IRA and Employee Benefit Provisions in “Fiscal Cliff” Legislation
On January 2, 2013, President Obama signed the American Taxpayer Relief Act of 2012 into law, avoiding the automatic tax increases and spending cuts that had been referred to as the “fiscal cliff.” The new law primarily affects individual income tax rates, expiring estate tax provisions, and various taxes paid by businesses and investors. However, the new law also makes significant changes to Individual Retirement Accounts (IRAs) and certain employee benefit plans. A summary of the key provisions of the new law, including the provisions relating to IRAs and employee benefit plans, is available here.
Takeaway: IRA owners and employers should familiarize themselves with the new law and consider whether amendments should be made to their employee benefit plan documents or participant communications. Employers will also need to begin using new payroll tax withholding tables as a result of the new law.