Tax Facts

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Retirement Plans
403(b) Tax Sheltered Annuities
Q 189 What are the rules concerning nondiscrimination for group health plans under GINA 2008?
Q 306 What is the tax treatment when shares of stock received in a demutualization are sold?
Q 473 Starting Point – What are the tax benefits of a tax sheltered annuity?

Q 474 What types of organizations can make tax sheltered annuities available to their employees?
Q 475 What are the various methods of funding a tax sheltered annuity plan?
Q 476 What requirements must a tax sheltered annuity contract meet?

Q 477 What is the written plan requirement for 403(b) plans?
Q 478 What nondiscrimination requirements must a tax sheltered annuity meet?
Q 479 What limits are there on excludable contributions to a tax sheltered annuity?
Q 480 How does the Section 415 overall limit affect the excludable amount for a tax sheltered annuity?

Q 481 What is the effect of making contributions to a tax sheltered annuity in excess of the “overall limit”?
Q 482 What is the limit on excludable amounts that may be contributed to tax sheltered annuity plans under salary reduction agreements? What are the consequences of exceeding the limit?

Q 483 What special rules apply to tax sheltered annuities for church employees?
Q 484 What is an excess contribution to a tax sheltered annuity? What is an excess aggregate contribution? What excise taxes apply to them?
Q 485 What are the requirements for an automatic enrollment provision in a 403(b) plan?
Q 486 Can an employer make post-retirement contributions to a tax sheltered annuity on behalf of a retired employee?
Q 487 What is a Roth 403(b) Contribution Program?
Q 488 May an employee exchange his tax sheltered annuity contract for another contract within the same plan? What is a plan-to-plan transfer?

Q 489 May an employee, his surviving spouse, or a non-spouse beneficiary roll over a distribution from a tax sheltered annuity?
Q 490 May an employee transfer funds from a 403(b) account to purchase past service credits?
Q 491 Is the employee taxed on incidental life insurance protection and waiver of premium benefits under a tax sheltered annuity contract?
Q 492 How are dividends under a tax sheltered annuity treated for income tax purposes?
Q 493 Are amounts borrowed under a tax sheltered annuity taxable income?
Q 494 Is interest on a loan under a tax sheltered annuity deductible?
Q 495 What distributions from a tax sheltered annuity are subject to a penalty for early, or premature, distributions?
Q 496 When must distributions from a tax sheltered annuity begin? What is the effect of failure to meet the requirements?
Q 497 What minimum distributions must be made from a tax sheltered annuity during the life of the participant under Section 401(a)(9)?
Q 498 What are the requirements of the minimum distribution incidental benefit rule with respect to tax sheltered annuities?
Q 499 How are the minimum distribution requirements met after the death of a tax sheltered annuity participant?
Q 500 Are the payments received under a tax sheltered annuity taxable income to the employee?
Q 501 How is a death benefit under a tax sheltered annuity taxed to the employee’s beneficiary?
Q 502 How is a reduction in salary for a tax sheltered annuity treated for Social Security tax and income tax withholding purposes?
Q 503 What excise taxes and additional taxes apply to tax sheltered annuity contributions and distributions?
Q 504 Can a 403(b) plan be frozen or terminated?

Estate Taxation
Q 673 Is the value of a death benefit payable from a qualified plan includable in the employee’s gross estate?
Q 674 Is a death benefit payable under a Keogh plan includable in a self-employed individual’s gross estate?
Q 675 How does community property law affect the estate taxation of qualified plan benefits?
Q 686 Is a death or survivor benefit under a tax sheltered annuity includable in the employee’s gross estate?
Gift Taxation
Q 737 Is there a taxable gift when an individual covered under a qualified plan, a tax sheltered annuity, or an individual retirement plan (IRA) irrevocably designates a beneficiary to receive a survivor benefit payable under the plan?
Q 738 Is there a taxable gift when a nonparticipant spouse waives the right to receive a qualified joint and survivor annuity or a qualified preretirement survivor annuity?
Q 739 Can community property law create a taxable gift by the spouse of an individual who designates a third party beneficiary to receive a survivor benefit payable under a qualified plan, a tax sheltered annuity, or an individual retirement plan (IRA)?
Pension And Profit Sharing
Q 324 Starting Point – What are the advantages of a qualified pension, annuity, profit sharing, or stock bonus plan?

Q 325 What requirements must be met in order for a plan to be “qualified”?

Q 326 What is the “exclusive benefit rule” of plan qualification?

Q 327 What minimum “age and service” requirements apply to qualified plans?
Q 328 What is the “minimum coverage” requirement for qualified plans?

Q 329 What are the requirements a plan must meet to be nondiscriminatory?

Q 330 What are the requirements with respect to nondiscriminatory availability of plan benefits, rights, and features?
Q 331 What are the nondiscrimination requirements a plan must meet with respect to plan amendments and terminations?

Q 332 What are the requirements for cross tested plans?

Q 333 What is permitted disparity? How does it work?
Q 334 What is “compensation” for purposes of nondiscrimination in a qualified plan?

Q 335 What are the Section 415 limits for qualified plans?

