IRS

Industry & Regulatory News

IRS Issues Yield Curves and Segment Rates for DB Plan Calculations

The IRS has issued Notice 2022-40, which contains updated guidance on factors used in certain defined benefit (DB) pension plan minimum funding and present value calculations. Updates include the corporate bond monthly yield curve, the corresponding spot segment rates for September used under Internal Revenue Code Section (IRC Sec.) 417(e)(3), and the 24-month average segment rates under IRC Sec. 430(h)(2). IRC Sec. 417 contains definitions and special rules for minimum survivor annuity requirements in DB plans. IRC Sec. 430 addresses minimum funding standards for single-employer DB plans.

September 20 2022

Industry & Regulatory News

IRS Releases Draft 2023 Form W-4R

The IRS has posted a draft 2023 Form W-4R, Withholding Certificate for Nonperiodic Payments and Eligible Rollover Distributions. New Form W-4R is to be used for nonperiodic and rollover distributions. Nonperiodic distributions are subject to a 10 percent withholding rate unless a different rate is elected. Eligible rollover distributions are subject to a mandatory 20 percent withholding rate on the taxable amount of the distribution unless a higher rate is elected. As previously announced, the IRS has postponed requirements to begin using these forms until January 1, 2023. Form W-4P can continue to be used until that time.

September 19 2022
IRS

Industry & Regulatory News

IRS Announces Applicable Federal Rates for October 2022

The IRS has issued Revenue Ruling 2022-18, which contains the applicable federal rates (AFR) for October 2022. These rates are used for such purposes as calculating distributions from retirement savings arrangements that meet the requirements for substantially equal periodic payments (a 10 percent early distribution penalty tax exception), also referred to as “72(t) payments.”

September 19 2022
IRS

Industry & Regulatory News

IRS Posts 2022 Draft Form 8606, Nondeductible IRAs

The IRS has released a draft 2022 Form 8606, Nondeductible IRAs. Form 8606 is filed by taxpayers who have made nondeductible Traditional IRA contributions for 2022, and by taxpayers who have made nondeductible Traditional IRA contributions in previous years and have taken distributions from a Traditional, SEP, or SIMPLE IRA in 2022 or converted part of their Traditional, SEP, or SIMPLE IRAs to Roth IRAs in 2022.

September 15 2022
IRS

Industry & Regulatory News

IRS Issues Deadline Relief for Arizona Victims of Severe Storms

The IRS has announced the postponement of certain tax-related deadlines for victims of severe storms in Arizona. The tax relief postpones various tax filing deadlines that began July 17, 2022. Affected individuals and households who reside or have a business in the Salt River Pima-Maricopa Indian Community, as well as taxpayers with records located in the covered area that are needed to meet covered deadlines, qualify for relief.

In addition to extending certain tax filing and tax payment deadlines, the relief includes completion of many time-sensitive, tax-related acts described in IRS Revenue Procedure 2018-58 and Treasury Regulation 301.7508A-1(c)(1). Affected taxpayers with a covered deadline on or after July 17, 2022, and before November 15, 2022, will have until November 15, 2022, to complete the acts. This includes filing Form 5500 series returns that are required to be filed on or after July 17, 2022, and before November 15, 2022.

“Affected taxpayer” automatically includes any individuals who live, and businesses whose principal place of business is located, in the covered disaster area. Those who reside or have a business located outside the covered disaster area, but have been affected by the disaster, may contact the IRS to request relief.

September 09 2022

Industry & Regulatory News

IRS Provides Additional Form W-4P, W-4R Guidance

The IRS has provided additional guidance related to federal income tax withholding requirements for retirement plan and IRA payments. As previously shared, new Form W-4R, Withholding Certificate for Nonperiodic Payments and Eligible Rollover Distributions, may be used in 2022 and must be used starting in 2023 for any nonperiodic distributions. Updated Form W-4P, Withholding Certificate for Periodic Pension or Annuity Payments, is now to be used only for periodic pension or annuity payments. The IRS has attempted to answer some of the outstanding questions regarding use of the new forms.

With regard to the use of electronic substitutes to paper Forms W-4P and W-4R, the IRS references Publications 15-A, Employer’s Supplemental Tax Guide, and 15-T, Federal Income Tax Withholding Methods, for general guidelines but does provide a few clarifications

  • Payers that electronically store payee personal information and accept withholding elections through an account tied to the payee are not required to have the payee submit the information again when completing an electronic substitute to Forms W-4P and W-4R
  • References to page numbers, when not applicable to the substitute form, should be replaced by appropriate references
  • An electronic substitute to Form W-4R can provide a link to a web page containing marginal tax rate tables as long as certain text and instructions are provided

The IRS also indicates that when providing paper substitute forms for Forms W-4P and W-4R, payers should generally follow the same guidelines that apply for electronic substitutes, with the exception that the substitute form must include applicable instructions and worksheets rather than providing a web address.

The IRS confirms that telephonic substitutes for Forms W-4P and W-4R are permitted and intends to issue additional guidance. In the meantime, brief scripting specific to three Form W-4R scenarios are provided, and the IRS specifies the Form W-4P content that should be scripted as well.

And finally, the IRS clarifies that for payers using electronic or paper substitutes for Forms W-4P and W-4R, compliance with the updated forms must occur by the later of January 1, 2023, or 30 days after the IRS releases the final versions of the 2023 Forms W-4P and W-4R.

September 06 2022

Industry & Regulatory News

IRS Issues Deadline Relief for Mississippi Water Crisis Victims

The IRS has announced the postponement of certain tax-related deadlines for victims of a water crisis in Mississippi. The tax relief postpones various tax filing deadlines that began August 30, 2022. Affected individuals and households who reside or have a business in Hinds County, as well as taxpayers with records located in the covered area that are needed to meet covered deadlines, qualify for relief.

September 02 2022

Industry & Regulatory News

IRS Issues Yield Curves and Segment Rates for DB Plan Calculations

The IRS has issued Notice 2022-35, which contains updated guidance on factors used in certain defined benefit (DB) pension plan minimum funding and present value calculations. Updates include the corporate bond monthly yield curve, the corresponding spot segment rates for August used under Internal Revenue Code Section (IRC Sec.) 417(e)(3), and the 24-month average segment rates under IRC Sec. 430(h)(2). IRC Sec. 417 contains definitions and special rules for minimum survivor annuity requirements in DB plans. IRC Sec. 430 addresses minimum funding standards for single-employer DB plans.

August 23 2022

Industry & Regulatory News

IRS Final Rule on Electronic Filing Requirements at OMB

The Office of Management and Budget has received a final rule from the IRS titled “Electronically Filed Returns”.

The IRS released a proposed rule in July 2021 regarding electronic filing requirements for certain information returns, pursuant to the Taxpayer First Act of 2019. The proposed regulations reduce the threshold by which filers must electronically file from 250 to 100 returns for the 2022 calendar year. For filings required after calendar year 2022, the threshold will be further reduced to 10 returns.

August 17 2022

Industry & Regulatory News

IRS Announces Applicable Federal Rates for September 2022

The IRS has issued Revenue Ruling 2022-17, which contains the applicable federal rates (AFR) for September 2022. These rates are used for such purposes as calculating distributions from retirement savings arrangements that meet the requirements for substantially equal periodic payments (a 10 percent early distribution penalty tax exception), also referred to as “72(t) payments.”

August 17 2022