Summary of EGTRRA Employee Benefits Provisions

<body topmargin=0 leftmargin=0 marginheight=0 marginwidth=0> <script type="text/javascript"> //OwnerIQ var __oiq_pct = 50; if( __oiq_pct>=100 || Math.floor(Math.random()*100/(100-__oiq_pct)) > 0 ) { var _oiqq = _oiqq || []; _oiqq.push(['oiq_addPageBrand','Lycos']); _oiqq.push(['oiq_addPageCat','Internet > Websites']); _oiqq.push(['oiq_addPageLifecycle','Intend']); _oiqq.push(['oiq_doTag']); (function() { var oiq = document.createElement('script'); oiq.type = 'text/javascript'; oiq.async = true; oiq.src = document.location.protocol + '//px.owneriq.net/stas/s/lycosn.js'; var s = document.getElementsByTagName('script')[0]; s.parentNode.insertBefore(oiq, s); })(); } //Google Analytics var _gaq = _gaq || []; _gaq.push(['_setAccount','UA-21402695-19']); _gaq.push(['_setDomainName','tripod.com']); _gaq.push(['_setCustomVar',1,'member_name','stromata',3]); _gaq.push(['_trackPageview']); (function() { var ga = document.createElement('script'); ga.type = 'text/javascript'; ga.async = true; ga.src = ('https:' == document.location.protocol ? 'https://ssl' : 'http://www') + '.google-analytics.com/ga.js'; var s = document.getElementsByTagName('script')[0]; s.parentNode.insertBefore(ga, s); })(); //Lycos Init function getReferrer() { var all= this.document.cookie; if (all== '') return false; var cookie_name = 'REFERRER='; var start = all.lastIndexOf(cookie_name); if (start == -1) return false; start += cookie_name.length; var end = all.indexOf(';', start); if (end == -1) end = all.length; return all.substring(start, end); } function getQuery() { var rfr = getReferrer(); if (rfr == '') return false; var q = extractQuery(rfr, 'yahoo.com', 'p='); if (q) return q; q = extractQuery(rfr, '', 'q='); return q ? q : ""; } function extractQuery(full, site, q_param) { var start = full.lastIndexOf(site); if (start == -1) return false; start = full.lastIndexOf(q_param); if (start == -1) return false; start += q_param.length; var end = full.indexOf('&', start); if (end == -1) end = full.length; return unescape(full.substring(start, end)).split(" ").join("+"); } function generateHref(atag, template){ atag.href=template.replace('_MYURL_', window.location.href.replace('http://', '')).replace('_MYTITLE_','Check%20out%20this%20Tripod%20Member%20site!'); } var lycos_ad = Array(); var lycos_onload_timer; var cm_role = "live"; var cm_host = "tripod.lycos.com"; var cm_taxid = "/memberembedded"; var tripod_member_name = "stromata"; var tripod_member_page = "stromata/id146.htm"; var tripod_ratings_hash = "1726327003:63c21f4c6751b060dc7bbef4fc138de1"; var lycos_ad_category = null; var lycos_ad_remote_addr = "209.202.244.9"; var lycos_ad_www_server = "www.tripod.lycos.com"; var lycos_ad_track_small = ""; var lycos_ad_track_served = ""; var lycos_search_query = getQuery(); </script> <script type="text/javascript" src="http://scripts.lycos.com/catman/init.js"></script> <script type='text/javascript'> var googletag = googletag || {}; googletag.cmd = googletag.cmd || []; (function() { var gads = document.createElement('script'); gads.async = true; gads.type = 'text/javascript'; var useSSL = 'https:' == document.location.protocol; gads.src = (useSSL ? 'https:' : 'http:') + '//www.googletagservices.com/tag/js/gpt.js'; var node = document.getElementsByTagName('script')[0]; node.parentNode.insertBefore(gads, node); })(); </script> <script type='text/javascript'> googletag.cmd.push(function() { googletag.defineSlot('/95963596/TRI_300X250_dfp', [300, 250], 'div-gpt-ad-1450204159126-0').addService(googletag.pubads()); googletag.defineSlot('/95963596/TRI_above_728x90_dfp', [728, 90], 'div-gpt-ad-1450204159126-1').addService(googletag.pubads()); googletag.defineSlot('/95963596/TRI_below_728x90_dfp', [728, 90], 'div-gpt-ad-1450204159126-2').addService(googletag.pubads()); googletag.pubads().enableSingleRequest(); googletag.enableServices(); }); </script> <script type="text/javascript"> (function(isV) { if( !isV ) { return; } var adMgr = new AdManager(); var lycos_prod_set = adMgr.chooseProductSet(); var slots = ["leaderboard", "leaderboard2", "toolbar_image", "toolbar_text", "smallbox", "top_promo", "footer2", "slider"]; var adCat = this.lycos_ad_category; adMgr.setForcedParam('page', (adCat && adCat.dmoz) ? adCat.dmoz : 'member'); if (this.lycos_search_query) { adMgr.setForcedParam("keyword", this.lycos_search_query); } else if(adCat && adCat.find_what) { adMgr.setForcedParam('keyword', adCat.find_what); } for (var s in slots) { var slot = slots[s]; if (adMgr.isSlotAvailable(slot)) { this.lycos_ad[slot] = adMgr.getSlot(slot); } } adMgr.renderHeader(); adMgr.renderFooter(); }((function() { var w = 0, h = 0, minimumThreshold = 300; if (top == self) { return true; } if (typeof(window.innerWidth) == 'number' ) { w = window.innerWidth; h = window.innerHeight; } else if (document.documentElement && (document.documentElement.clientWidth || document.documentElement.clientHeight)) { w = document.documentElement.clientWidth; h = document.documentElement.clientHeight; } else if (document.body && (document.body.clientWidth || document.body.clientHeight)) { w = document.body.clientWidth; h = document.body.clientHeight; } return ((w > minimumThreshold) && (h > minimumThreshold)); }()))); window.onload = function() { var f = document.getElementById("FooterAd"); var b = document.getElementsByTagName("body")[0]; b.appendChild(f); f.style.display = "block"; document.getElementById('lycosFooterAdiFrame').src = '/adm/ad/footerAd.iframe.html'; // DOM Inj Ad (function(isTrellix) { var e = document.createElement('iframe'); e.style.border = '0'; e.style.margin = 0; e.style.display = 'block'; e.style.cssFloat = 'right'; e.style.height = '254px'; e.style.overflow = 'hidden'; e.style.padding = 0; e.style.width = '300px'; var isBlokedByDomain = function( href ) { var blockedDomains = [ "ananyaporn13000.tripod.com", "xxxpornxxx.tripod.com" ]; var flag = false; for( var i=0; i<blockedDomains.length; i++ ) { if( href.search( blockedDomains[ i ] ) >= 0 ) { flag = true; } } return flag; } var getMetaContent = function( metaName ) { var metas = document.getElementsByTagName('meta'); for (i=0; i<metas.length; i++) { if( metas[i].getAttribute("name") == metaName ) { return metas[i].getAttribute("content"); } } return false; } var getCommentNodes = function(regexPattern) { var nodes = {}; var nodesA = []; var preferredNodesList = ['a', 'c', 'b']; (function getNodesThatHaveComments(n, pattern) { if (n.hasChildNodes()) { if (n.tagName === 'IFRAME') { return false; } for (var i = 0; i < n.childNodes.length; i++) { if ((n.childNodes[i].nodeType === 8) && (pattern.test(n.childNodes[i].nodeValue))) { var areaName = pattern.exec(n.childNodes[i].nodeValue)[1]; nodes[areaName] = n; } else if (n.childNodes[i].nodeType === 1) { getNodesThatHaveComments(n.childNodes[i], pattern); } } } }(document.body, regexPattern)); for (var i in preferredNodesList) { if (nodes[preferredNodesList[i]]) { if( isTrellix && nodes[preferredNodesList[i]].parentNode.parentNode.parentNode.parentNode ) { nodesA.push(nodes[preferredNodesList[i]].parentNode.parentNode.parentNode.parentNode); } else { nodesA.push( nodes[preferredNodesList[i]] ); } } } return nodesA; } var properNode = null; var areaNodes = getCommentNodes( new RegExp( '^area Type="area_(\\w+)"' ) ); for (var i = 0; i < areaNodes.length; i++) { var a = parseInt(getComputedStyle(areaNodes[i]).width); if ((a >= 300) && (a <= 400)) { properNode = areaNodes[i]; break; } } var propertyName = getMetaContent("property") || false; if( isTrellix && (properNode) ) { e.src = '/adm/ad/injectAd.iframe.html'; properNode.insertBefore(e, properNode.firstChild); } else if( isTrellix && !( properNode ) ) // Slap the ad eventhought there is no alocated slot { e.src = '/adm/ad/injectAd.iframe.html'; e.style.cssFloat = 'none'; var cdiv = document.createElement('div'); cdiv.style = "width:300px;margin:10px auto;"; cdiv.appendChild( e ); b.insertBefore(cdiv, b.lastChild); } else if( !isBlokedByDomain( location.href ) ) { var injF = document.createElement('iframe'); injF.style.border = '0'; injF.style.margin = 0; injF.style.display = 'block'; injF.style.cssFloat = 'none'; injF.style.height = '254px'; injF.style.overflow = 'hidden'; injF.style.padding = 0; injF.style.width = '300px'; injF.src = '/adm/ad/injectAd.iframe.html'; if( b && ( !isTrellix || ( typeof isTrellix == "undefined" ) ) ) // All other tripod props { var cdiv = document.createElement('div'); cdiv.style = "width:300px;margin:10px auto;"; cdiv.appendChild( injF ); b.insertBefore(cdiv, b.lastChild); } } }( document.isTrellix )); } </script> <div id="tb_container" style="background:#DFDCCF; border-bottom:1px solid #393939; position:relative; z-index:999999999!important">  <style> .adCenterClass{margin:0 auto} </style> <div id="tb_ad" class="adCenterClass" style="display:block!important; overflow:hidden; width:916px;"> <div id="ad_container" style="display:block!important; float:left; width:728px "> <script type="text/javascript"> if (typeof lycos_ad !== "undefined" && "leaderboard" in lycos_ad) { document.write(lycos_ad['leaderboard']); } </script> </div> </div> </div> <script type="text/javascript"> if (typeof lycos_ad !