Reconciliation Act of 2001 (EGTRRA), signed by President Bush on June 7 includes a variety of provisions affecting employee benefits. Among them is a provision that creates a new exclusion under Code Section 132 for qualified employer-provided retirement planning services.
These services include any retirement planning advice or information provided to an employee and his or her spouse by an employer maintaining a qualified employer plan. The exclusion is not limited to services that concern only the qualified plan. For example, qualified services can include advice and information about retirement income planning for an employee and the employee´s spouse and how the employer´s plan fits into the employee´s overall retirement income plan. The exclusion does not apply to services that may be related to retirement planning, such as accounting, brokerage, legal and tax preparation services. The new exclusion is effective for taxable years beginning after Dec. 31, 2001. For years prior to the effective date of this new exclusion, employers and employees may seek to rely on exclusion arguments based on either the de minimis fringe exclusion (Section 132(e)) or the working condition fringe exclusion (Section 132(d)).
The new exclusion is not permanent, however. EGTRRA contains a "sunset" provision stating that most of its provisions, including the new Section 132 exclusion, will expire on Dec. 31, 2010. The Senate leadership at the time EGTRRA was under consideration made the provision subject to the sunset to ensure that it would pass under Senate rules governing its consideration of tax bills.
Two measures have been introduced in the House that would make the provisions of EGTRRA permanent: H.R. 2316, introduced by Rep. Kenny C. Hulshof (R-Mo.) on June 26, and H.R. 2327, introduced by Rep. Paul Ryan (R-Wis.) on June 27. Both bills were referred to the House Ways and Means Committee. Unless one of these or another measure that would void the sunset provision becomes law, however, much of EGTRRA will expire on Dec. 31, 2010.
From Employer''s Guide to Fringe Benefit Rules, ©Thompson Publishing Group, Inc.