EP Issue Snapshots
The IRS has expanded its “EP Issue Snapshots” webpage to address more topics. EP issue snapshots are IRS research summaries on tax-related retirement plan issues. Eight new snapshots have been added, seven of which are potentially relevant for 401(k) plans.
Plan Loans. One of the new snapshots explains the borrowing limits for participants with multiple loans. Another discusses proposed regulations impacting the spousal consent period under Code § 417(a)(4) (see our Checkpoint article) and whether the 180-day consent period applies to spousal consent to use a participant’s accrued benefits as security for loans. [EBIA Comment: The snapshot on multiple loans is consistent with IRS guidance issued last year on this topic (see our Checkpoint article) but provides different examples to illustrate how the borrowing limits apply.]
Short Plan and Limitation Years. One snapshot discusses how to adjust the Code § 415(c) defined contribution dollar limitation for a short limitation year. Another explains how to adjust the Code § 401(a)(17) compensation limit in a short plan year.
Other Topics. Additional snapshots address the use of forfeitures for qualified nonelective or qualified matching contributions under proposed regulations (see our Checkpoint article), vesting requirements for matching contributions, and qualification requirements for non-electing church plans.
EBIA Comment: Previous issue snapshots have covered topics such as how to identify HCEs in an initial or short plan year (see our Checkpoint article) and vesting schedule changes (see our Checkpoint article). The IRS notes on a related webpage that issue snapshots “are developed through internal collaboration and may evolve as the compliance environment changes and new insights and experiences are contributed.” Thus, the snapshots are not intended as a comprehensive discussion of all issues on the covered topics, nor do they limit the IRS’s ability to use other approaches in audits. Nevertheless, 401(k) plan sponsors, administrators, and advisors may find them to be a helpful resource. For more information, see EBIA’s 401(k) Plans manual at Section III.C.4 (“IRS Rulings and Other Guidance”).
Contributing Editors: EBIA Staff.