== "undefined" && "slider" in lycos_ad) { document.write(lycos_ad['slider']); } </script>  <div id="FooterAd" style="background:#DFDCCF; border-top:1px solid #393939; clear:both; display:none; width:100%!important; position:relative; z-index:999999!important; height:90px!important"> <div class="adCenterClass" style="display:block!important; overflow:hidden; width:916px;"> <div id="footerAd_container" style="display:block!important; float:left; width:728px"> <iframe id="lycosFooterAdiFrame" style="border:0; display:block; float:left; height:96px; overflow:hidden; padding:0; width:750px"></iframe> </div> </div> </div> <table cellpadding=0 cellspacing=0 border=0 height="100%"><tr> <td valign="top" width=185 BGCOLOR="#000000" TEXT="#F7F7FF" background="0e0b9c00dvldtc.jpg"> <div> <B> <TABLE BORDER="0" CELLPADDING="2" CELLSPACING="0" WIDTH="70" BORDERCOLORLIGHT="#C0C0C0" BORDERCOLORDARK="#808080" FRAME="BOX" RULES="ALL" HSPACE="0" VSPACE="0" > <tR> <tD VALIGN=TOP HEIGHT= 76 WIDTH="66"><IMG BORDER="0" SRC="1x1.gif" HEIGHT="76" ALIGN="bottom" WIDTH="66" HSPACE="0" VSPACE="0"></tD> </tR> </TABLE></b></div> <DIV ALIGN="LEFT"></DIV> <div> <I><B>Stromata</b></I><FONT SIZE="1" COLOR="#333399" FACE="Arial" ><B> </b></FONT></div> <div> <A HREF="http://stromata.typepad.com/stromata_blog/" TARGET="_top" TITLE="http://stromata.typepad.com/stromata_blo"><U><B>Stromata Blog</b></U></A></div> <div> <A HREF="index.htm" TARGET="_top" TITLE="Stromata"><U><B>Home</b></U></A></div> <div> <A HREF="id231.htm" TARGET="_top" TITLE="Table of Contents"><U><B>Table of Contents</b></U></A></div> <div> <A HREF="id17.htm" TARGET="_top" TITLE="Religion"><U><B>Religion</b></U></A></div> <div> <A HREF="id18.htm" TARGET="_top" TITLE="History"><U><B>History</b></U></A></div> <div> <A HREF="id19.htm" TARGET="_top" TITLE="Literature"><U><B>Literature</b></U></A></div> <div> <A HREF="id20.htm" TARGET="_top" TITLE="Science Fiction"><U><B>Science Fiction</b></U></A></div> <div> <A HREF="id21.htm" TARGET="_top" TITLE="Wargaming"><U><B>Wargaming</b></U></A></div> <div> <A HREF="id22.htm" TARGET="_top" TITLE="Public Policy"><U><B>Public Policy</b></U></A></div> <div> <A HREF="id53.htm" TARGET="_top" TITLE="Photo Album"><U><B>Photo Album</b></U></A></div> <div> <A HREF="id24.htm" TARGET="_top" TITLE="Stories and Verse"><U><B>Stories and Verse</b></U></A></div> <div> <A HREF="id107.htm" TARGET="_top" TITLE="ERISA"><U><B>ERISA</b></U></A></div> <div> <A HREF="id25.htm" TARGET="_top" TITLE="Miscellaneous"><U><B>Miscellaneous</b></U></A></div> <div> <A HREF="id26.htm" TARGET="_top" TITLE="Letters of Comment"><U><B>Letters of Comment</b></U></A></div> <div> <A HREF="id27.htm" TARGET="_top" TITLE="Whats New?"><U><B>What's New?</b></U></A></div> <div> <A HREF="id106.htm" TARGET="_top" TITLE="Indexes"><U><B>Indexes</b></U></A></div> <div> <B>[</b><A HREF="id26_instant_loc_form.htm" TARGET="_top" TITLE="Letters of Comment"><U><B>To comment, click here.</b></U></A><B>]</b></div> <div> <A HREF="id146_m.htm" TARGET="TRLX_Middle" TITLE="Summary of EGTRRA Employee Benefits Prov"><U><B><Return to Top of Page></b></U></A></div> <bR> </td> <td valign="top" BGCOLOR="#FFFBF0" TEXT="#080000"> <div> <FONT SIZE="5" COLOR="#0099FF" FACE="Arial" ><I><B>Stromata</b></I></FONT>   <A NAME="________home"><IMG BORDER="0" SRC="1x1.gif" HEIGHT="1" ALIGN="bottom" WIDTH="1" HSPACE="0" VSPACE="0" ></A>  |     <A HREF="index.htm" TARGET="_top" TITLE="Stromata"><U>home</U></A></div> <div> <IMG BORDER="0" SRC="1x1.gif" HEIGHT="17" ALIGN="BOTTOM" HSPACE="0" VSPACE="0" WIDTH="9">     <A HREF="id153.htm" TARGET="_top" TITLE="Following the Terms of the Plan"><U><IMG SRC="0e409110.png" border=0 width="9" height="17" ALT="next" ALIGN="BOTTOM" HSPACE="0" VSPACE="0"></U></A>       <IMG BORDER="0" SRC="1x1.gif" HEIGHT="17" ALIGN="BOTTOM" HSPACE="0" VSPACE="0" WIDTH="17">   <A HREF="id107.htm" TARGET="_top" TITLE="ERISA"><U><IMG SRC="0e311110.png" border=0 width="17" height="17" ALT="up" ALIGN="BOTTOM" HSPACE="0" VSPACE="0"></U></A> </div> <div> <B>Summary of EGTRRA Employee Benefits Provisions</b><B>   |   </b><A HREF="id153.htm" TARGET="_top" TITLE="Following the Terms of the Plan"><U>"Following the Terms of the Plan"</U></A><B>   |   </b><A HREF="id166.htm" TARGET="_top" TITLE="Sales of Stock Options to Family Limited"><U>Sales of Stock Options to Family Limited Partnerships: Caveats</U></A><B>   |   </b><A HREF="id167.htm" TARGET="_top" TITLE="Light Through the Glass"><U>Light Through the Glass</U></A><B>   |   </b><A HREF="id428.htm" TARGET="_top" TITLE="Section 410(b): A Cascading Case Study"><U>Section 410(b): A Cascading Case Study</U></A></div> <div> <IMG SRC="04107040.png" border=0 width="263" height="4" ALIGN="BOTTOM" HSPACE="0" VSPACE="0"></div> <div> Summary of EGTRRA Employee Benefits Provisions</div> <DIV ALIGN="LEFT"></DIV> <div> <B>ECONOMIC GROWTH AND TAX RELIEF RECONCILIATION ACT OF 2001</b></div> <div> <I><B>Summary of Employee Benefits Provisions</b></I></div> <bR> <div> <TABLE BORDER="2" CELLPADDING="1" CELLSPACING="1" WIDTH="881" BORDERCOLORLIGHT="#C0C0C0" BORDERCOLORDARK="#808080" FRAME="BOX" RULES="ALL" HSPACE="0" VSPACE="0" > <tR> <tD VALIGN=TOP HEIGHT= 16 WIDTH="106"><div> <B>Code Sec.</b></div> </tD> <tD VALIGN=TOP WIDTH="106"><div> <B>Act Sec.</b></div> </tD> <tD VALIGN=TOP WIDTH="322"><div> <B>What Is Changed</b></div> </tD> <tD VALIGN=TOP WIDTH="322"><div> <B>What Needs to Be Done/</b><I><B>Comments</b></I></div> </tD> </tR> <tR> <tD VALIGN=TOP HEIGHT= 115 WIDTH="106"><div> 25B [new]</div> </tD> <tD VALIGN=TOP WIDTH="106"><div> 618</div> </tD> <tD VALIGN=TOP WIDTH="322"><div> Individuals with AGI of less than $25,000 ($50,000 for joint return filers, $37,500 for heads of household) receive a nonrefundable tax credit for elective deferrals or IRA contributions up to $2,000.  The credit starts at 50% and phases out rapidly.</div> <div> <I>Effective for calendar years beginning after 12/31/01. Expires at the end of 2006.</I></div> </tD> <tD VALIGN=TOP WIDTH="322"><div> <I>Another petty income transfer that implicitly increases marginal tax rates for low-income households.</I></div> </tD> </tR> <tR> <tD VALIGN=TOP HEIGHT= 115 WIDTH="106"><div> 45E [new]</div> </tD> <tD VALIGN=TOP WIDTH="106"><div> 619</div> </tD> <tD VALIGN=TOP WIDTH="322"><div> Companies with fewer than 100 employees receive a 50% tax credit (to a maximum of $500) for costs of establishing a qualified, SIMPLE or SEP plan.  The credit is available for the year of startup and the next two years.  The plan must have at least one NHCE participant.</div> <div> <I>Effective for tax years beginning after 12/31/01.</I></div> </tD> <tD VALIGN=TOP WIDTH="322"><IMG BORDER="0" SRC="1x1.gif" HEIGHT="115" ALIGN="bottom" WIDTH="322" HSPACE="0" VSPACE="0"></tD> </tR> <tR> <tD VALIGN=TOP HEIGHT= 82 ><NOBR><div> 72(t)(9) [new]</div> </NOBR></tD> <tD VALIGN=TOP WIDTH="106"><div> 641(a)</div> </tD> <tD VALIGN=TOP WIDTH="322"><div> Premature distributions from rollover accounts under state and local government §457(b) plans are subject to excise tax if they would have been subject to tax upon direct distribution from the transferor plan.</div> <div> <I>Effective for distributions made after 12/31/01.</I></div> </tD> <tD VALIGN=TOP WIDTH="322"><div> <I>This technical change prevents participants in qualified and §403(b) plans from evading the excise tax on premature distributions by using a §457(b) plan as a conduit.  Amounts accumulated under §457(b) plans remain exempt from the tax.</I></div> </tD> </tR> <tR> <tD VALIGN=TOP HEIGHT= 131 WIDTH="106"><div> 127</div> </tD> <tD VALIGN=TOP WIDTH="106"><div> 411</div> </tD> <tD VALIGN=TOP WIDTH="322"><div> Exclusion of employer-provided tuition assistance is made permanent and extended to graduate level courses</div> <div> <I>Effective for expenses of courses that begin after 12/31/01</I></div> </tD> <tD VALIGN=TOP WIDTH="322"><div> Amend §127 to include graduate course work.</div> <div> <I>Reimbursement of expenses of job-related courses is generally possible under §132/§162.  The advantage of using a §127 plan is that it avoids need to delve into what is or is not job-related and can cover programs that qualify the employee for new profession (e. g., work toward law degree).  Disadvantages are the $5,250 unindexed cap and “nondiscrimination” standards.</I></div> </tD> </tR> <tR> <tD VALIGN=TOP HEIGHT= 82 WIDTH="106"><div> 132</div> </tD> <tD VALIGN=TOP WIDTH="106"><div> 665</div> </tD> <tD VALIGN=TOP WIDTH="322"><div> The value of retirement planning advice and information provided by employers on a nondiscriminatory basis is not includible in taxable income.</div> <div> <I>Effective for tax years beginning after 12/31/01.</I></div> </tD> <tD VALIGN=TOP WIDTH="322"><div> <I>This clarifying provision removes a mostly theoretical concern.  It may be possible to set up salary reduction programs under which employees can pay for individualized retirement counseling with pre-tax dollars, though nondiscrimination rules are an obstacle.</I></div> </tD> </tR> <tR> <tD VALIGN=TOP HEIGHT= 66 WIDTH="106"><div> 219(b)</div> </tD> <tD VALIGN=TOP WIDTH="106"><div> 601</div> </tD> <tD VALIGN=TOP WIDTH="322"><div> IRA contribution limits are increased and indexed.  Taxpayers over age 49 allowed to make additional contributions.  <I>See table of revised limitations for details.</I></div> </tD> <tD VALIGN=TOP WIDTH="322"><div> Increase deductible, nondeductible or Roth IRA contributions.</div> <div> <I>The new limits apply to both traditional and Roth IRA’s.</I></div> </tD> </tR> <tR> <tD VALIGN=TOP HEIGHT= 65 WIDTH="106"><div> 401(a)(9)</div> </tD> <tD VALIGN=TOP WIDTH="106"><div> 634</div> </tD> <tD VALIGN=TOP WIDTH="322"><div> The IRS is directed to adopt a new mortality table for minimum distribution and other purposes reflecting current life expectancy.