What IRS Regulations and Guidance Should You Expect Soon?

IRS gave an update on several initiatives that have been in the works longer than expected.

The Service’s latest goals are contained in the second quarter update to the 2023-2024 Priority Guidance Plan, released March 18, 2024.

Here are a few highlights:

Retirement Plan Changes from IRS

On February 27, 2023, the Service released proposed regulations on how plan administrators should handle retirement plan forfeitures.

The anticipated effective date came and went without final regulations – that date was January 1, 2024. But final regulations are on the way later this year, IRS said.

According to the proposed regulations, plan administrators would have 12 months after the close of the plan year in which the forfeitures were incurred to use the funds.

Also explained in the proposed regulations, forfeited amounts could only be used to:

• pay plan administrative expenses
• reduce employer contributions under the plan, or
• increase benefits in other participants’ accounts according to plan terms.

Several other regulations that IRS aims to finalize before the end of 2024 relate to retirement plans.

For example, one reg would allow employees to use an electronic medium to make elections and spousal consents for retirement plans.

Proposed regulations for this came out on December 30, 2022. The proposed regulations spell out requirements such as the electronic system must be reasonably designed to prevent other people from making participant elections.

Guidance Based on Secure 2.0 Act

Also in its 2023-2024 Priority Guidance Plan, IRS itemized its soon-to-be-released guidance.

That included guidance involving student loan payments and retirement plans. The guidance was prompted by the Secure 2.0 Act, which said employers could make matching contributions to the following types of plans:

• 401(k)
• 403(b), or
• SIMPLE IRA.