Tag Archives: Internal Revenue Service

The New Year is a Reminder of the Imminence of the Mandates of Health Care Reform

Contributed by Rebecca Dobbs Bush

With the ringing in of the New Year, we are now officially on the eve of the employer mandate provisions within Health Care Reform. The employer mandate provisions require those employers with 50 or more “full-time equivalent” employees to offer “minimum value” coverage to employees that work 30 or more hours per week. Where two or more companies have a common owner, or are otherwise related, they are combined for purposes of determining whether they employ enough employees. The coverage offered by the company must be “affordable” for employees. Where an employer does not do this, and at least one full-time employee receives a premium tax credit to help pay for coverage on an Exchange, the employer will be subject to penalties or a “tax” of $2,000 per full-time employee – with the first 30 full-time employees “free.”

The employer mandate provisions are now also being referred to as the “shared responsibility” provisions. The IRS has issued multiple Notices attempting to clarify the confusion over implementation and application. Most recently, the IRS issued proposed regulations and FAQ’s on December 28, 2012. The attempted clarification of the shared responsibility provisions have only served to confirm the confusing and complicated nature of the provisions.

What is imperative for every employer to understand is that the basis for determining how and whether the shared responsibility provisions apply to your business on January 1, 2014 depends upon the make-up and structure of your workforce during 2013. Accordingly, employers need to act now to understand whether and how the shared responsibility provisions of Health Care Reform will affect them come January 1, 2014.

401(k) Contribution Limits Increased for 2013

Contributed by Rebecca Dobbs

This October, the IRS announced cost of living adjustments increasing 401(k) contribution limits.  The new limits for 2013 are as follows:                             

  2013 2012
Maximum Elective Deferral By Employee                              $17,500 $17,000
Catch-Up Contributions (age 50 and over) $5,500 $5,500
Defined Contribution Maximum Deferral (employer/employee combined) $51,000 $50,000
Employee Annual Compensation Limit for Calculating Contributions $255,000        $250,000

As many employees base their deferral percentages on the maximum elective deferral allotted by the IRS, employers should advise employees of their ability to raise this percentage come 2013. 

For those employers with SIMPLE plans (savings incentive match plan for employees of small employers), permitted employee deferrals increase in 2013 from $11,500 to $12,000.

If participation in your plan is lacking, the raised limits on contribution deferrals also provides a reason for service provider(s) to come in and conduct educational meetings designed to help employees understand the value of a 401(k) plan.  Even if your company is not in a position to provide a match, the value of earning compounded interest on employee contributions cannot be emphasized to participants enough.