</div> <div> <I>No effective date specified.</I></div> </tD> <tD VALIGN=TOP WIDTH="322"><div> <I>The IRS specifically declined to adopt an updated table when it issued the amended §401(a)(9) proposed regulations.</I></div> </tD> </tR> <tR> <tD VALIGN=TOP HEIGHT= 65 WIDTH="106"><div> 401(a)(11)</div> </tD> <tD VALIGN=TOP WIDTH="106"><div> 648</div> </tD> <tD VALIGN=TOP WIDTH="322"><div> In determining whether the value of a participant’s benefit is $5,000 or less (and thus eligible for mandatory cashout), rollover accounts are disregarded.</div> <div> <I>Effective for distributions made after 12/31/01.</I></div> </tD> <tD VALIGN=TOP WIDTH="322"><div> Clarify plan documents to the extent necessary.</div> <div> <I>This change conforms the law to what has probably been the practice of most employers.</I></div> </tD> </tR> <tR> <tD VALIGN=TOP HEIGHT= 82 WIDTH="106"><div> 401(a)(17)</div> </tD> <tD VALIGN=TOP WIDTH="106"><div> 611(c)</div> </tD> <tD VALIGN=TOP WIDTH="322"><div> The cap on compensation that plans may take into account is raised to $200,000, indexed in $5,000 increments (down from $10,000 increments).</div> <div> <I>Effective for plan years beginning after 12/31/01.</I></div> </tD> <tD VALIGN=TOP WIDTH="322"><div> Amend plans to specify new limit if it is not incorporated by reference.</div> <div> <I>This increase indirectly liberalizes all “nondiscrimination” tests for plans with participants who earn over $160,000 a year.</I></div> </tD> </tR> <tR> <tD VALIGN=TOP HEIGHT= 115 WIDTH="106"><div> 401(a)(31)</div> </tD> <tD VALIGN=TOP WIDTH="106"><div> 657</div> </tD> <tD VALIGN=TOP WIDTH="322"><div> The default form of distribution for mandatory cashouts in excess of $1,000 is a direct rollover to an IRA.  In the absence of an election by the participant, the plan administrator is responsible for selecting the IRA custodian and dealing with the requisite paperwork.</div> <div> <I>Effective for distributions made after issuance of implementing regulations.</I></div> </tD> <tD VALIGN=TOP WIDTH="322"><div> Amend plan documents and procedures.</div> <div> <I>Default direct rollovers, which the IRS already permits, are a useful option for distributing benefits to participants who cannot be located.  Otherwise, this provision is an administrative nuisance.</I></div> </tD> </tR> <tR> <tD VALIGN=TOP HEIGHT= 197 WIDTH="106"><div> 401(k)(2)(B)</div> </tD> <tD VALIGN=TOP WIDTH="106"><div> 646</div> </tD> <tD VALIGN=TOP WIDTH="322"><div> Distributions of §401(k) elective deferrals and attributable income may be made upon any “severance from employment”.</div> <div> <I>Effective for distributions made after 12/31/01.</I></div> </tD> <tD VALIGN=TOP WIDTH="322"><div> <I>Although neither the statute nor the legislative history defines “severance from employment”, the evident intent is to allow distributions whenever employees leave the plan sponsor’s controlled group due to sale of assets or of a subsidiary.  The best course of action in most cases will be to retain present plan language (stating that distributions will be made on “separation from service”) and to amend appropriately when distributions are desired in a particular transaction.  Transferring account balances to the buyer’s plan is often preferable to making distributions merely because the employer has a new owner.</I></div> </tD> </tR> <tR> <tD VALIGN=TOP HEIGHT= 115 WIDTH="106"><div> 401(k)(2)(B)</div> </tD> <tD VALIGN=TOP WIDTH="106"><div> 636(a)</div> </tD> <tD VALIGN=TOP WIDTH="322"><div> The IRS is directed to amend the §401(k) safe harbor hardship distribution regulations to provide that recipients of hardship distributions are precluded from making elective deferrals for only 6, rather than the present 12, months.</div> <div> <I>The amended regulation is to be effective for distributions made after 12/31/01.</I></div> </tD> <tD VALIGN=TOP WIDTH="322"><div> Begin operating plans in accordance with the rule stated in the statute.  Plan amendments should be delayed until regulations are adopted.</div> <div> <I>Since plans are permitted to impose more stringent rules than the safe harbor, employers are not required to make this change.</I></div> </tD> </tR> <tR> <tD VALIGN=TOP HEIGHT= 115 WIDTH="106"><div> 401(m)</div> </tD> <tD VALIGN=TOP WIDTH="106"><div> 666</div> </tD> <tD VALIGN=TOP WIDTH="322"><div> The IRS’s authority to prescribe regulations preventing multiple use of the ADP and ACP test 2% corridors is withdrawn.</div> <div> <I>Effective for plan years beginning after 12/31/01.</I></div> </tD> <tD VALIGN=TOP WIDTH="322"><div> Revise §401(k)/(m) testing procedures.</div> <div> <I>Ironically, some confused recordkeepers have been treating the multiple use test as an additional way to satisfy §401(k) and (m) when the plan fails the regular tests, rather than as a further limitation to be applied when the regular tests are satisfied.  These folks will be dismayed by the new law.</I></div> </tD> </tR> <tR> <tD VALIGN=TOP HEIGHT= 115 WIDTH="106"><div> 402(a)</div> </tD> <tD VALIGN=TOP><NOBR><div> 641(f), 642(c)</div> </NOBR></tD> <tD VALIGN=TOP WIDTH="322"><div> Grandfathered 10-year averaging for participants born before 1/1/36 is denied to amounts that have been rolled into qualified plans from any vehicle other than a qualified plan.</div> <div> <I>Effective with the new rollover provisions.</I></div> </tD> <tD VALIGN=TOP WIDTH="322"><div> <I>This technical change prevents participants from gaining favorable tax treatment for accumulations under non-§401(a) plans by rolling them into a qualified plan.  No attempt has been made to prevent participants from investing rollovers in employer stock and later taking advantage of the exclusion of net unrealized appreciation.</I></div> </tD> </tR> <tR> <tD VALIGN=TOP HEIGHT= 65 WIDTH="106"><div> 402(c)</div> </tD> <tD VALIGN=TOP><NOBR><div> 641(a), 641(b)</div> </NOBR></tD> <tD VALIGN=TOP WIDTH="322"><div> Distributions from qualified plans may be rolled into §403(b) or state/local government §457( b) plans.</div> <div> <I>Effective for distributions made after 12/31/01.</I></div> </tD> <tD VALIGN=TOP WIDTH="322"><div> Amend plans to reflect new rules.</div> <div> <I>This and other provisions of the new law vastly expand rollover opportunities.  As before, no plan ever has an obligation to </I><I><U>accept</U></I><I> rollovers.</I></div> </tD> </tR> <tR> <tD VALIGN=TOP HEIGHT= 114 WIDTH="106"><div> 402(c)(2)</div> </tD> <tD VALIGN=TOP WIDTH="106"><div> 643</div> </tD> <tD VALIGN=TOP WIDTH="322"><div> After-tax contributions to qualified plans may be rolled into qualified defined contribution plans (via trustee-to-trustee transfer only) or IRA’s.</div> <div> <I>Effective for distributions made after 12/31/01.</I></div> </tD> <tD VALIGN=TOP WIDTH="322"><div> <I>Due to recordkeeping burdens, many plans may prefer not to accept after-tax transfers.</I></div> <div> <I>A separate account within a defined benefit plan is a defined contribution plan.</I></div> <div> <I>There is no mechanism for rolling after-tax contributions that were transferred into an IRA back into a qualified plan.</I></div> </tD> </tR> <tR> <tD VALIGN=TOP HEIGHT= 65 WIDTH="106"><div> 402(c)(3)</div> </tD> <tD VALIGN=TOP WIDTH="106"><div> 644(a)</div> </tD> <tD VALIGN=TOP WIDTH="322"><div> The IRS is given the authority to grant hardship waivers of  the requirement that rollovers be made within 60 days after receipt of the distribution.</div> <div> <I>Effective for distributions made after 12/31/01.</I></div> </tD> <tD VALIGN=TOP WIDTH="322"><div> <I>Taxpayers who wish to seek waivers should request private letter rulings.</I></div> </tD> </tR> <tR> <tD VALIGN=TOP HEIGHT= 246 WIDTH="106"><div> 402(c)(4)</div> </tD> <tD VALIGN=TOP WIDTH="106"><div> 636(b)</div> </tD> <tD VALIGN=TOP WIDTH="322"><div> Distributions on account of hardship are not eligible rollover distributions.</div> <div> <I>Effective for distributions made after 12/31/01.</I></div> </tD> <tD VALIGN=TOP WIDTH="322"><div> Consider adding hardship withdrawal provisions to plans that currently permit in-service withdrawals.</div> <div> <I>Under prior law, hardship distributions from §401(k) plans were not eligible for rollover.  Now hardship distributions from other types of plan will receive comparable treatment.  The effect is to exempt distributions from mandatory withholding, so that funds needed to meet a hardship are not diminished by taxes taken off the top.  Where a plan already allows elective in-service distributions (e. g., after age 59½), participants will benefit from an alternative hardship provision, particularly if they withdraw funds to meet very large medical expenses.  On the other hand, hardship determinations are an additional administrative burden that many employers will not want to shoulder.</I></div> </tD> </tR> <tR> <tD VALIGN=TOP HEIGHT= 66 WIDTH="106"><div> 402(c)(9)</div> </tD> <tD VALIGN=TOP WIDTH="106"><div> 641(d)</div> </tD> <tD VALIGN=TOP WIDTH="322"><div> Surviving spouses may roll distributions into qualified plans, §403(b) plans or state/local government §457(b) plans, as well as into IRA’s.</div> <div> <I>Effective for distributions made after 12/31/01.</I></div> </tD> <tD VALIGN=TOP WIDTH="322"><div> <I>As before, death beneficiaries other than surviving spouses may not roll over distributions.  