More On Tax Planningfrom The Advisor's Professional Library
- IRAs: In General Individual Retirement Accounts are highly popular tools for contributing funds that grow on a tax deferred basis. Depending on the type of IRA, the accumulation can be tax free.
- Charitable Giving Charitable giving can reduce your clients’ tax liabilities. However, the general and verification rules for the deduction of charitable gifts must be understood in order to take full tax advantage of such gifts.
In case you missed it, the Internal Revenue Service (IRS) released Notice 2010-69 on October 12, which provides interim relief to employers with respect to reporting the cost of coverage under an employer-sponsored group health plan on Form W-2, Wage and Tax Statement.
According to the latest weekly briefing from Aon Hewitt, The Patient Protection and Affordable Care Act requires employers to report the aggregate cost of applicable employer-sponsored coverage on the Form W-2. The Notice makes this provision optional for employers in 2011, allowing employers time to make any necessary changes to payroll systems or procedures to comply with this new reporting requirement.
The IRS and Treasury Department anticipate issuing guidance on the Form W-2 reporting requirement before the end of 2010.
According to the brief, if an employer does decide to report the aggregate cost of employer coverage on the Form W-2, the IRS has also released a draft Form W-2 that includes the codes that employers may use to report the cost of coverage under an employer-sponsored group health plan.
Aon Hewitt also reports that on October 13, the Departments of Labor, Health and Human Services, and Treasury released a third set of frequently asked questions (FAQs) regarding implementation issues under the Patient Protection and Affordable Care Act. This third set of FAQs specifically addresses health plans covering retirees. The two FAQs clarify that:
• The statutory exemption under the Health Insurance Portability and Accountability Act (HIPAA) for group health plans with "less than two participants who are current employees" continues to apply under the Affordable Care Act. Therefore, the group market insurance reforms do not apply to "retiree only" group health plans.
• Pending further guidance, an employer that sponsors a group health plan that covers retirees and individuals on long-term disability can continue to treat that plan as exempt under HIPAA. The agencies have not released guidance on this specific topic but plan to issue a request for information "very soon," with the guidance expected in 2011. If the guidance regarding application of the group market reforms is more restrictive than this current interpretation, the agencies state that the guidance will apply prospectively only. Finally, the agencies also encourage such plans to adopt the group market reforms voluntarily and state that doing so will not otherwise affect the plan's exempt status.
The agencies released the first two sets of FAQs on September 20, 2010 and October 8, 2010.
AdvisorOne Washington Bureau Chief Melanie Waddell contributed to this report.