IRS CCA: Definition of Remuneration Regarding Employee’s Elective Deferral Amounts to Purchase Annuity, Qualified Health Insurance Benefits Excluded from Gross Income (IRC §4960)

The Chief Counsel’s Office advised on whether the definition of remuneration, under I.R.C. 4960, includes an employee’s elective deferral amounts to purchase an I.R.C. 403(b) annuity, and salary reduction amounts under an I.R.C. 125 cafeteria plan to purchase qualified health insurance benefits, and other health benefits that are excluded from gross income. The Chief Counsel’s Office clarified that: 1) the exclusion from gross income under I.R.C. 3401 and 3402, provided in IRS guidance, should be treated as extending to the I.R.C. 4960(c)(3) definition of remuneration; and 2) for purposes of calculating the I.R.C. 4960 excise tax, remuneration should not be ...