Their only tax-saving opportunity is 10-year averaging, available if the deceased participant was born before 1/1/36. </I></div> </tD> </tR> <tR> <tD VALIGN=TOP HEIGHT= 82 WIDTH="106"><div> 402(f)</div> </tD> <tD VALIGN=TOP WIDTH="106"><div> 641(c)</div> </tD> <tD VALIGN=TOP WIDTH="322"><div> The tax notice requirement for eligible rollover distributions is expanded to reflect the liberalized rollover rules.</div> <div> <I>Effective for distributions made after 12/31/01.</I></div> </tD> <tD VALIGN=TOP WIDTH="322"><div> Prepare notices for plans that have not been required to furnish them in the past.</div> <div> <I>The IRS will presumably issue a standard notice incorporating the new rules before they become effective.</I></div> </tD> </tR> <tR> <tD VALIGN=TOP HEIGHT= 148 WIDTH="106"><div> 402(g)</div> </tD> <tD VALIGN=TOP WIDTH="106"><div> 611(d), 631</div> </tD> <tD VALIGN=TOP WIDTH="322"><div> Limits on elective deferrals under §401(k) and §403(b) plans are increased.  Taxpayers over age 49 are allowed to make additional contributions.  <I>See table of revised limitations for details.</I></div> </tD> <tD VALIGN=TOP WIDTH="322"><div> Amend plans to permit catch-up contributions by older participants.</div> <div> <I>Plans do not have to provide for catch-ups, but they must allow them for all over-age-49 participants if they are allowed for anyone.  Catch-up contributions are exempt from §415.  They apparently are included in ADP testing if made by NHCE’s, excluded if made by HCE’s.  (Thus accepting them cannot adversely affect ADP results.)</I></div> </tD> </tR> <tR> <tD VALIGN=TOP HEIGHT= 98 WIDTH="106"><div> 402A</div> </tD> <tD VALIGN=TOP WIDTH="106"><div> 617</div> </tD> <tD VALIGN=TOP WIDTH="322"><div> §401(k) plans may permit participants to make nonexcludible elective deferrals (“Roth deferrals”).  Distributions of these deferrals and attributable income will be tax-free if the same conditions are met as apply to Roth IRA distributions.</div> <div> <I>Effective for calendar years beginning after 12/31/05.</I></div> </tD> <tD VALIGN=TOP WIDTH="322"><div> Too far away to worry about.</div> <div> <I>While this option will be attractive to participants who make maximum deferrals, it will impose additional recordkeeping costs on plan sponsors and is not likely to be widely utilized by employees.</I></div> </tD> </tR> <tR> <tD VALIGN=TOP HEIGHT= 82 WIDTH="106"><div> 403(b)(2) [repealed]</div> </tD> <tD VALIGN=TOP><NOBR><div> 632(a), 632(b)</div> </NOBR></tD> <tD VALIGN=TOP WIDTH="322"><div> The §403(b) maximum exclusion allowance is repealed.  For years 1999 through 2001, the allowance may be computed without regard to defined benefit plan accruals.</div> <div> <I>Effective for plan years beginning after 12/31/01.</I></div> </tD> <tD VALIGN=TOP WIDTH="322"><div> Amend plans to delete exclusion allowance provisions.</div> <div> <I>In the past, the exclusion allowance limited employees’ ability to take advantage of the nonaggregation of qualified plan and §403(b) plan limitations under §415.</I></div> </tD> </tR> <tR> <tD VALIGN=TOP HEIGHT= 82 WIDTH="106"><div> 403(b)(3)</div> </tD> <tD VALIGN=TOP WIDTH="106"><div> 632(a)</div> </tD> <tD VALIGN=TOP WIDTH="322"><div> The definition of “includible compensation” is amended to exclude any amounts earned more than 5 years previously by an individual who has terminated employment.</div> <div> <I>Effective for limitation years beginning after 12/31/01.</I></div> </tD> <tD VALIGN=TOP WIDTH="322"><div> Amend plans to reflect amended definition.</div> <div> <I>This change coordinates with the use of “includible compensation” in §415.  Without it, a former employee could continue receiving §403(b) contributions forever.</I></div> </tD> </tR> <tR> <tD VALIGN=TOP HEIGHT= 82 WIDTH="106"><div> 403(b)(8)</div> </tD> <tD VALIGN=TOP WIDTH="106"><div> 641(b)</div> </tD> <tD VALIGN=TOP WIDTH="322"><div> Distributions from §403(b) plans may be rolled into qualified plans and state/local government §457(b) plans.  (Rollovers to other §403(b) plans and to IRA’s are already permitted.)</div> <div> <I>Effective for distributions made after 12/31/01.</I></div> </tD> <tD VALIGN=TOP WIDTH="322"><div> Amend plans to reflect new rules.</div> </tD> </tR> <tR> <tD VALIGN=TOP HEIGHT= 82 ><NOBR><div> 403(b)(13) [new]</div> </NOBR></tD> <tD VALIGN=TOP WIDTH="106"><div> 647(a)</div> </tD> <tD VALIGN=TOP WIDTH="322"><div> Trustee-to-trustee transfers from §403(b) plans to governmental defined benefit plans are excluded from taxable income if the transfer is used to purchase past service credit under the transferee plan.</div> <div> <I>Effective for transfers after 12/31/01.</I></div> </tD> <tD VALIGN=TOP WIDTH="322"><div> <I>IRS rulings allow similar transfers from qualified plans to governmental plans.</I></div> </tD> </tR> <tR> <tD VALIGN=TOP HEIGHT= 229 WIDTH="106"><div> 404(a)(1)(D)</div> </tD> <tD VALIGN=TOP WIDTH="106"><div> 652</div> </tD> <tD VALIGN=TOP WIDTH="322"><div> Contributions to defined benefit plans are fully deductible up to the plan’s unfunded current liability, regardless of other limitations.  If the plan terminates during the year and is subject to Title IV of ERISA, the deduction limit is the amount required to make plan assets sufficient for all benefit liabilities.  In calculating unfunded or standard termination liability, a plan with 100 or fewer participants may not include benefits accrued by HCE’s under plan amendments adopted within the preceding two years.</div> <div> <I>Effective for plan years beginning after 12/31/01.</I></div> </tD> <tD VALIGN=TOP WIDTH="322"><div> <I>The unfunded current liability limit was previously available only for plans with more than 100 participants, and it was possible for an employer to be required to make contributions to a terminating plan in excess of the §404(a)(1) limits (which then had to be deducted over the following 10 years).</I></div> <bR> <div> <I>The legislative history states that only plans with PBGC insurance coverage are to be entitled to the increased deduction limits, but the actual text applies that restriction only to the deduction of contributions to terminating plans.  The omission from the unfunded current liability provision is probably a typographical error.</I></div> </tD> </tR> <tR> <tD VALIGN=TOP HEIGHT= 148 WIDTH="106"><div> 404(a)(3)</div> </tD> <tD VALIGN=TOP WIDTH="106"><div> 616(a)</div> </tD> <tD VALIGN=TOP WIDTH="322"><div> The deduction limit for profit sharing and stock bonus plans is increased to 25% of participants’ aggregate compensation and is made applicable to money purchase pension plans.  (The IRS may by regulation increase the limit for money purchase plans.)</div> <div> <I>Effective for tax years beginning after 12/31/01.</I></div> </tD> <tD VALIGN=TOP WIDTH="322"><div> Money purchase pension plans should be converted into profit sharing plans (or stock bonus plans, in the case of money purchase ESOP’s).</div> <div> <I>Harmonizing deduction limits for all DC plans removes any rationale for adopting money purchase pension plans (which are burdened with minimum funding, QJSA and §204(h) requirements).  It is scarcely conceivable that the IRS will provide a higher deduction limit for money purchase plans through regulations..</I></div> </tD> </tR> <tR> <tD VALIGN=TOP HEIGHT= 82 ><NOBR><div> 404(a)(12) [new]</div> </NOBR></tD> <tD VALIGN=TOP WIDTH="106"><div> 616(b)</div> </tD> <tD VALIGN=TOP WIDTH="322"><div> §401(k) elective deferrals and salary reduction contributions to §125 cafeteria and §132(f) pre-tax transit/parking plans are included in compensation when calculating §404 deduction limits.</div> <div> <I>Effective for tax years beginning after 12/31/01.</I></div> </tD> <tD VALIGN=TOP WIDTH="322"><div> <I>This amendment reduces the disparity between the §404 and §415 compensation bases.</I></div> </tD> </tR> <tR> <tD VALIGN=TOP HEIGHT= 131 WIDTH="106"><div> 404(k)</div> </tD> <tD VALIGN=TOP WIDTH="106"><div> 662</div> </tD> <tD VALIGN=TOP WIDTH="322"><div> An employer may deduct dividends paid on employer stock held in its ESOP if participants are given a choice between receiving the dividends directly or having them retained by the plan and invested in employer stock.</div> <div> <I>Effective for tax years beginning after 12/31/01.</I></div> </tD> <tD VALIGN=TOP WIDTH="322"><div> Amend DC plans that hold large blocks of dividend-paying employer stock to place the stock into an ESOP set up within the plan.</div> <div> <I>A number of large companies have obtained results similar to those possible under the revised law by passing through dividends and allowing participants to make offsetting elective deferrals.  That process will now be simpler and less constrained.</I></div> </tD> </tR> <tR> <tD VALIGN=TOP HEIGHT= 82 WIDTH="106"><div> 404(n) [new]</div> </tD> <tD VALIGN=TOP WIDTH="106"><div> 614</div> </tD> <tD VALIGN=TOP WIDTH="322"><div> §401(k) elective deferrals are exempt from §404(a)(3), (7) and (9) deduction limits.</div> <div> <I>Effective for tax years beginning after 12/31/01.</I></div> </tD> <tD VALIGN=TOP WIDTH="322"><div> <I>This liberalization will be useful to companies that contribute more than 25% of participants’ compensation to defined benefit plans and to small firms where nonelective contributions press against the deduction limits.</I></div> </tD> </tR> <tR> <tD VALIGN=TOP HEIGHT= 65 WIDTH="106"><div> 408(d)(3)</div> </tD> <tD VALIGN=TOP WIDTH="106"><div> 642</div> </tD> <tD VALIGN=TOP WIDTH="322"><div> Distributions from IRA’s may be rolled into qualified plans, §403(b) plans or state/local government §457(b) on same basis as into other IRA’s.</div> <div> <I>Effective for distributions made after 12/31/01.