Section 401 - Qualified pension, profit-sharing, and stock bonus plans

59 Analyses of this statute by attorneys

  1. Tax Cuts and Jobs Act Could have Far-reaching Effects on Higher Education

    K&L Gates LLPMary Burke BakerNovember 16, 2017

    The “base amount” is equal to the employee’s taxable wages (Box 1 of Form W-2) averaged over the last five tax years. While IRC §401(a), §403(b), and §457(b) retirement benefits would not be included in the calculation, this could apply to any other payments triggered or accelerated by a termination of employment, including severance and retirement benefits under nonqualified plans. Like the excise tax on compensation above $1 million, the severance payment excise tax would apply to nonprofits as well as state and local governments, and the excise tax would be payable by the organization.

  2. New Opinion and Advisory Program for Pre-Approved 403(b) Plans

    Morgan, Lewis & Bockius LLPApril 18, 2013

    IRS pre-approval would provide hospitals, schools, and other eligible employers adopting the plan assurance that the plan's written terms comply with IRC section 403(b) and the final 403(b) regulations issued in 2007 (403(b) requirements), which added a written plan document requirement.[2] The new procedures for 403(b) plans are similar in many respects to the procedures described in Revenue Procedure 2011-49[3] for qualified plans under IRC section 401(a). However, unlike the pre-approved plan program for 401(a) qualified plans, an employer that adopts a pre-approved 403(b) plan will not be able to apply for an individual determination letter for the plan.

  3. Excise Tax Problems? Retirement Compensation May Help

    Carlton Fields Jorden BurtLowell J. WaltersJune 12, 2018

    [12] While the specifics are outside the scope of this article, organizations are at great risk if they provide severance arrangements with a value approaching three times an employee’s standard annual compensation.[13]How Retirement Plans Can HelpSince it appears that additions to and distributions from retirement plans intending to satisfy the requirements of IRC Sections 401(a), 403(b) and 457(b) — hereafter referred to as retirement plans — are not included in the calculation, “converting” taxable compensation into retirement plan contributions should alleviate the risk of triggering the excise tax or reduce the excise tax if it is triggered.The most common way to convert taxable income to retirement plan contributions is through salary deferrals. This method is most likely to be agreeable to higher paid employees who tend to defer salary at higher rates.

  4. No Fooling – Don’t Forget to Take Your First “Required Minimum Distribution” by April 1st

    M. Robinson & Company, P.C.Patricia WeisgerberMarch 27, 2015

    However, while there is no guarantee a waiver will be granted, with an excise tax of 50 percent looming, it is,at the least, worth a try. [1] IRC Section 401(a)(9)(A). [2] IRC Section 401(a)(9)(C).

  5. Selecting the Best Retirement Plan for Your Practice

    Williams MullenElinor ClendeninMay 23, 2018

    An independent physician practice that does not have access to a hospital’s retirement plans has several retirement plan options to consider. Doctors who are employed by hospitals will usually be able to participate in the hospital’s retirement plan that is either an Internal Revenue Code (IRC) section 403(b) plan (if a nonprofit or governmental entity) or an IRC section 401(k) plan that allows employees to make pre-tax or Roth contributions. These plans will generally have some type of employer contribution either through a matching contribution or an employer contribution.

  6. “But Sometimes You Get What You Need” – – Another Decision on Annuity Exemptions

    Squire Patton Boggs LLPG. Christopher MeyerAugust 1, 2016

    However, the statute does not specify which provisions of the Internal Revenue Code (IRC) an annuity must comply with in order to qualify for an exemption.In Wittman, the trustee challenged the debtors’ claimed exemption of several annuities. The trustee contended that, in order to qualify as exempt, the annuities had to comply with IRC §§ 401-409, dealing with tax-deferred qualified retirement plans. In response, the debtors argued that annuity would qualify as exempt if it met the standards for favorable tax treatment under § 72 of the IRC, which deals with annuities more generally.The Seventh Circuit’s review began with an analysis of the language of the statute, as well as its structure and purpose, the latter as a means of informing its statutory analysis.