Q 336 What are the vesting standards that a qualified plan must meet?

Q 337 What is the anti-cutback rule and what benefits does it protect?

Q 338 Which types of plans are subject to the automatic survivor benefit requirements?

Q 339 What forms of survivor benefits must be provided under a qualified plan?

Q 340 Under what circumstances may survivor benefits required under a qualified plan be waived?
Q 341 When is a qualified plan required to offer distributions from a qualified plan? What is a TEFRA 242(b) election?
Q 342 What are the “minimum distribution” requirements for qualified plans?
Q 343 What is an individual’s “required beginning date” for purposes of required minimum distributions from a qualified plan?
Q 344 What are the minimum distribution requirements for individual account plans during the lifetime of the employee?
Q 345 What are the minimum distribution requirements for annuity payouts from a defined benefit plan?
Q 346 How are the minimum distribution requirements met after the death of the employee?
Q 347 How is the “designated beneficiary” determined for purposes of the minimum distribution requirements? What are the separate account rules?
Q 348 Who is the employee’s spouse or surviving spouse for purposes of the minimum distribution requirements? What is the effect of a QDRO?
Q 349 What is the “incidental benefit rule” for qualified plans?
Q 350 How is an individual taxed when a qualified plan distribution fails to meet the minimum distribution requirements?
Q 351 What restrictions apply to the assignment or alienation of a participant’s qualified plan benefit?

Q 352 What is a “qualified domestic relations order”?

Q 353 What do the top-heavy rules require with respect to a qualified plan?

Q 354 When is a plan top-heavy?

Q 355 What are the special qualification requirements that apply to top-heavy plans?

Q 356 What other qualification requirements must be met in order for a plan to be qualified?
Q 357 What individuals are treated as “employees” of an employer for purposes of meeting the qualification requirements?

Q 358 What special rules apply to “leased employees” for purposes of the qualification requirements?

Q 359 Who are the “highly compensated” employees for purposes of the qualification requirements?
Q 360 Who is a key employee for purposes of the top-heavy rules for qualified plans?
Q 361 Who is an owner-employee for purposes of the qualification requirements?

Q 362 What is a “controlled group” of corporations? When are trades or businesses under “common control”?

Q 363 What is an “affiliated service group”?

Q 364 Can IRS apply retroactively its finding that a plan does not meet qualification requirements?

Q 365 Starting Point – How is the employer’s deduction for qualified plan contributions limited?

Q 366 Can an employer contribute property other than money to a qualified plan trust?
Q 367 When does an employer take a deduction for its contributions to a pension, profit sharing, or stock bonus plan?
Q 368 What other specific rules affect an employer’s deduction for its contributions to a qualified plan?

Q 369 How much may an employer deduct if it contributes to more than one type of qualified plan?

Q 370 Is there a penalty if an employer contributes more to its qualified plan than it can deduct in a year?

Q 371 Starting Point—What qualification requirements are specific to each type of plan?

Q 372 What is a defined benefit plan?

Q 373 What special qualification requirements apply to defined benefit pension plans?

Q 374 How are the Section 415 limits applied to defined benefit plans?
Q 375 What is a cash balance plan?

Q 376 How are the required annual and quarterly payments to defined benefit plans determined?

Q 377 What is a defined contribution plan?

Q 378 What special qualification requirements apply to defined contribution plans?

Q 379 How are the Section 415 limits applied to defined contribution plans?
Q 380 What are savings and thrift plans?

Q 381 What special rules apply to the sale of employer securities to a defined contribution plan?

Q 382 What is the diversification requirement for defined contribution plans?

Q 383 What is a pension plan?

Q 384 What is a target benefit plan?

Q 385 What is the maximum amount that an employer may deduct annually for contributions on behalf of employees to a qualified pension trust or annuity plan?

Q 386 What special qualification requirements apply to pension plans but not to profit sharing plans?

Q 387 What is the minimum funding standard that applied in plan years before 2008?

Q 388 What is the funding requirement for defined benefit plans beginning after 2007?
Q 389 What requirements apply to defined benefit plans that are “at risk” beginning after 2007?

Q 390 When are pension plan contributions credited for funding standard account purposes?

Q 391 What other special requirements apply in plan years prior to 2008 when a qualified plan is subject to the minimum funding standard?

Q 392 What is the penalty for underfunding a qualified plan that is subject to the minimum funding standard?

Q 393 Can the minimum funding standard for qualified plans be waived?

Q 394 What is a profit sharing plan?

Q 395 How much may an employer deduct for its contributions to a qualified profit sharing or stock bonus plan?
Q 396 What special qualification requirements apply to profit sharing plans but not to pension plans?

Q 397 What is a 401(k) plan?

Q 398 What special qualification requirements apply to 401(k) plans?
Q 399 What is the limit on elective deferrals to employer-sponsored plans?
Q 400 What are the rules for catch-up contributions to employer sponsored retirement plans?
Q 401 What is a solo 401(k) plan?
Q 402 What is an automatic enrollment safe harbor 401(k) plan?