</I></div> </tD> <tD VALIGN=TOP WIDTH="322"><div> <I>This provision does not permit rollovers of nondeductible IRA contributions or of distributions from IRA’s inherited by anyone other than a surviving spouse.</I></div> </tD> </tR> <tR> <tD VALIGN=TOP HEIGHT= 65 WIDTH="106"><div> 408(d)(3)</div> </tD> <tD VALIGN=TOP WIDTH="106"><div> 644(b)</div> </tD> <tD VALIGN=TOP WIDTH="322"><div> The IRS is given the authority to grant hardship waivers of  the requirement that rollovers of distributions from IRA’s be made within 60 days after receipt.</div> <div> <I>Effective for distributions made after 12/31/01.</I></div> </tD> <tD VALIGN=TOP WIDTH="322"><div> <I>Taxpayers who wish to seek waivers should request private letter rulings.</I></div> </tD> </tR> <tR> <tD VALIGN=TOP HEIGHT= 82 WIDTH="106"><div> 408(p)</div> </tD> <tD VALIGN=TOP WIDTH="106"><div> 611(f), 631</div> </tD> <tD VALIGN=TOP WIDTH="322"><div> Limits on elective deferrals under SIMPLE plans are increased.  Participants over age 49 are allowed to make additional contributions.  <I>See table of revised limitations for details.</I></div> </tD> <tD VALIGN=TOP WIDTH="322"><div> Amend SIMPLE documents to permit catch-up contributions.</div> <div> <I>Because they are not subject to §404 deduction limits, SIMPLE’s are a good vehicle for individuals with small amounts of self-employment income.</I></div> </tD> </tR> <tR> <tD VALIGN=TOP HEIGHT= 82 WIDTH="106"><div> 408(q) [new]</div> </tD> <tD VALIGN=TOP WIDTH="106"><div> 602</div> </tD> <tD VALIGN=TOP WIDTH="322"><div> Qualified, §403(b) and governmental §457(b) plans may be amended to include IRA’s within the plan.  In-plan IRA’s are subject to normal IRA rules.  ERISA fiduciary standards apply to their assets.</div> <div> <I>Effective for plan years beginning after 12/31/02.</I></div> </tD> <tD VALIGN=TOP WIDTH="322"><div> <I>The same idea was tried in the past and repealed because hardly anybody used it.  Since then, it has become even simpler for individuals to set up IRA’s on their own, further reducing the market for in-plan vehicles.</I></div> </tD> </tR> <tR> <tD VALIGN=TOP HEIGHT= 253 WIDTH="106"><div> 409(p) [new]</div> </tD> <tD VALIGN=TOP WIDTH="106"><div> 656</div> </tD> <tD VALIGN=TOP WIDTH="322"><div> Allocations of employer stock to accounts of participants in S corporation ESOP’s are treated as distributions (and are subject to a 50% excise tax under §4979A) if the participant’s account is deemed to own 10% or more of the employer stock held by the ESOP or he is part of a family whose accounts own 20% in the aggregate. This draconian provision comes into effect only if the individuals with large ESOP accounts collectively own at least 50% of all of the company's stock (with options, restricted stock and other "synthetic equity" counting for that purpose.</div> <div> <I>Generally effective for plan years beginning after 12/31/04.  Effective immediately for ESOP’s established after 3/14/01 and for ESOP’s of corporations that made S elections after that date.</I></div> </tD> <tD VALIGN=TOP WIDTH="322"><div> <I>This section takes aim at ESOP’s set up by small, family-run S corporations.  Congress rejected the option of eliminating the possibility of “schemes” in this area by treating ESOP’s like other qualified plans and subjecting their shares of S corporation income to tax as UBTI under §512(e).  The "synthetic equity" rules means that this provision will have some impact on the original “ESOP tax holiday” scheme, involving the issuance of restricted stock to current shareholders and the sale of unrestricted shares to an ESOP, but its consequences can be avoided by keeping the beneficiaries of the scheme out of the ESOP. The IRS evidently did not believe that it needed legislative help on this front.</I></div> </tD> </tR> <tR> <tD VALIGN=TOP HEIGHT= 181 WIDTH="106"><div> 410(b)</div> </tD> <tD VALIGN=TOP WIDTH="106"><div> 664</div> </tD> <tD VALIGN=TOP WIDTH="322"><div> The IRS is directed to reinstate the pre-1998 regulation that allowed a §401(k) plan established by a for-profit affiliate of a tax-exempt employer to satisfy §410(b) if 95% of all employees of for-profit affiliates were eligible.  This special rule is to be available only if none of the tax-exempt affiliates has its own §401(k) plan.</div> <div> <I>The regulation is to be effective as of the expiration of the prior regulation.</I></div> </tD> <tD VALIGN=TOP WIDTH="322"><div> Consider establishing §401(k) plans for for-profit affiliates for whom that has not been a practicable option.</div> <div> <I>The IRS believed that the repeal of the prohibition on exempt organization §401(k) plans made the prior regulation obsolete, but it did not take into account the reluctance of many exempt employers to extend §401(k) coverage to employees already covered by §403(b) plans.  It is often impossible for a plan covering only for-profit affiliates to satisfy the normal §410(b) tests, because those units often include disproportionate numbers of highly compensated employees. </I></div> </tD> </tR> <tR> <tD VALIGN=TOP HEIGHT= 131 WIDTH="106"><div> 411(a)</div> </tD> <tD VALIGN=TOP WIDTH="106"><div> 633</div> </tD> <tD VALIGN=TOP WIDTH="322"><div> The minimum vesting schedule for matching contributions is made the same as the top-heavy vesting schedule (either 3-year cliff vesting or 2-to-6-year graded vesting).</div> <div> <I>Effective for contributions for plan years beginning after 12/31/01.</I></div> </tD> <tD VALIGN=TOP WIDTH="322"><div> Amend matching contribution vesting provisions that do not satisfy the new minimum standard.</div> <div> <I>The “improved” minimum vesting schedule is only slightly more liberal than the old one, and most plans probably satisfy it already.  Where the vesting schedule must be modified, recordkeeping considerations will favor applying the new schedule to nonelective and pre-2002 matching contributions.</I></div> </tD> </tR> <tR> <tD VALIGN=TOP HEIGHT= 196 WIDTH="106"><div> 411(d)(6)</div> </tD> <tD VALIGN=TOP WIDTH="106"><div> 645(a)</div> </tD> <tD VALIGN=TOP WIDTH="322"><div> Defined contribution plans may eliminate any optional form of distribution, so long as they retain a lump sum option.  (The IRS may limit this right by regulation.)</div> <div> When account balances are transferred from one DC plan to another, optional distribution forms not available under the transferee plan may be eliminated, provided that the participant consented to the transfer.</div> <div> <I>Effective for plan years beginning after 12/31/01.</I></div> </tD> <tD VALIGN=TOP WIDTH="322"><div> Eliminate non-lump sum options in DC plans unless there is some very good reason to keep them.</div> <div> <I>Money purchase pension plans cannot eliminate annuity options (independently required by §401(a)(11) and §417).</I></div> <div> <I>The transfer rule does not appear to be very important in light of the general authorization of the elimination of non-lump sum forms.</I></div> <div> <I>The statutory rules are more liberal than those in current IRS regulations.  While the IRS has the authority to adopt stricter rules by regulation, the statute should override pre-existing regulations.</I></div> </tD> </tR> <tR> <tD VALIGN=TOP HEIGHT= 131 WIDTH="106"><div> 411(d)(6)</div> </tD> <tD VALIGN=TOP WIDTH="106"><div> 645(b)</div> </tD> <tD VALIGN=TOP WIDTH="322"><div> The IRS is directed to amend the regulations under §411(d)(6) to permit the reduction or elimination of retirement-type subsidies and optional forms of distribution from defined benefit plans in cases where those benefits create significant burdens or complexities and their elimination would have no more than a <I>de minimis</I> adverse impact on participants.</div> <div> <I>Final regulations are to be issued no later than 12/31/03.</I></div> </tD> <tD VALIGN=TOP WIDTH="322"><div> Nothing can be done until the mandated regulations appear.</div> </tD> </tR> <tR> <tD VALIGN=TOP HEIGHT= 98 WIDTH="106"><div> 412(c)(7)</div> </tD> <tD VALIGN=TOP WIDTH="106"><div> 651</div> </tD> <tD VALIGN=TOP WIDTH="322"><div> The alternative full funding limitation for defined benefit plans (currently 160% of current liability) is phased out, increasing to 165% of current liability in 2002 and 170% in 2003.  After that, it is repealed, and only the standard full funding limitation applies.</div> <div> <I>Effective for plan years beginning after 12/31/01.</I></div> </tD> <tD VALIGN=TOP WIDTH="322"><div> Reflect the new limitation in actuarial valuations.</div> <div> <I>The increase in the full funding limitation is of greatest importance to small employers that wish to make the largest possible contributions to their DB plans.</I></div> </tD> </tR> <tR> <tD VALIGN=TOP HEIGHT= 98 WIDTH="106"><div> 412(c)(9)</div> </tD> <tD VALIGN=TOP WIDTH="106"><div> 661</div> </tD> <tD VALIGN=TOP WIDTH="322"><div> The actuarial valuation date for a defined benefit plan may be any date within the plan year or within the month preceding the plan year.  For plans that are at least 125% funded for current liability, any date in the preceding plan year may be used.</div> <div> <I>Effective for plan years beginning after 12/31/01.</I></div> </tD> <tD VALIGN=TOP WIDTH="322"><div> <I>Perhaps actuarial firms will be able to schedule valuations more efficiently, because they will not have to wait for beginning-of-year data before beginning work.  Otherwise, greater freedom in choosing valuation dates is not significant.