Compliance Newsletter April 2024

Disaster Relief for Alaska
In response to severe storms, landslides, and mudslides in Alaska, the IRS and PBGC have issued disaster relief.
Proposed White House Budget
The White House Office of Management and Budget released President Biden’s fiscal year 2025 federal budget proposal.

Disaster Relief for Alaska

In response to severe storms, landslides, and mudslides that impacted parts of Alaska beginning November 20, 2023, the Internal Revenue Service (IRS) and Pension Benefit Guaranty Corporation (PBGC) extended certain deadlines for individuals and businesses in impacted areas.

Impacted Areas

Individuals who reside or have a business in the Wrangell Cooperative Association of Alaska Tribal Nation, as well as relief workers affiliated with a recognized government or philanthropic organization assisting in the relief effort, may be eligible for extended deadline relief.

Deadline Relief

Certain deadlines on or after November 20, 2023, are extended until July 15, 2024. Below is a partial list of retirement-impact tax filing and payment deadlines that may be extended:

Retirement plan loan repayments under Internal Revenue Code section 72(p)(2)
Required minimum distributions under Internal Revenue Code section 401(a)(9)
The 10% additional income tax continues to not apply even if the following is missed during the relief period:
- Substantially equal payments made over the participant’s life or joint lives of the participant and designated beneficiary
- Deadline for using a distribution from an IRA for a first-time home purchase by the close of the 120th day after the distribution is received
Prior tax year contribution deadlines for retirement plans
Indirect rollover distribution deadlines
- 60-day rollovers
- Rollover of qualified loan offsets
Refunds as a result of
- Excess deferrals
- ADP/ACP non-discrimination testing
- Eligible automatic contribution arrangement (EACA) withdrawals
- Excess IRA contributions
Deadline for recontributing qualified reservist distributions
Form 5500 and Form 8955-SSA filing Form 5498 for IRAs
PBGC premium payments
PBGC deadlines that are based on the Form 5500 deadline
Single Employer Plan Termination Forms 500 and 501

Additional Resources

For any questions related to IRS deadlines and other disaster-related issues, the IRS has a toll-free number at 1-866-562-5227. For PBGC disaster-related questions, call 1-800-736-2444 ext. 4136.

Proposed White House Budget

On March 11, 2024, the White House Office of Management and Budget (OMB) released President Biden’s fiscal year 2025 federal budget proposal. Below are the highlights of the retirement impact initiatives included in the proposal.

Proposed Retirement Impacts

Require nonqualified deferred compensation (NQDC) plans that fail to comply with Code section 409A to withhold the 20% additional tax and additional interest tax on the NQDC included in an employee’s income due to the failure.

Cap on Retirement Assets – Apply a $10 million cap on Individual Retirement Accounts (IRA) and defined contribution plan accumulations.
Eliminate Roth conversions for high-income taxpayers (generally, greater than $450,000 for joint filers).
Treat IRA owners and beneficiaries (if the owner has died) as disqualified persons for prohibited transaction rules.
Prohibit an IRA from holding an interest in domestic international sales corporation or foreign sales corporation that receives a payment from an entity owned (10% or more) by the IRA owner.

Next Steps

Congress is under no obligation to consider these budget proposals; however, they represent the current administration’s priorities. We will keep you informed if these ideas receive any Congressional action or support in the future.

The subject matter in this communication is educational only and provided with the understanding that Principal^® is not rendering legal, accounting, investment or tax advice. You should consult with appropriate counsel, financial professionals and other advisors on all matters pertaining to legal, tax, investment or accounting obligations and requirements.

Insurance products and plan administrative services provided through Principal Life Insurance Company^®, a member of the Principal Financial Group^®, Des Moines, IA 50392.

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