six released on the earlier date and two released on the later date). As background, Issue Snapshots represent the IRS’s periodic research summaries on tax-related issues.

Here are the issues presented and a summary of their content:

• Plan Forfeitures Used for Qualified Nonelective and Qualified Matching Contributions – This snapshot discusses the recent changes to the rules governing qualified nonelective contributions (QNECs) and qualified matching contributions (QMACs). Specifically, it examines the fact that plan forfeitures can now be contributed as QNECs and QMACs.
• Vesting Schedules for Matching Contributions – Matching contributions are subject to different vesting requirements. This snapshot discusses the different vesting requirements for matching contributions to a defined contribution plan.
• Qualification Requirements for Non-Electing Church Plans under IRC Section 401(a) – This snapshot identifies and discusses the IRC regulations that a church plan must follow if they sponsor a qualified plan. It also identifies the pre-ERISA requirements church plans must follow.
• Borrowing Limits for Participants with Multiple Plan Loans – Last year, the IRS issued guidance on the limits applied when a participant has multiple plan loans in a given year. This snapshot explains that guidance and gives examples of its application.
• Treatment of 401(a)(17) Limitation in Defined Contribution Plan in a Short Plan Year – This snapshot discusses how to adjust the IRC compensation limit in a short plan year, such as an amended or terminating plan year.
• Treatment of 415(c) Dollar Limitations in a Short Limitation Year – This snapshot explains how to adjust the annual contribution limit for a defined contribution plan that experiences a short plan year (either in an initial, amended or terminating plan year).
• Spousal Consent Period to Use an Accrued Benefit as Security for Loans – IRS regulations require that qualified plans with qualified joint and survivor annuities (QJSAs) obtain the consent of a participant’s spouse prior to the participant’s use of plan assets as security for a loan. This snapshot clarifies that plans may use a 180-day period for obtaining spousal consent.
• How to Change Interest Crediting Rates in a Cash Balance Plan – This snapshot addresses how to credit rates on account balances in a cash balance plan. (This is a defined benefit plan issue.)

Plan sponsors should review these snapshots for a better understanding of the IRS guidance on these issues.

IRS Issue Snapshots Page »