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Tax Cuts and Jobs Act Effects on Retirement Plans

The final Tax Cuts and Jobs Act does not change tax breaks for retirement savings. However, there are some changes to defined contribution plan loan repayment periods and covered employee designations for non-qualified deferred compensation plans (NQDPs). Regarding DC plan loans, should an employee with an outstanding loan leave employment, he or she has until the due date for filing tax returns to rollover the outstanding balance to an IRA to avoid the loan treatment as a taxable distribution, versus the prior 60-day time period. For NQDCs, a “covered employee” at a publicly traded company, all foreign companies traded through ADRs (American Depository Receipts) as well as large private C or S corporations includes the “principal executive officer and principal financial officer, as well as the next three highly compensated employees during the tax year.” If an individual was a covered employee at a company in a taxable year after December 31, 2016, he or she will be considered to be a covered employee indefinitely. Commission and performance-based exclusions have also been eliminated.; December 21, 2017.