TaxFacts

TaxFacts Intelligence Weekly

William H. Byrnes, J.D., LL.M. and Robert Bloink, J.D., LL.M.

Mar 14, 2019

IRS: Employers Must Exercise Caution in Providing "Free Lunch" for Employees

The IRS has released a technical advice memorandum (TAM) that sheds light on the potential tax implications when employers provide employees with free meals in the office. Post-tax reform, meals provided "for the convenience of the employer" may receive favorable tax treatment. In the TAM, the IRS denied exclusion of the meals' value from employee compensation. Here, the employer provided free meals to all employees in snack areas, at their desks and in the cafeteria, justifying provision of these meals by citing need for a secure business environment for confidential discussions, employee protection, improvement of employee health and a shortened meal period policy. The IRS rejected these rationales, stating that the employer was required to show that the policies existed in practice, not just in form, and that they were enforced upon specific employees. In this case, the employer had no policies relating to employee discussion of confidential information and provided no factual support for its other claims. General goals of improving employee health were found to be insufficient. The IRS also considered the availability of meal delivery services a factor in denying the exclusion, but indicated that if the employees were provided meals because they had to remain on the premises to respond to emergencies, that would be a factor indicating that the exclusion should be granted. For more information on "de minimis" type fringe benefits, visit Tax Facts Online. Read More

Common Scenarios in Client Retirement Planning: Account Consolidation and the Rules of the Road

Most clients will change jobs a few times in their lives, which often means they wind up with multiple 401(k) and other types of retirement plans. Consolidating can produce many benefits--namely, making it easier to manage retirement assets and easing RMD calculations, but there are rules to consolidating and clients also need to be aware of benefits that may be unique to any one type of plan. Clients should evaluate their goals with respect to eventual withdrawals, as the rules for penalty-free withdrawals--for example, via using an IRA to establish a series of substantially equal periodic payments to provide penalty-free withdrawals prior to age 591/2. For more information on the rollover rules and how they may impact clients considering retirement account consolidation, visit Tax Facts Online. Read More

April 1 is Fast Approaching: Important Deadline for Clients With First-Time RMD Obligations

While April 15 is a well-known and understood deadline, most clients don't associate April 1 with any important tax-related deadlines—but April 1 is, in fact, one of the most important deadlines for clients who turned 701/2 years old in the previous year. For those clients who maintain traditional retirement accounts, such as 401(k)s and IRAs, April 1 is the date by which they must take their first required minimum distribution (RMD) from the account if they turned 701/2 in the previous year. For example, a client who turned 701/2 in 2018 must take their first RMD by April 1, 2019. This April 1 deadline is a special rule that applies only to first-time RMDs--a client's 2019 RMD will be due by December 31, 2019. This means that clients who choose to wait until the April 1 deadline will be required to take two RMDs in 2019. For each subsequent year, the generally applicable December 31 deadline is the relevant date for RMDs. For more information on lifetime RMD requirements, visit Tax Facts Online. Read More

 
Tax Facts Team
Molly Miller
Publisher
William H. Byrnes, J.D., LL.M
Tax Facts Author
Jason Gilbert, J.D.
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Robert Bloink, J.D., LL.M.
Tax Facts Author
Connie L. Jump
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Alexis Long, J.D.
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Patti O'Leary
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Danielle Birdsail
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