Compliance Stuff

The IRS recently released updated FAQs addressing educational assistance programs under Internal Revenue Code Section 127. While much of the guidance reflects existing rules, the updates incorporate recent legislative changes and provide helpful clarifications for employers that offer or are considering offering education benefits. Refresher: Section 127 Basics Still Apply Section 127 allows employers to provide employees with tax‑free educational assistance of up to $5,250 per year, indexed for inflation after 2026. That amount continues to apply to both traditional tuition assistance and qualified student loan repayment benefits. To qualify, the program must: Be a written plan for the exclusive benefit of employees (click here for our prior post on the document requirement); Avoid discrimination in favor of highly compensated employees; and Be communicated to eligible employees. Student Loan Repayment: Continued Flexibility — With Guardrails The FAQs reiterate that educational ass...

The Internal Revenue Service has released updated frequently asked questions addressing educational assistance programs under Section 127 of the Internal Revenue Code, along with a revised sample plan document, Publication 5993 (Rev. 4-2026). The updated guidance represents changes made by the One Big Beautiful Bill of 2025, providing clarification for employers that offer—or are considering offering—tuition assistance or student loan repayment benefits. Chance to Revamp : The updated guidance, reformed by the One Big Beautiful Bill , gives employers a timely opportunity to modernize Section 127 programs, including by revising plan documents, expanding or formalizing student loan repayment features, and reassessing compliance with notice and nondiscrimination requirements. Section 127 permits employers to provide certain educational benefits to employees on a tax-free basis through a written educational assistance program. Employees may currently exclude up to $5,250 per year from gro...

Should you request the automatic extension of time to file your tax return with the IRS? What is the specific process to obtain the extension, and what does a U.S. taxpayer need to know about this important right? The decision to file an extension is often mistaken for a lack of preparation or procrastination. In reality, for many taxpayers, it is a strategic maneuver designed to ensure accuracy, protect legal options, and maintain a principled, strategic approach to financial management. As the April 15 deadline approaches tomorrow, understanding the actual mechanics of the extension process, the reasoning behind an extension, and the responsibilities that remain is essential for avoiding unnecessary penalties and potential issues and challenges with the IRS itself. The Purpose of the Extension The Internal Revenue Service (IRS) provides an automatic six-month extension for taxpayers who require more time to gather documentation or resolve issues or inaccuracies within their financi...

The US Department of the Treasury and the Internal Revenue Service have finalized regulations under the SECURE 2.0 Act that change how certain retirement plan participants may make catch-up contributions. Beginning in 2026, participants whose income meets certain thresholds and who are eligible to make catch-up contributions may, in many cases, only be permitted to do so on a Roth (after-tax) basis.  While these rules apply to nearly all defined contribution retirement plans, they raise unique administrative and compliance challenges for multiemployer defined contribution plans, which are those defined contribution plans to which more than one employer is obligated to contribute and which are maintained pursuant to one or more collective bargaining agreements (CBAs) .  Although the rules include temporary relief for collectively bargained plans, multiemployer plans should begin planning now.  What the Final Regulations Require The Roth catch-up requirement applies only if...

  Employers should be thinking about whether to address the following areas of workplace compliance in 2026. These items on the employer to-do list are not all for the month of January, but don’t forget to come back to them throughout the year. Routine Use of Artificial Intelligence.  Does your workplace have a policy on how employees  may use AI in performing their jobs ? D o you have a preferred platform, or do you require certain settings to be used when employees use AI? Does your confidentiality policy address how employees can engage with AI and still protect your data? Or do you pretend that employees don’t use AI at all? Training Managers to Understand Requests for Accommodation Under the Pregnant Worker Fairness Act (PWFA).   This act has been in effect since June 27, 2023, and there have been a number of recent settlements, lawsuits, and charges against employers for failing to accommodate known limitations due to pregnancy. Recent EEOC enforcement exampl...

On December 19, 2025, the Internal Revenue Service (IRS)  announced  that it extended the grace period for states and employers to report tax information about benefits paid through a state’s paid family and medical leave program. For 2026, states and employers will not have to comply with tax and income reporting obligations related to those benefits. Quick Hits The IRS recently declared it will not enforce tax and reporting requirements for state paid family and medical leave (PFML) benefits in 2026. Thirteen states and Washington, D.C., have enacted state-run paid family and medical leave programs. Under  Revenue Ruling 2025-4 , amounts paid to an employee under a state’s PFML program should be included in an employee’s gross income and are wages for federal employment tax purposes. However, for 2025, states and employers did not have to comply with the employment tax and reporting requirements in that revenue ruling. In its latest notice, the IRS stated, “States may ...

  Beginning January 1, 2026, age 50+ catch‑up contributions for “high‑paid participants” of 401(k), 403(b), and governmental 457(b) retirement plans must be made on a Roth basis. As a result, employers must identify who is a “high-paid participant” and ensure that corresponding catch-up contributions are characterized as Roth — even if a participant’s standing catch-up deferral election is pre‑tax.   The Internal Revenue Service (IRS) recently released final regulations   implementing the mandatory Roth catch-up, which will create pressure points for payroll systems, retirement plan recordkeepers, and plan sponsors. This update summarizes the new mandatory Roth catch-up requirement, highlights selected issues for payroll and human resources to consider, and recommends solutions to reduce compliance risk.  The New Mandatory Roth Catch‑Up Rule Under final IRS regulations, a catch‑up eligible participant with FICA wages paid by applicable employer(s) above a wage thresh...