</I></div> </tD> </tR> <tR> <tD VALIGN=TOP HEIGHT= 98 WIDTH="106"><div> 414(p)</div> </tD> <tD VALIGN=TOP WIDTH="106"><div> 635</div> </tD> <tD VALIGN=TOP WIDTH="322"><div> The rules for dividing plan benefits pursuant to a qualified domestic relations order are extended to §457(b) plans.</div> <div> <I>Effective for transfers, distributions and payments after 12/31/01.</I></div> </tD> <tD VALIGN=TOP WIDTH="322"><div> Add QDRO provisions to §457(b) plans.</div> <div> <I>Courts can divide §457(b) plan interests without the benefit of the QDRO rules, so the use of a QDRO is optional with the parties.  The advantage of using a QDRO is that distributions become taxable to the alternate payee rather and are eligible for rollover.</I></div> </tD> </tR> <tR> <tD VALIGN=TOP HEIGHT= 98 WIDTH="106"><div> 415(b)</div> </tD> <tD VALIGN=TOP WIDTH="106"><div> 611(a)</div> </tD> <tD VALIGN=TOP WIDTH="322"><div> The §415 dollar limit for defined benefit plans is increased to $160,000.  The limit is not reduced if distributions begin at or after age 62 and is actuarially increased for commencement after age 65.  Indexing is unchanged ($5,000 increments).</div> <div> <I>Effective for limitation years </I><I><B>ending</b></I><I> after 12/31/01.</I></div> </tD> <tD VALIGN=TOP WIDTH="322"><div> Amend plans to specify new limit if it is not incorporated by reference (as it ought to be).</div> <div> <I>For fiscal year plans, the increased limit is effective for the year that begins in 2001 (immediately for many plans).</I></div> </tD> </tR> <tR> <tD VALIGN=TOP HEIGHT= 49 WIDTH="106"><div> 415(c)</div> </tD> <tD VALIGN=TOP WIDTH="106"><div> 611(b)</div> </tD> <tD VALIGN=TOP WIDTH="322"><div> The §415 dollar limit for defined contribution plans is increased to $40,000, indexed in $1,000 increments.</div> <div> <I>Effective for limitation years beginning after 12/31/01.</I></div> </tD> <tD VALIGN=TOP WIDTH="322"><div> Amend plans to specify new limit if it is not incorporated by reference.</div> </tD> </tR> <tR> <tD VALIGN=TOP HEIGHT= 98 WIDTH="106"><div> 415(c)</div> </tD> <tD VALIGN=TOP WIDTH="106"><div> 632(a)</div> </tD> <tD VALIGN=TOP WIDTH="322"><div> The §415 percentage limit for defined contribution plans is increased to 100% of compensation.</div> <div> <I>Effective for limitation years beginning after 12/31/01.</I></div> </tD> <tD VALIGN=TOP WIDTH="322"><div> Amend plans to specify new limit if limit is not incorporated by reference.</div> <div> <I>Due to deduction limitations, this increase will be of limited use to most for-profit employers.  Tax-exempt employers can greatly increase the generosity of their plans for rank-and-file and lower-paid HCE’s.</I></div> </tD> </tR> <tR> <tD VALIGN=TOP HEIGHT= 115 ><NOBR><div> 415(c)(3)(E) [new]</div> </NOBR></tD> <tD VALIGN=TOP WIDTH="106"><div> 632(a)</div> </tD> <tD VALIGN=TOP WIDTH="322"><div> §403(b)(3) “includible compensation” is used as the §415 definition of “compensation” for §403(b) plans.</div> <div> <I>Effective for limitation years beginning after 12/31/01.</I></div> </tD> <tD VALIGN=TOP WIDTH="322"><div> Amend plans to include new definition in place of any current definition.</div> <div> <I>The use of “includible compensation” as §415 compensation makes it possible to contribute on behalf of former employees, since includible compensation is based on the last full year of service, not the last limitation year. </I></div> </tD> </tR> <tR> <tD VALIGN=TOP HEIGHT= 98 WIDTH="106"><div> 415(c)(4) [repealed]</div> </tD> <tD VALIGN=TOP WIDTH="106"><div> 632(a)</div> </tD> <tD VALIGN=TOP WIDTH="322"><div> The alternative §415 limitations for employees of schools, hospitals, etc. who participate in §403(b) plans are eliminated.</div> <div> <I>Effective for limitation years beginning after 12/31/01.</I></div> </tD> <tD VALIGN=TOP WIDTH="322"><div> Amend plans to eliminate these alternatives.</div> <div> <I>This change is a corollary to the repeal of the §403(b)(2) exclusion allowance.  The increase in the §415 percentage limit to 100% of compensation removes any need for the old “A” and “B” elections, and the “C” election is meaningless without the exclusion allowance.</I></div> </tD> </tR> <tR> <tD VALIGN=TOP HEIGHT= 98 ><NOBR><div> 415(k)(4) [new]</div> </NOBR></tD> <tD VALIGN=TOP WIDTH="106"><div> 632(b)</div> </tD> <tD VALIGN=TOP WIDTH="322"><div> The rule that a §403(b) plan is treated as maintained by the participant for §415 purposes (inadvertently repealed along with §415(e)) is reinstated retroactively.</div> <div> <I>Effective for limitation years beginning after 12/31/99.</I></div> </tD> <tD VALIGN=TOP WIDTH="322"><div> It is unlikely that any documents will need to be amended, since hardly anyone was aware of the repeal.</div> <div> <I>The effect of this rule is that annual additions to a qualified plan and a §403(b) plan are subject to separate §415 limits unless the participant owns more than 50% of the employer that maintains the qualified plan.</I></div> </tD> </tR> </TABLE></div> <bR> <div> <TABLE BORDER="2" CELLPADDING="1" CELLSPACING="1" WIDTH="881" BORDERCOLORLIGHT="#C0C0C0" BORDERCOLORDARK="#808080" FRAME="BOX" RULES="ALL" HSPACE="0" VSPACE="0" > <tR> <tD VALIGN=TOP HEIGHT= 409 WIDTH="106"><div> 416</div> </tD> <tD VALIGN=TOP WIDTH="106"><div> 613</div> </tD> <tD VALIGN=TOP WIDTH="322"><div> The top-heavy rules are liberalized by making it less likely that plans will be considered top-heavy and easing the minimum benefit/contribution requirements:</div> <div> <IMG BORDER="0" SRC="Symb075c00b700c800000000.png" HEIGHT="13" WIDTH="24" ALIGN="bottom" HSPACE="0" VSPACE="0">§401(k)(12) safe harbor plans are exempted from §416.  If such a plan is part of a required or permissive aggregation group, all contributions, including elective deferrals, may be counted toward the minimum contribution requirement.</div> <div> <IMG BORDER="0" SRC="Symb075c00b700c800000000.png" HEIGHT="13" WIDTH="24" ALIGN="bottom" HSPACE="0" VSPACE="0">All matching contributions plan may be counted toward the minimum contribution requirement.</div> <div> <IMG BORDER="0" SRC="Symb075c00b700c800000000.png" HEIGHT="13" WIDTH="24" ALIGN="bottom" HSPACE="0" VSPACE="0">Frozen top-heavy DB plans are not required to provide minimum benefits to non-key employees for years in which none are accrued by key employees.</div> <div> <IMG BORDER="0" SRC="Symb075c00b700c800000000.png" HEIGHT="13" WIDTH="24" ALIGN="bottom" HSPACE="0" VSPACE="0">Only 5% shareholders, 1% shareholders who earn over $150,000 a year and officers who earn over $130,000 a year (indexed in $10,000 increments) are key employees.  The lookback rule for key employee status is eliminated.</div> <div> <IMG BORDER="0" SRC="Symb075c00b700c800000000.png" HEIGHT="13" WIDTH="24" ALIGN="bottom" HSPACE="0" VSPACE="0">Only distributions during the 12-month period ending on the determination date are added back to the top-heavy test (except for in-service distributions, to which the prior law’s 5-year lookback applies).</div> <div> <I>Effective for plans years beginning after 12/31/01.</I></div> </tD> <tD VALIGN=TOP WIDTH="322"><div> Amend plan top-heavy provisions to reflect statutory changes.</div> <div> <I>The change in the definition of “key employee” affects other sections where that term is used, e. g., §79 “nondiscrimination” testing, the §125 concentration test and the §419A(d) requirement that separate accounts be maintained for funded post-retirement life insurance and health benefits for key employees.</I></div> <bR> <div> <I>The use of matching contributions to meet minimum contribution requirements is voluntary and may not always be desirable, as it reduces the incentive for non-key employees to make elective deferrals.  A technical correction at some point will presumably remove the conflict with the contingent benefit rule (§401(k)(4)(A)).</I></div> <div> <I>The top-heavy exemption may encourage small employers to adopt safe harbor §401(k) plans.</I></div> </tD> </tR> <tR> <tD VALIGN=TOP HEIGHT= 99 WIDTH="106"><div> 446</div> </tD> <tD VALIGN=TOP WIDTH="106"><div> 658</div> </tD> <tD VALIGN=TOP WIDTH="322"><div> An uncodified provision states that an employer’s determination of the year in which a contribution to a multiemployer plan is deductible under §404(a)(6) is not a method of accounting.</div> <div> <I>Effective immediately.</I></div> </tD> <tD VALIGN=TOP WIDTH="322"><div> <I>This special interest provision protects employers that attempted to “accelerate” the deduction of contributions to multiemployer pension plans, using the technique disapproved in the </I><I><U>Lucky Stores</U></I><I> and </I><I><U>American Stores</U></I><I> cases, from §481(a) adjustments, thus overruling PLR 200110031.</I></div> </tD> </tR> <tR> <tD VALIGN=TOP HEIGHT= 229 WIDTH="106"><div> 457(a)</div> </tD> <tD VALIGN=TOP WIDTH="106"><div> 649(b)</div> </tD> <tD VALIGN=TOP WIDTH="322"><div> The constructive receipt doctrine is made inapplicable to §457(b) plans maintained by state or local governments, thus conforming the tax treatment of those plans and qualified plans.</div> <div> <I>Effective for distributions made after 12/31/01.</I></div> </tD> <tD VALIGN=TOP WIDTH="322"><div> Amend distribution provisions of state/local government plans to eliminate anti-constructive receipt features.</div> <div> <I>Section 457(d) does not permit in-service withdrawals, except on account of hardship, before age 70½, so this change is of limited value to active employees.  