IRS, Treasury Update 2017-18 Priority Guidance Plan

The IRS and Treasury Department have issued an update to their joint 2017-18 Priority Guidance Plan. It reflects projects they hope to complete by June 30, 2018. The IRS and Treasury note that the update to the Priority Guidance Plan “reflects 29 additional projects, including those that have become near term priorities” due to the enactment of the Tax Cuts and Jobs Act. The previous plan was issued in November.

The plans listed in the update that are related to retirement benefits include:

• guidance under Code Section 401(a)(9) on the use of lump sum payments to replace lifetime income being received by retirees under DB plans;

• regulations on the definition of governmental plan under Section 414(d);

• regulations concerning IRAs under Sections 219, 408, 408A and 4973;

• guidance updating regulations for service credit and vesting under Section 411;

• guidance on the treatment of future interest credits and annuity conversion factor under a hybrid DB plan and adjustments under a variable annuity plan for purposes of satisfying certain qualification regulations; and

• guidance relating to church plans.

Initial Implementation of TCJA

The updated plan includes projects stemming from the Tax Cuts and Jobs Act’s compensation-related changes:

• application of the effective date provisions to the elimination of the exceptions for commissions and performance-based compensation from the definition of compensation subject to the deduction limit under Internal Revenue Code Section 162(m); and

• certain issues relating to the excise tax on excess remuneration paid by “applicable tax-exempt organizations” under Internal Revenue Code Section 4960.

Priorities Completed or Underway

The IRS and Treasury report in the update that the following priorities have been met or are in the process of being so:

• proposed regulations on the application of the normal retirement age regulations under Section 401(a) to governmental plans were published on Jan. 27;

• proposed regulations regarding qualified nonelective contributions (QNECs) and qualified matching contributions (QMACs) were published on Jan. 18;

• announcements on hardship distributions and loans from retirement plans as a result of Hurricanes Harvey, Irma and Maria, as well as the California wildfires, were issued on Aug. 30, Sept. 12 and Oct. 31; and

• proposed regulations under Section 411(a)(11) were published on Oct. 9.