IRS Published Guidance
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New Reporting Requirement for the reporting of dividends on employer securities that are distributed from an ESOP: The IRS issued Announcement 2008-56 , which states that, beginning with distributions in 2009, the reporting of dividends on employer securities that are distributed from an employee stock ownership plan under section 404(k) of the Code must be on a Form 1099-R that does not report any other distributions. Accordingly, if there are other distributions from the plan in such years that are not § 404(k) dividends, they must be reported on a separate Form 1099-R. It is anticipated that the instructions will require a special code in box 7 of the form to indicate the special tax treatment and rollover restrictions applicable to § 404(k) dividends.Payments of § 404(k) dividends made directly from the corporation to the plan participants or their beneficiaries are reported on Form 1099-DIV in accordance with the instructions to that form.
Permitted Disparity and taxable wage base for 2008: Revenue Ruling 2007-71 provides covered compensation tables for the year 2008, which are for use in determining contributions to defined benefit plans and permitted disparity.
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Non-Spouse Beneficiary Rollover provision to be Mandatory: The following is from the IRS' website : PPA ’06 § 829(a)(1) added § 402(c)(11) to allow nonspouse beneficiaries to roll over distributions from a qualified plan to an individual retirement plan. Nonspouse beneficiary rollovers are an optional plan provision for 2007... Pursuant to an impending technical correction, nonspouse beneficiary rollovers will be required for plan years beginning on or after January 1, 2008. Click here for details
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Issues Explains How to Fix/Avoid Common 401(k) Mistakes: IRS issues list of common mistakes that occur in 401(k) plans, as well as tips on identifying, avoiding and correcting these mistakes. Click here for details.
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List of Qualified Pension or Retirement Plans Expanded: The IRS has issued Revenue Ruling 2007-58, which supplements Rev. Rul. 94-62, 1994-1 C.B. 164, by expanding the list of entities that are treated as “qualified pension or retirement plans.” It will be published in IRB 2007-37 dated Sept.10, 2007.
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RIP Schedule P: The IRS issued Announcement 2007-63, in which they explained that Schedule P is no longer required. This is not really news, as our friend JEVD over on http://benefitslink.com/boards/ brought to our attention in July of last year that the 2006 version of The Instructions for Form 5500 did not include the Schedule P, and in fact stated that “The Internal Revenue Service no longer requires the filing of Schedule P, Annual Return of Fiduciary of Employee Benefit Trust”. The filing of a complete Form 5500 return will now replace Schedule P as the means of starting the running of the 3/6-year statute of limitations.
- See Announcement 2007-63, for additional details.
- Visit the Form 5500 Series section of the department of labor’s website for information about Form 5500
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Guidance on PPA Rollover and Distribution Provisions :The IRS issued Notice 2007-07, which includes guidance on rollovers, distributions and vesting of non-elective contributions.
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Increase IRA Thresholds and Income Limits: The IRS issued FS-2007-2, which includes highlights of tax law changes that went into effect for tax year 2006. This includes increased IRA contribution limits, increased salary deferral limits, and changes that would allow certain military members to use tax-free combat pay when figuring how much they were eligible to contribute to an IRA. See FS-2007-2, for details
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Qualification Requirements for Plans: The IRS issued Notice 2007-03, which describes the 2006 Cumulative List of changes for plan qualification requirements. This includes changes made under the Pension Protection Act of 2006. The Notice is available at http://www.irs.gov/pub/irs-drop/n-07-03.pdf
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