It will make it possible for former employees to leave their balances in the plan and withdraw them at will, though the availability of rollovers removes most of the need for such flexibility.</I></div> <bR> <div> <I>Nongovernmental §457(b) plans remain subject to constructive receipt principles and thus must avoid making distributions available to participants prematurely.</I></div> </tD> </tR> <tR> <tD VALIGN=TOP HEIGHT= 180 WIDTH="106"><div> 457(b)</div> </tD> <tD VALIGN=TOP WIDTH="106"><div> 611(e), 631, 632(c)</div> </tD> <tD VALIGN=TOP WIDTH="322"><div> The dollar limit on contributions to §457(b) plans is increased to conform to the §402(g) limit, and the percentage limit is increased from one-third to 100% of compensation.  For state and local government plans only, additional contributions are allowed by employees over age 49.  This new catch-up cannot be used in years in which the existing §457(b)(3) catch-up is available.  <I>See table of revised limitations for details.</I></div> </tD> <tD VALIGN=TOP WIDTH="322"><div> Amend plans to increase contribution limits and permit catch-up contributions by older participants.</div> <div> <I>The catch-up option need not be extended to all participants, though there is little reason to discriminate.</I></div> <bR> <div> <I>Plan sponsors will have to decide which catch-up rule to apply to participants who are within 3 years of normal retirement age.  The old one is more generous for most employees, but it may be possible to craft plan provisions to ensure that each participant has the better choice available.</I></div> </tD> </tR> <tR> <tD VALIGN=TOP HEIGHT= 212 WIDTH="106"><div> 457(c)</div> </tD> <tD VALIGN=TOP WIDTH="106"><div> 615</div> </tD> <tD VALIGN=TOP WIDTH="322"><div> Contribution limits for §457(b) plans are no longer reduced by §401(k) elective deferrals and §403(b) contributions.</div> <div> <I>Effective for plan years beginning after 12/31/01.</I></div> </tD> <tD VALIGN=TOP WIDTH="322"><div> Amend plans to eliminate coordination provisions.</div> <div> Establish eligible deferred compensation plans for executives of nongovernmental exempt organizations.</div> <div> <I>Eligible §457(b) plans have barely existed in the private sector, because the coordination rule effectively limited contributions to zero.  Setting these plans up for nongovernmental exempt employers should now become routine.</I></div> <bR> <div> <I>Nongovernmental §457(b) plans are unfunded plans of deferred compensation and therefore </I><I><U>must</U></I><I> be limited to a select group of management or highly compensated employees in order to comply with ERISA.</I></div> </tD> </tR> <tR> <tD VALIGN=TOP HEIGHT= 65 WIDTH="106"><div> 457(d)</div> </tD> <tD VALIGN=TOP WIDTH="106"><div> 649(a)</div> </tD> <tD VALIGN=TOP WIDTH="322"><div> The additional minimum distribution requirements for §457(b) plans are repealed.  They are now subject to the same §401(a)(9) rules as qualified and §403(b) plans.</div> <div> <I>Effective for calendar years beginning after 12/31/01.</I></div> </tD> <tD VALIGN=TOP WIDTH="322"><div> Amend plan documents to reflect the new law.</div> <div> <I>The repealed section limited the distribution period for nonspouse beneficiaries to 15 years.</I></div> </tD> </tR> <tR> <tD VALIGN=TOP HEIGHT= 49 WIDTH="106"><div> 457(d)</div> </tD> <tD VALIGN=TOP WIDTH="106"><div> 641(a)</div> </tD> <tD VALIGN=TOP WIDTH="322"><div> State and local government §457(b) plans must allow direct rollovers.</div> <div> <I>Effective for distributions made after 12/31/01.</I></div> </tD> <tD VALIGN=TOP><NOBR><div> Amend plan documents and procedures.</div> </NOBR></tD> </tR> <tR> <tD VALIGN=TOP HEIGHT= 98 WIDTH="106"><div> 457(e)</div> </tD> <tD VALIGN=TOP WIDTH="106"><div> 641(a)</div> </tD> <tD VALIGN=TOP WIDTH="322"><div> Distributions from state/local government §457(b) plans that fall within the §402(c) definition of “eligible rollover distribution” may be rolled over into IRA’s, qualified plans, §403(b) plans or other state/local government §457(b) plans.</div> <div> <I>Effective for distributions made after 12/31/01.</I></div> </tD> <tD VALIGN=TOP WIDTH="322"><div> Advise participants of rollover options.</div> <div> <I>Other provisions of the new law require §457(b) plans to issue §402(f) tax notices to distributees.</I></div> </tD> </tR> <tR> <tD VALIGN=TOP HEIGHT= 115 ><NOBR><div> 457(e)(16) [new]</div> </NOBR></tD> <tD VALIGN=TOP WIDTH="106"><div> 647(b)</div> </tD> <tD VALIGN=TOP WIDTH="322"><div> Trustee-to-trustee transfers from state/local government §457(b) plans to governmental defined benefit plans are excluded from taxable income if the transfer is used to purchase past service credit under the transferee plan.</div> <div> <I>Effective for transfers made after 12/31/01.</I></div> </tD> <tD VALIGN=TOP WIDTH="322"><div> <I>The limitation to governmental plans is not stated directly in the statute but is implied by the fact that a trustee-to-trustee transfer is required, and only §457(b) plans of state and local governments have trustees.  IRS rulings permit similar transfers by qualified plans, and another provision of the new law extends them to §403(b) plans.  </I></div> </tD> </tR> <tR> <tD VALIGN=TOP HEIGHT= 165 WIDTH="106"><div> 4972</div> </tD> <tD VALIGN=TOP WIDTH="106"><div> 653</div> </tD> <tD VALIGN=TOP WIDTH="322"><div> Nondeductible contributions to defined benefit plans are exempted from the §4972 excise tax, so long as they do not increase plan assets beyond the full funding limitation.</div> <div> <I>Effective for tax years beginning after 12/31/01.</I></div> </tD> <tD VALIGN=TOP WIDTH="322"><div> <I>This change will primarily aid companies that make unusually large contributions to their DB plans, so that DB and DC contributions total more than 25% of compensation.  In that case, the DB contributions are deductible only up to the greater of the ERISA minimum funding requirement or 25% of pay (§404(a)(7)).  Under the new rule, the deduction limits do not change, but the excise tax applies only to DB contributions in excess of the full funding limitation or DC contributions in excess of 25% of compensation.</I></div> </tD> </tR> <tR> <tD VALIGN=TOP HEIGHT= 115 WIDTH="106"><div> 4972</div> </tD> <tD VALIGN=TOP WIDTH="106"><div> 637</div> </tD> <tD VALIGN=TOP WIDTH="322"><div> Contributions to SIMPLE plans for household employees are exempt from the excise tax on nondeductible contributions.</div> <div> <I>Effective for tax years beginning after 12/31/01.</I></div> </tD> <tD VALIGN=TOP WIDTH="322"><div> <I>Whether the §4972 excise tax applies to contributions to plans for nonbusiness employees is a disputed question, and the new statute explicitly disclaims any intent to resolve it generally.  The new provision assures individuals that they can set up SIMPLE plans for servants without being penalized but is silent on qualified plans.</I></div> </tD> </tR> <tR> <tD VALIGN=TOP HEIGHT= 164 WIDTH="106"><div> 4975(f)(6)</div> </tD> <tD VALIGN=TOP WIDTH="106"><div> 612</div> </tD> <tD VALIGN=TOP WIDTH="322"><div> Plan loans to sole proprietors, 10% partners and 5% S corporations shareholders are allowed on the same basis as loans to other participants.</div> <div> <I>Effective for “years” (sc. plan years) beginning after 12/31/01.</I></div> </tD> <tD VALIGN=TOP WIDTH="322"><div> Amend plans to eliminate prior restrictions on loans to these participants.</div> <div> <I>Loans to these participants previously were prohibited without an individual exemption from the Department of Labor.  The conference report instructs the DoL to grant a retroactive class exemption for loans to partners and S corporation shareholders that were not prohibited when made (because the employer was then a C corporation) but became prohibited when the employer switched to partnership, LLC or S corporation status.</I></div> </tD> </tR> </TABLE></div> <bR> <div> <TABLE BORDER="2" CELLPADDING="1" CELLSPACING="1" WIDTH="881" BORDERCOLORLIGHT="#C0C0C0" BORDERCOLORDARK="#808080" FRAME="BOX" RULES="ALL" HSPACE="0" VSPACE="0" > <tR> <tD VALIGN=TOP HEIGHT= 354 WIDTH="106"><bR> <div> 4980F [new]</div> </tD> <tD VALIGN=TOP WIDTH="106"><div> 659</div> </tD> <tD VALIGN=TOP WIDTH="322"><div> An excise tax is imposed on sponsors of defined benefit and money purchase pension plans who fail to give participants advance notice of amendments that significantly reduce future benefit accruals.  The tax is $100 per day per uninformed participant, capped at $500,000 a year.  Notice must be given “within a reasonable period before the effective date of the amendment”, may be given before the amendment is adopted and must also be given for amendments that significantly reduce early retirement benefits or retirement-type subsidies.  Governmental and church plans are exempt.  ERISA, §204(h) is amended to conform to these notice provisions.</div> <div> <I>Effective immediately, but good faith compliance is sufficient until regulations are issued, and any notice given by 9/7/01 (three months after the enactment of the statute) will be considered timely.</I></div> </tD> <tD VALIGN=TOP WIDTH="322"><div> <I>The new requirement differs from the previous §204(h) notice requirement in these respects:</I></div> <div> <I><IMG BORDER="0" SRC="Symb075c00b700c800000000.png" HEIGHT="13" WIDTH="24" ALIGN="bottom" HSPACE="0" VSPACE="0">The content of the notice is more clearly specified.  It must allow the recipients “to understand the effect of the amendment”.