IRS ISSUES NEW MODEL TAX NOTICES FOR ELIGIBLE ROLLOVER DISTRIBUTIONS
The IRS has issued two model explanations to satisfy the requirement that administrators of qualified plans, 403(b) plans and governmental 457 plans provide a special tax notice to recipients of eligible rollover distributions.
The first model applies to eligible rollover distributions from designated Roth accounts, and the second covers remaining eligible rollover distributions. The notices are available at http://www.irs.gov/pub/irs-drop/n-09-68.pdf. In addition to reflecting changes in the law since the model notice was last updated more than seven years ago, the IRS has simplified the presentation and description of the options available to recipients of eligible rollover distributions.
We strongly encourage administrators to use the model notice language, which may be customized by omitting any information that does not apply to your specific plan.
IRS FINALIZES GROUP HEALTH PLAN EXCISE TAX REGULATIONS
The IRS has issued final excise tax return regulations for failures to comply with the requirements of COBRA (group health plan continuation coverage and notices), HIPAA (certificates of creditable coverage, preexisting condition exclusions, special enrollment, discrimination on health status factors), mental health parity, the Mothers and Newborns Protection Act (minimum hospital stay limits) and Michelle's Law (extension of coverage for loss of student status due to illness). The return requirements apply to returns due after 2009, which means they apply to failures that occur in 2009. Returns are due not later than the due date for the plan sponsor's income tax return for the year, without extensions. The IRS has published a draft return (Form 8928), but the final form has not yet been adopted.
Two rules mitigate the impact of these excise taxes. First, the tax does not apply to a period before the deficiency is or could be discovered with reasonable diligence. Second, the excise taxes can generally be avoided by correcting the deficiency retroactively and placing the affected beneficiary in as good a financial position as if the deficiency had not occurred. Finalization of the excise tax return rules, however, also means that the statute of limitations will not apply if no excise tax return is filed with respect to a violation.
Employers and plan administrators should periodically review their health plan administration procedures to ensure they offer required benefits and provide required notices in a
timely manner.
Contact Us
If you have questions about HSAs, HDHPs or permitted “other health coverage,” please contact a member of Oppenheimer’s Employee Benefits Group.
This alert is a copyrighted publication produced by Oppenheimer Wolff & Donnelly LLP. The information contained in this alert is of a general nature and is subject to change. Readers should not act without further inquiry and/or consultation with legal counsel.