The IRS maintains pre-approved plan programs (1) for retirement plans described in I.R.C. § 401(a) (qualified plans), and (2) for annuity contracts or custodial accounts described in I.R.C. § 403(b) (403(b) plans). A new chart shows what types of plans are and are not eligible to use the pre-approved plan program.
Tag Archives: pensions
New chart: Pre-approved Plan Eligibility Checklist
New article: 403(b) Plan Design and Compliance
(Posted on December 6, 2023 by Carol V. Calhoun)
A new article, Section 403(b) Plan Design and Compliance, discusses the rules that apply when eligible tax-exempt organizations establish tax-sheltered annuities, custodial accounts, or retirement income accounts, as described in Section 403(b) of the Internal Revenue Code (403(b) plans).
This article addresses the following topics:
- 403(b) Plan Overview
- Eligible Employers and Employee>
- ERISA Coverage of 403(b) Plans
- Qualification Requirements
- 403(b) Plan Contributions
- 403(b) Plan Distributions
- Implementation and Operation
- Correcting 403(b) Plan Errors
- Terminating 403(b) Plans
- EP Subcommittee Report: 403(b) Plan Issues and Recommendations
- Advantages and Disadvantages of 403(b) Plans
New Article: Pre-Approved 403(b) Plans
(Posted on December 6, 2023 by Carol V. Calhoun)
On November 21, 2023, the IRS issued Rev. Proc. 2023-37, substantially updating its guidance on preapproved retirement programs described in Internal Revenue Code (I.R.C.) § 403(b) (403(b) plans). A new article, Pre-Approved 403(b) Plans, discusses preapproved 403(b) plans, including their advantages, legal pitfalls, and other issues that an eligible employer may consider when determining whether to convert its existing 403(b) plan into a preapproved plan.
The major topics are:
- What Is a 403(b) Plan?
- What Are the Advantages of a Preapproved 403(b) Plan?
- What Are the Legal Pitfalls of a Preapproved 403(b) Plan?
- What Operational Issues Can Arise for a Preapproved Plan?
- What Practical Issues Can Arise for a Preapproved Plan?
- When Should an Employer Adopt a Preapproved 403(b) Plan?
- Can the Employer Cure Past Plan Issues by Adopting a Preapproved 403(b) Plan?
- What Should an Employer Do If It Did Not Comply with the Written Plan Document Requirement in the Past?
New Article: Substantial Risk of Forfeiture Under the IRC
(Posted on December 4, 2023 by Carol V. Calhoun)
An article recently published in the Lexis Practice Advisor, Substantial Risk of Forfeiture Under the IRC, discusses the concept of substantial risk of forfeiture (SRF) under sections 83, 409A, 457(f), 457A, and
Topics covered are:
- Significance of SRF under the Various I.R.C. Sections
- Definition of SRF
- Conditions that Generally Support the Existence of a SRF and Related Requirements
- Conditions that Generally Do Not Support the Existence of a SRF
- Other rules relating to SRF
It is accompanied by a Substantial Risk of Forfeiture Comparison Chart, which summarizes the rules.
IRS Announces 415 and Other Limits for 2024
(Posted on November 20, 2023 by Carol V. Calhoun)
The Internal Revenue Service has issued IRS Notice 2023-75, 2023–47 IRB 1256, setting out the limits on benefits and contributions for 2024. As expected, the limits rose, but not as steeply as last year. Maximum deferrals under a 401(k) or 403(b) plan rose from $22,500 to $23,000, while maximum benefits under a defined benefit plan rose from $265,000 to $275,000.
A chart showing details, and limits from 1996 to 2024, can be found at this link.
2024 Social Security Wage Base and Projected IRS Benefits & Contributions Limits
(Posted on October 12, 2023 by Carol V. Calhoun)
The Social Security Administration today issued a News Release announcing that the Social Security wage base will rise from $160,200 in 2023 to $168,600 in 2024. In addition, based on the issuance of the CPI-U for September 2023 we have been able to project section 415 and several other IRS limits for 2024.
A chart showing details, and limits from 1996 to 2024, can be found at this link.
Fifth Edition of the Governmental Plans Answer Book Published
(Posted on June 9, 2023 by Carol V. Calhoun)
The Fifth Edition of the Governmental Plans Answer Book has now been published. The Governmental Plans Answer Book is the only full-length treatise on the law governing the retirement plans that federal, state, and local governments maintain for their employees. The law has changed a lot since the Fourth Edition was published in 2017, and the new edition has been updated to reflect them.
The Fifth Edition of Governmental Plans Answer Book gives subscribers the most relevant, current, and practice-oriented answers to the issues faced daily by plan administrators, attorneys, actuaries, consultants, accountants, and other pension professionals as they navigate the requirements and procedures involved in administering their plans. It examines the following significant changes and case law in this area: Read more.
Comparison of 457(b) Plans, 401(k) Plans, 403(b) Plans, and Deemed IRAs Updated
(Posted on November 24, 2022 by Carol V. Calhoun)
The Comparison of 457(b) Plans, 401(k) Plans, 403(b) Plans, and Deemed IRAs chart has now been updated to reflect recent developments, including:
- 2023 limits on contributions and benefits
- Changes in the Employee Plans Compliance Resolution System (EPCRS)
- Changes in the IRS determination letter program for 401(k) plans
- Addition of an IRS determination letter program for individually designed 403(b) plans
- The IRS opinion letter program for pre-approved 403(b) plans
New Benefits Guide: Government and Tax-Exempt Organizations
(Posted on December 30, 2020 by Carol V. Calhoun)
Carol V. Calhoun has written a Benefits Guide entitled “Government and Tax-Exempt Organizations” for Bloomberg Law. The Bloomberg Law Benefits Guide is intended to be a resource for non-benefits practitioners that is easy to understand and explains complex topics in a straightforward way. Ms. Calhoun’s guide covers the types of plans maintained by governmental and tax-exempt organizations, determination of whether a plan is governmental, legal requirements and restrictions, and correction methods in case of errors in administration. The Benefits Guide is available to Bloomberg subscribers, or a copy of Ms. Calhoun’s chapter is available at this link.
457 Answer Book, Eighth Edition, Published
(Posted on June 22, 2020 by Carol V. Calhoun)
The Eighth Edition of the 457 Answer Book was published on June 5, 2020. Carol V. Calhoun is the author of Chapter 1, History of 457 Plans, and Chapter 14, Miscellaneous Issues.
The 457 Answer Book is an in-depth resource that provides answers to the questions that tax-exempt organizations, state and local governments, their accountants, tax and legal advisors, 457 administrators, product providers, and investment counselors need to know.
Guiding readers through all aspects of 457 plan administration — from installation through the audit process — the 457 Answer Book describes: the duties and responsibilities of those performing the functions; the required legal, accounting, and administrative tasks; checklists that facilitate control of each administrative process; and suggested forms.
The 457 Answer Book also provides:
- The history and legal origins of the plan
- Design and drafting standards
- Suggested administrative procedures
- Data processing and payroll considerations
- Operations and fund flow mechanics
- Marketing and sales suggestions
- And much more