IRS

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.”

The IRS has announced the postponement of certain tax-related deadlines for victims of severe storms and flooding in Missouri. The tax relief postpones various tax filing deadlines that began July 25, 2022. Affected individuals and households who reside or have a business in the Independent City of St. Louis, Montgomery, St. Charles and St. Louis counties, as well as taxpayers with records located in the covered area that are needed to meet covered deadlines, qualify for relief.

The IRS has announced the postponement of certain tax-related deadlines for victims of a water shortage and health impact from unprecedented sargassum seagrass influx on the island of St. Croix, U.S. Virgin Islands. The tax relief postpones various tax-filing deadlines that began July 15, 2022. Affected individuals and households who reside or have a business on the Island of St. Croix, as well as taxpayers with records located in the covered area that are needed to meet covered deadlines, qualify for relief.

The IRS has issued Notice 2022-32, 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 July 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.

The IRS has released a draft 2022 tax year Form 8889, Health Savings Accounts (HSAs). Form 8889 is filed by taxpayers to report HSA contributions and associated tax deductions, HSA distributions, and any tax or penalty tax owed for distributions not used for qualified medical expenses.

The IRS has released the latest version of Publication 1179 (Revenue Procedure 2022-25), General Rules and Specifications for Substitute Forms 1096, 1098, 1099, 5498, and Certain Other Information Returns.

Some organizations, such as IRA trustees or custodians, may prefer to draft and use substitute forms rather than IRS-provided information return forms. In addition to specifications for properly creating substitute forms, the guidance addresses such issues as inclusion of logos, slogans, and advertisements, as well as penalties for information return filing failures, and delivery requirements.

The IRS has made available a draft 2022 Form 945 Annual Return of Withheld Federal Income Tax. This form is used to report withheld federal income tax from nonpayroll payments such as distributions from tax-favored retirement plans. The form will be reviewed and additional details provided as warranted.

The IRS has issued Notice 2022-29, 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 May 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.

According to an Employee Plans News release, the IRS is piloting a pre-examination retirement plan compliance program beginning in June 2022. Plan sponsors of retirement plans that have been selected for examination would be notified by letter and given a 90-day period to review plan documents and operations to determine if there are compliance issues. Mistakes found that qualify for the Self Correction Program under the Employee Plans Compliance Resolution System can be corrected in that manner. For items that don’t qualify, the plan sponsor can request remediation through a closing agreement with the IRS. The IRS will review documentation and either issue a closing letter or conduct a limited or full scope examination. The goal of the pilot program is to reduce taxpayer burden and reduce time spent on retirement examinations. The duration of the pilot was not specified, but the IRS will evaluate the effectiveness of the program to determine if it will become part of their overall compliance strategy. 

Senators Patty Murray (D-WA) and Richard Burr (R-NC)—chair and ranking members of the Senate Health, Education, Labor and Pensions Committee respectively—have released a discussion draft of compiled retirement provisions from several bills into the Senate’s latest version of what has been coined SECURE Act 2.0. The RISE & SHINE Act shares some similarities to, and builds upon the Securing a Strong Retirement Act bill that passed the House in March.