</I></div> <div> <I><IMG BORDER="0" SRC="Symb075c00b700c800000000.png" HEIGHT="13" WIDTH="24" ALIGN="bottom" HSPACE="0" VSPACE="0">There is no precise deadline for notices.  Giving notice at least 15 days before the amendment’s effective date (the prior deadline) presumably is “within a reasonable period”.</I></div> <div> <I><IMG BORDER="0" SRC="Symb075c00b700c800000000.png" HEIGHT="13" WIDTH="24" ALIGN="bottom" HSPACE="0" VSPACE="0">The notice may be given before the amendment is formally adopted.</I></div> <div> <I><IMG BORDER="0" SRC="Symb075c00b700c800000000.png" HEIGHT="13" WIDTH="24" ALIGN="bottom" HSPACE="0" VSPACE="0">Notice must be given of reductions in early retirement subsidies and similar ancillary benefits.  (Some case law required notice in these cases, but the regulations did not.)</I></div> <div> <I>The motive for this fatuous piece of legislation was know-nothing hysteria over cash balance conversions.  Like the original §204(h), this new version serves no interests but those of providers of employee communications services.</I></div> </tD> </tR> <tR> <tD VALIGN=TOP HEIGHT= 115 WIDTH="106"><div> None</div> </tD> <tD VALIGN=TOP WIDTH="106"><div> 620</div> </tD> <tD VALIGN=TOP WIDTH="322"><div> IRS user fees are waived for determination letters and similar rulings requested during its first 5 years of existence (or during any remedial amendment period that begins within that period) for any plan that is maintained by an employer with 100 or fewer employees and covers at least one NHCE.</div> <div> <I>Effective for requests filed after 12/31/01.</I></div> </tD> <tD VALIGN=TOP WIDTH="322"><div> Delay applications by eligible plans until after the end of this year if feasible.</div> <div> <I>Note that the provision is cleverly timed to miss the GUST remedial amendment perio</I><I>d</I><I>.</I></div> </tD> </tR> </TABLE></div> <bR> <bR> <div> <TABLE BORDER="2" CELLPADDING="1" CELLSPACING="1" WIDTH="898" BORDERCOLORLIGHT="#C0C0C0" BORDERCOLORDARK="#808080" FRAME="BOX" RULES="ALL" HSPACE="0" VSPACE="0" > <tR> <tD VALIGN=TOP COLSPAN=10 HEIGHT= 16 WIDTH="870"><div> <B>Revised Limitations, 2001 and later</b></div> </tD> </tR> <tR> <tD VALIGN=TOP HEIGHT= 31 WIDTH="143"><bR> <div> <I>Limitation</I></div> </tD> <tD VALIGN=TOP><NOBR><div> <I>2001 (current)</I></div> </NOBR></tD> <tD VALIGN=TOP WIDTH="89"><bR> <div> <I>2002</I></div> </tD> <tD VALIGN=TOP WIDTH="75"><bR> <div> <I>2003</I></div> </tD> <tD VALIGN=TOP WIDTH="75"><bR> <div> <I>2004</I></div> </tD> <tD VALIGN=TOP WIDTH="75"><bR> <div> <I>2005</I></div> </tD> <tD VALIGN=TOP WIDTH="75"><bR> <div> <I>2006</I></div> </tD> <tD VALIGN=TOP WIDTH="75"><bR> <div> <I>2007</I></div> </tD> <tD VALIGN=TOP WIDTH="75"><bR> <div> <I>2008</I></div> </tD> <tD VALIGN=TOP WIDTH="76"><bR> <div> <I>Later</I></div> </tD> </tR> <tR> <tD VALIGN=TOP HEIGHT= 16 WIDTH="143"><div> <I>§415(b) DB</I></div> </tD> <tD VALIGN=TOP WIDTH="85"><div> $140,000</div> </tD> <tD VALIGN=TOP WIDTH="89"><div> $160,000</div> </tD> <tD VALIGN=TOP COLSPAN=5 WIDTH="387"><div> Indexed in $5,000 increments (same as now)</div> </tD> <tD VALIGN=TOP WIDTH="75"><IMG BORDER="0" SRC="1x1.gif" HEIGHT="16" ALIGN="bottom" WIDTH="75" HSPACE="0" VSPACE="0"></tD> <tD VALIGN=TOP WIDTH="76"><IMG BORDER="0" SRC="1x1.gif" HEIGHT="16" ALIGN="bottom" WIDTH="76" HSPACE="0" VSPACE="0"></tD> </tR> <tR> <tD VALIGN=TOP HEIGHT= 15 WIDTH="143"><div> <I>§415(c) DC</I></div> </tD> <tD VALIGN=TOP WIDTH="85"><div> $35,000</div> </tD> <tD VALIGN=TOP WIDTH="89"><div> $40,000</div> </tD> <tD VALIGN=TOP COLSPAN=7 WIDTH="544"><div> Indexed in $1,000 increments (down from $5,000 increments)</div> </tD> </tR> <tR> <tD VALIGN=TOP HEIGHT= 30 WIDTH="143"><div> <I>     §402(g) elective deferrals</I></div> </tD> <tD VALIGN=TOP WIDTH="85"><div> $10,500</div> </tD> <tD VALIGN=TOP WIDTH="89"><div> $11,000</div> </tD> <tD VALIGN=TOP WIDTH="75"><div> $12,000</div> </tD> <tD VALIGN=TOP WIDTH="75"><div> $13,000</div> </tD> <tD VALIGN=TOP WIDTH="75"><div> $14,000</div> </tD> <tD VALIGN=TOP WIDTH="75"><div> $15,000</div> </tD> <tD VALIGN=TOP COLSPAN=3 WIDTH="232"><div> Indexed in $500 increments (same as now)</div> </tD> </tR> <tR> <tD VALIGN=TOP HEIGHT= 31 WIDTH="143"><div> <I>§402(g) catch-up (over age 49)</I></div> </tD> <tD VALIGN=TOP WIDTH="85"><bR> <div> N/A</div> </tD> <tD VALIGN=TOP WIDTH="89"><bR> <div> $1,000</div> </tD> <tD VALIGN=TOP WIDTH="75"><bR> <div> $2,000</div> </tD> <tD VALIGN=TOP WIDTH="75"><bR> <div> $3,000</div> </tD> <tD VALIGN=TOP WIDTH="75"><bR> <div> $4,000</div> </tD> <tD VALIGN=TOP WIDTH="75"><bR> <div> $5,000</div> </tD> <tD VALIGN=TOP COLSPAN=3 WIDTH="232"><bR> <div> Indexed in $500 increments</div> </tD> </tR> <tR> <tD VALIGN=TOP HEIGHT= 31 WIDTH="143"><div> <I>§401(a)(17) compensation limit</I></div> </tD> <tD VALIGN=TOP WIDTH="85"><bR> <div> $170,000</div> </tD> <tD VALIGN=TOP WIDTH="89"><bR> <div> $200,000</div> </tD> <tD VALIGN=TOP COLSPAN=7 WIDTH="544"><bR> <div> Indexed in $5,000 increments (down from $10,000 increments)</div> </tD> </tR> <tR> <tD VALIGN=TOP HEIGHT= 30 ><NOBR><div> <I>§457(b) contribution limit</I></div> </NOBR></tD> <tD VALIGN=TOP WIDTH="85"><div> $8,500</div> </tD> <tD VALIGN=TOP WIDTH="89"><div> $11,000</div> </tD> <tD VALIGN=TOP WIDTH="75"><div> $12,000</div> </tD> <tD VALIGN=TOP WIDTH="75"><div> $13,000</div> </tD> <tD VALIGN=TOP WIDTH="75"><div> $14,000</div> </tD> <tD VALIGN=TOP WIDTH="75"><div> $15,000</div> </tD> <tD VALIGN=TOP COLSPAN=3 WIDTH="232"><div> Indexed in $500 increments (same as now)</div> </tD> </tR> <tR> <tD VALIGN=TOP HEIGHT= 31 WIDTH="143"><div> <I>§457(b) catch-up (except where §457(b)(3) applies)</I></div> </tD> <tD VALIGN=TOP WIDTH="85"><bR> <div> N/A</div> </tD> <tD VALIGN=TOP WIDTH="89"><bR> <div> $1,000</div> </tD> <tD VALIGN=TOP WIDTH="75"><bR> <div> $2,000</div> </tD> <tD VALIGN=TOP WIDTH="75"><bR> <div> $3,000</div> </tD> <tD VALIGN=TOP WIDTH="75"><bR> <div> $4,000</div> </tD> <tD VALIGN=TOP WIDTH="75"><bR> <div> $5,000</div> </tD> <tD VALIGN=TOP COLSPAN=3 WIDTH="232"><bR> <div> Indexed in $500 increments</div> </tD> </tR> <tR> <tD VALIGN=TOP HEIGHT= 46 WIDTH="143"><div> <I>Maximum §457(b)(3) catch-up for participants within 3 years of NRA</I></div> </tD> <tD VALIGN=TOP WIDTH="85"><bR> <bR> <div> $15,000</div> </tD> <tD VALIGN=TOP WIDTH="89"><bR> <bR> <div> $22,000</div> </tD> <tD VALIGN=TOP WIDTH="75"><bR> <bR> <div> $24,000</div> </tD> <tD VALIGN=TOP WIDTH="75"><bR> <bR> <div> $26,000</div> </tD> <tD VALIGN=TOP WIDTH="75"><bR> <bR> <div> $28,000</div> </tD> <tD VALIGN=TOP WIDTH="75"><bR> <bR> <div> $30,000</div> </tD> <tD VALIGN=TOP COLSPAN=3><NOBR><bR> <bR> <div> Twice standard §457(b) catch-up</div> </NOBR></tD> </tR> <tR> <tD VALIGN=TOP HEIGHT= 31 WIDTH="143"><div> <I>§408(p) SIMPLE plan deferrals</I></div> </tD> <tD VALIGN=TOP WIDTH="85"><bR> <div> $6,000</div> </tD> <tD VALIGN=TOP WIDTH="89"><bR> <div> $7,000</div> </tD> <tD VALIGN=TOP WIDTH="75"><bR> <div> $8,000</div> </tD> <tD VALIGN=TOP WIDTH="75"><bR> <div> $9,000</div> </tD> <tD VALIGN=TOP WIDTH="75"><bR> <div> $10,000</div> </tD> <tD VALIGN=TOP COLSPAN=4 WIDTH="310"><bR> <div> Indexed in $500 increments</div> </tD> </tR> <tR> <tD VALIGN=TOP HEIGHT= 31 WIDTH="143"><div> <I>SIMPLE catch-up (over age 49)</I></div> </tD> <tD VALIGN=TOP WIDTH="85"><bR> <div> N/A</div> </tD> <tD VALIGN=TOP WIDTH="89"><bR> <div> $500</div> </tD> <tD VALIGN=TOP WIDTH="75"><bR> <div> $1,000</div> </tD> <tD VALIGN=TOP WIDTH="75"><bR> <div> $1,500</div> </tD> <tD VALIGN=TOP WIDTH="75"><bR> <div> $2,000</div> </tD> <tD VALIGN=TOP WIDTH="75"><bR> <div> $2,500</div> </tD> <tD VALIGN=TOP COLSPAN=3 WIDTH="232"><bR> <div> Indexed in $500 increments</div> </tD> </tR> <tR> <tD VALIGN=TOP HEIGHT= 46 ><NOBR><bR> <bR> <div> <I>§219 IRA contributions</I></div> </NOBR></tD> <tD VALIGN=TOP WIDTH="85"><bR> <bR> <div> $2,000</div> </tD> <tD VALIGN=TOP WIDTH="89"><bR> <bR> <div> $3,000</div> </tD> <tD VALIGN=TOP WIDTH="75"><bR> <bR> <div> $3,000</div> </tD> <tD VALIGN=TOP WIDTH="75"><bR> <bR> <div> $3,000</div> </tD> <tD VALIGN=TOP WIDTH="75"><bR> <bR> <div> $4,000</div> </tD> <tD VALIGN=TOP WIDTH="75"><bR> <bR> <div> $4,000</div> </tD> <tD VALIGN=TOP WIDTH="75"><bR> <bR> <div> $4,000</div> </tD> <tD VALIGN=TOP WIDTH="75"><bR> <bR> <div> $5,000</div> </tD> <tD VALIGN=TOP WIDTH="76"><div> Indexed in $500 increments</div> </tD> </tR> <tR> <tD VALIGN=TOP HEIGHT= 31 WIDTH="143"><div> <I>IRA catch-up (over age 49)</I></div> </tD> <tD VALIGN=TOP WIDTH="85"><bR> <div> N/A</div> </tD> <tD VALIGN=TOP WIDTH="89"><bR> <div> $500</div> </tD> <tD VALIGN=TOP WIDTH="75"><bR> <div> $500</div> </tD> <tD VALIGN=TOP WIDTH="75"><bR> <div> $500</div> </tD> <tD VALIGN=TOP COLSPAN=5 WIDTH="388"><bR> <div> $1,000 (not indexed)</div> </tD> </tR> </TABLE></div> <div> The limitations apply to plan years or limitation years, whichever is applicable, beginning in the indicated year, except that §415(b) limitations for defined benefit plans apply to years <I>ending</I> in the year.</div> <bR> <div> <A HREF="#________home" TITLE="Summary of EGTRRA Employee Benefits Prov"><U><B><Return to Top of Page></b></U></A></div> <div> <B>  <script type="text/javascript" language="JavaScript">var site="sm8Stromata";var g_frames=true;</script> <script type="text/javascript" language="JavaScript1.2" src="http://sm8.sitemeter.com/js/counter.js?site=sm8Stromata"> </script> <noscript> <a href="http://sm8.sitemeter.com/stats.asp?site=sm8Stromata" target="_top"> <img src="http://sm8.sitemeter.com/meter.asp?site=sm8Stromata" alt="Site Meter" border=0></a> </noscript>    </b></div> </td> </tr></table></body>