  7. IRS Issues Notice 2015-49 Eliminating Further Lump Sum Windows for Retirees in Pay Status Under Qualified Defined Benefit Pension Plans

    Sidley Austin LLPJuly 16, 2015

    These windows are usually part of an employer “de-risking program” whereby the employer seeks to reduce the financial impact of the accounting treatment applicable to funding its pension plans. Offering such a window to participants already in pay status, as compared to participants waiting to commence their benefit, raises the concern that the acceleration in payment method might violate the current required minimum distribution regulations under IRC §401(a)(9). In particular, current regulations allow such an acceleration only under certain circumstances, including a plan amendment that increases benefits.

  8. The Honeymoon Is Over: IRS Says It Is Time to Amend Plans to Cover Same-Sex Spouses

    Sutherland Asbill & Brennan LLPReginald ClarkApril 8, 2014

    a significant impact on numerous aspects of qualified retirement plans, including:Benefit or Provision ImpactedImpact of Windsor and the Ruling Qualified Joint and Survivor Annuities (QJSAs) Same-sex spouses are “spouses” for purposes of determining the right to and calculating the QJSA benefit Spousal consent rights, including for plan loans, apply to same-sex spouses A same-sex spouse’s survivor annuity under a QJSA is not taken into account when determining maximum benefits under IRC § 415(b) Qualified Pre-Retirement Survivor Annuities (QPSAs) Same-sex spouses are considered “spouses” for purposes of determining the right to and the calculation of the QPSA benefit and other spousal death benefits Beneficiary Designations Default spousal designations apply to same-sex spouses Minimum Required Distributions Spousal deferral rules that apply to death benefits apply to same-sex spouses under IRC § 401(a)(9) Hardship Distributions Plans that provide for hardship distributions for payment of a spouse’s medical bills, tuition, or funeral expenses must allow hardship distributions for such expenses for same-sex spouses Qualified Domestic Relations Orders (QDROs) Plans are required to honor QDROs that assign benefits to a same-sex spouse Stock Attribution Rules A same-sex spouse is treated as owning shares owned by the other spouse for purposes of determining whether corporations are members of a controlled group under IRC § 414(b) A same-sex spouse is treated as owning shares owned by the other spouse for purposes of determining whether an employee is a key employee under IRC § 416(i) Employee Stock Ownership Plans (ESOPs) A same-sex spouse is treated as a “spouse” for purposes of applying allocation and accrual limits under IRC § 409 The Ruling also noted that the IRS would issue additional guidance o

  9. The Wait is Over – IRS Guidance on Amendments Really Was Imminent

    Bryan Cave LLPTim ZehnderApril 5, 2014

    The brief seven page Notice took the form of a Q&A and weighed in on many of the issues facing plan sponsors:The Basics – The Notice reconfirms the basic principle (which arguably was not questioned by anyone at this stage of the game) that any retirement plan qualification rule that applies because a participant is married must be applied with respect to a participant who is married to an individual of the same sex. The Notice provides the example of a participant in a plan subject to the rules of IRC 401(a)(11) who is married to a same-sex spouse and notes that such participant cannot waive a qualified joint and several annuity without obtaining his or her same-sex spouses consent as required by IRC 417.Retroactive Application of Windsor – Moving on to the “meaty” questions, the IRS indicated that qualified retirement plans are required to reflect the outcome of Windsor as of June 26, 2013.

  10. 2020 Cost of Living Adjustments for Retirement Plans

    Jackson Lewis P.C.Keith A. DropkinNovember 6, 2019

    $6,000$6,500Defined Contribution Plan Limit (IRC § 415(c))The limitation for annual contributions to a defined contribution plan (such as a 401(k) plan or profit sharing plan).$56,000$57,000Defined Benefit Plan Limit (IRC § 415(b))The limitation on the annual benefits from a defined benefit plan.$225,000$230,000Annual Compensation Limit (IRC § 401(a)(17))The maximum amount of compensation that may be taken into account for benefit calculations and nondiscrimination testing.$280,000($415,000 for certain gov’t plans)$285,000($425,000 for certain gov’t plans)Highly Compensated Employee Threshold (IRC § 414(q))The definition of an HCE includes a compensation threshold for the prior year. A retirement plan’s discrimination testing is based on coverage and benefits for HCEs.$125,000(for 2020 HCE determination)$130,000(for 2021 HCE determination)Key Employee Compensation Threshold (IRC § 416)The definition of a key employee includes a compensation threshold. Key employees must be determined for purposes of applying the top-heavy rules.