Tag Archives: public plans


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

Read more.

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?

Read more.

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 3121(v)(2) of the Internal Revenue Code and the different consequences of the failure to achieve a SRF under each such section.

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.

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.

“Effect of the Tax Cuts and Jobs Act of 2017 on Nonprofits and Governments,” PowerPoint now available
(Posted on February 15, 2018 by Carol V. Calhoun)


The Tax Cuts and Jobs Act of 2017 made a number of changes affecting the compensation and benefits that governmental, church, and other tax-exempt organizations can provide to their employees. Given the short time between introduction and passage of the Act, it is not surprising that many of the new provisions are unclear in their application. Moreover, some of them may produce unintended consequences for these organizations.

As part of a symposium on “Recent Developments in Benefits/Executive Compensation Affecting Tax Exempt Organizations,” Carol V. Calhoun gave a presentation on the ways in which the Tax Cuts and Jobs Act of 2017 will affect the compensation and benefits of such organizations. A copy of the PowerPoint for her speech can be found at this link.
 
 
 
 
 
 
 
 

IRS Issues Self-Assessment Forms for Federal, State, and Local Government Employers
(Posted on July 10, 2017 by Carol V. Calhoun)


Internal Revenue ServiceThe IRS has now issued a series of forms to enable federal, state, and local governments to assess their compliance with federal tax statutes, and has set forth some common errors found in examining such employers. Several of the forms relate to employee benefits issues, and may be of assistance to governments trying to ensure that they comply with all legal requirements.

The forms are as follows:

For use by Federal, State and Local Government Entities

For use by State and Local Government Entities Only

Read more.

Proposed Regulations: Normal Retirement Age for Governmental Plans
(Posted on January 27, 2016 by Carol V. Calhoun)


irsOn January 27, 2016, the IRS issued proposed regulations governing the extent to which governmental pension plans must comply with the rules governing normal retirement ages. In general, the rules are a positive step from the perspective of governmental plan sponsors, but they contain a few potential pitfalls.

Background

The qualification rules of the Internal Revenue Code (“Code”) provide for several rules that are based on a plan’s normal retirement age. For example, a pension plan cannot pay in-service benefits before the earlier of age 62 or normal retirement age. Benefits must be fully vested at normal retirement age. Benefits under the plan must be definitely determinable (i.e., subject to calculation, rather than at an employer’s discretion) as of normal retirement age. Read more.

IRS determination letters after 2016; what are the options?
(Posted on July 28, 2015 by Carol V. Calhoun)


Internal Revenue ServiceAs previously discussed, faced with substantial budget cuts, the Internal Revenue Service (“IRS”) has announced that it is eliminating most determination letters (letters concerning the qualified status of retirement plans, which gives rise to numerous tax benefits), effective December 31, 2016. (Announcement 2015-19.) In the past, individually designed retirement plans were able to obtain a determination letter once every five years, during a cycle provided by the IRS. The most likely new regime will involve making determination letters on individually designed plans available only when a plan is first adopted, or when it is terminated. Between those dates, the only way to ensure qualification other than filing a declaratory judgment action with the Tax Court is likely to be to adopt annual updates put out by the IRS that will include model wording for amendments.

For entities that maintain a retirement plan, the new regime may mean that they discover qualification issues only on audit, when it is too late to fix the issue. And the potential penalties on audit (for the employer, the trust under the plan, and the employees) are, as set forth in a prior article, huge. What steps should a plan administrator take to ensure the qualification of a plan after that point? Read more.