News

The Council of the District of Columbia has approved a new transportation benefit law (D.C. ACT 23-305) that requires employers who provide parking benefits to also offer ‘clean-air’ transportation benefits to their employees. The law also requires the employers to submit annual/bi-annual reporting and plans to the city. The new law applies to every employer that employs at least 20 persons located in Washington D.C. and offers its employees free or discounted parking. Note, the ordinance does not apply if the employer owns the parking lot.

In recent years, the Federal Government has passed several pieces of legislation to offer relief and much-needed flexibility to employers that offer dependent care assistance programs (DCAPs). But many employers are struggling to make these benefits attractive to all levels of their workforce who may not see the value in putting away pre-tax dollars for care of children. However, DCAP assistance and the expanded Dependent care tax credit is a benefit many should reconsider.

The short answer is yes. If you are not currently conducting ongoing verification audits or requiring employees to provide documentation when they enroll in benefits, then you should audit your plan.

Background

The Health Opportunity Patient Empowerment Act, passed in 2006, included a provision which allows the owner of an Individual Retirement Account (IRA) to make a one-time, tax-free transfer into a Health Savings Account (HSA). This type of transfer is officially referred to as a qualified HSA funding distribution (QHFD) and gives HSA owners an additional way to fund their accounts and save on taxes while planning to cover future qualified medical expenses. Through this transfer, IRA assets are moved directly from the IRA trustee to the HSA trustee as a regular contribution. The election to make a qualified HSA funding distribution is irrevocable.

On November 14, 2022, the IRS has Notice 2022-59, announcing the adjusted applicable dollar amount for determining the Patient-Centered Outcomes Research Trust Fund (PCORTF) fee for policy years and plan years ending on or after October 1, 2022, and before October 1, 2023.

On October 18, 2022, the IRS issued Revenue Procedure 2022-38, which address annual inflation adjustments for more than 60 tax provisions. Included are new limits for Flexible Spending Accounts, Commuter Benefits and various other code provisions, as follows:

Effective December 14, 2022, the federal prime interest rate increased from 7 percent to 7.50 percent. The prime interest rate is largely determined by the federal funds rate, as set by the Federal Reserve’s Federal Open Market Committee (FOMC). As Department of Labor regulations require a retirement plan loan interest rate to be comparable to interest rates charged by entities that are in the business of lending money in similar circumstances, plan sponsors typically use a benchmark such as the prime rate to set the interest rate on plan loans. As a reminder, for a participant who is on active duty in the uniformed services, the Servicemembers Civil Relief Act of 2003 prescribes an interest rate limitation of 6% for loans that were secured before the military service period started.

The next FOMC meeting is scheduled for February 1, 2023.

The Pension Benefit Guarantee Corporation (PBGC) has issued a final rule updating interest assumptions under the asset allocation regulation for plans with valuation dates in the first quarter of 2023. These interest assumptions are used for valuing benefits under terminating single-employer plans. The rule is scheduled to be published in the Federal Register on December 15, 2022, and is effective January 1, 2023.

Click here to download the PDF.

Senators John Hickenlooper (D-CO) and Tom Tillis (R-NC), and Representatives Terri Sewell (D-AL) and Lloyd Smucker (R-PA) introduced the Retirement Savings for Americans Act. A press release from Sen. Hickenlooper explains that the bill would establish a new government program providing a portable, tax-advantaged retirement savings account for eligible workers and give federal matching contributions to low and middle-income workers.