|Feb. 1, 2010 | www.fisherphillips.com|
On December 19, 2009, President Obama signed the 2010 Defense Appropriations Bill, which included an extension of the 65% COBRA Subsidy provision originally enacted last February in the Stimulus Bill.
The Form 5500 is changing! Forms in the 5500 series (including the Form 5500 Annual Return/Report of Employee Benefit Plan and Form 5500-SF Short Form Annual Return Report of Small Employee Benefit Plan) are used annually to report information concerning a welfare benefit or retirement plan's funding, size, operations and other characteristics. The U.S. Labor Department (DOL) has created a new web-based electronic filing system called "EFAST2." Under the EFAST2 system, Forms 5500 filed for plan years beginning on or after January 1, 2009, may no longer be filed in paper format (e.g., mail, fax, private delivery service), but instead must be filed electronically.
Section 409A of the Internal Revenue Code generally provides that nonqualified deferred compensation plans must comply with certain complex rules regarding the timing of deferrals and distributions. Compliance must be in both form and operation. Failure to abide by section 409A's requirements will result in all amounts deferred under the plan for the current year and all previous years becoming immediately taxable to the employee, plus an additional 20% excise tax and interest penalty. As a result, a failure to comply with the requirements of section 409A can have severe adverse tax consequences to the executive. The IRS recently issued a Notice which will provide methods for employers to voluntarily correct many types of failures to comply with the plan document requirements. By taking advantage of this correction program, you may be able to avoid or reduce the current income inclusion and additional tax penalties under section 409A.