Q 403 What are the requirements for a 401(k) safe harbor plan?
Q 404 What are the requirements for a SIMPLE 401(k) plan?
Q 405 What are the requirements for a Roth 401(k) feature?

Q 406 How are distributions from a designated Roth account taxed?

Q 407 What is an eligible investment advice arrangement?

Q 408 What is a combination defined benefit/401(k) plan?

Q 409 What restrictions apply to distributions from 401(k) plans?

Q 410 What requirements apply to hardship withdrawals from a 401(k) plan?

Q 411 How does a 401(k) plan satisfy the nondiscrimination in amount requirement?

Q 412 What special rules apply to employer matching contributions? What rules apply to employee contributions?

Q 413 What happens if a 401(k) plan fails its nondiscrimination testing?
Q 414 What is a fully insured, or 412(i) plan?

Q 415 What requirements must a fully insured, or 412(i) plan, meet in order to be exempt from the minimum funding requirements?

Q 415.50 Information and Document Request—412(i) Plan
Q 416 What is a stock bonus plan?

Q 417 What is an employee stock ownership plan?

Q 418 May plans other than employee stock ownership plans be invested primarily in employer securities?

Q 419 What special qualification requirements apply to stock bonus plans and employee stock ownership plans?
Q 420 What special qualification requirements apply to employee stock ownership plans (ESOPs)?

Q 421 What is a Section 1042 election? What rules apply to qualified sales to an employee stock ownership plan?

Q 422 How much may an employer deduct for its contributions to an ESOP?

Q 423 What requirements apply when an S corporation maintains an ESOP?

Q 424 What special requirements apply to plans covering shareholder-employees of S corporations?

Q 425 What special qualification rules apply to Keogh plans?
Q 426 What are the rules governing the deduction for Keogh plan contributions?

Q 427 To what extent can a qualified plan provide life or health insurance benefits for its participants?

Q 428 May excess pension assets be transferred to Section 401(h) accounts?

Q 429 Starting Point – How are distributions from a qualified plan taxed?

Q 430 Is an employee taxed currently on his employer’s contributions to a qualified plan?

Q 431 What method is used to determine the cost of current life insurance protection provided in a qualified plan and taxed to common law employee participants?

Q 432 May the cost of life insurance protection be recovered tax free from qualified plan benefits?

Q 433 What are the tax and qualification consequences of a loan from a qualified plan?

Q 434 What requirements must a qualified plan loan meet in order to avoid taxation as a distribution?

Q 435 What other rules apply to loans from a qualified plan?

Q 436 How is an employee taxed on preretirement distributions from a qualified plan?

Q 437 What is an early (premature) distribution from a qualified plan, and what penalties relate to it?

Q 438 How is an employee taxed on postretirement distributions from a qualified plan?

Q 439 What is a lump sum distribution? What special tax treatment is available for a lump sum distribution from a qualified plan?

Q 439.50 1986 10-Year Averaging Lump Sum Distribution Table
Q 440 If a qualified plan trust distributes an annuity contract or life insurance policy to an employee, is the value of the contract taxable to the employee in the year of distribution?

Q 441 How is net unrealized appreciation taxed when employer securities are distributed from a qualified plan?

Q 442 How is an employee taxed on his periodic retirement benefits under a qualified pension, annuity, or profit sharing plan?

Q 443 How are variable annuity benefits payable under a qualified pension or profit sharing plan taxed to an employee?
Q 444 How is an employee’s cost basis for his interest in a qualified plan determined?

Q 445 How are disability pension payments from a qualified pension or profit sharing plan taxed?

Q 446 When an employee dies before retirement, how is his beneficiary taxed on a single sum cash payment of the death benefit payable under his qualified plan?

Q 447 How is a beneficiary taxed on life income or installment payments of the death benefit under a qualified plan when an employee dies before retirement?
Q 448 How is the employee’s beneficiary taxed on death benefit payments from a qualified plan when the employee dies after retirement?

Q 449 What general rules apply to withholding of income tax from qualified retirement plan benefits?

Q 450 Are the earnings of a qualified pension or profit sharing trust taxable to the trust? Are they currently taxable to the plan participants?

Q 451 What is the penalty if money or property reverts to the employer from a qualified plan?

Q 452 What are prohibited transactions? What is the tax penalty if a prohibited transaction takes place?

Quick Clicks
Q 125 What requirements must a Section 457 plan meet?
Q 242 What is a SAR-SEP? What requirements must be met if a simplified employee pension is offered on a cash or deferred basis?

Q 243 What is a SIMPLE IRA plan?

Q 335 What are the Section 415 limits for qualified plans?

Q 342 What are the “minimum distribution” requirements for qualified plans?
Q 343 What is an individual’s “required beginning date” for purposes of required minimum distributions from a qualified plan?
Q 344 What are the minimum distribution requirements for individual account plans during the lifetime of the employee?
Q 345 What are the minimum distribution requirements for annuity payouts from a defined benefit plan?
Q 346 How are the minimum distribution requirements met after the death of the employee?
Q 347 How is the “designated beneficiary” determined for purposes of the minimum distribution requirements? What are the separate account rules?
Q 348 Who is the employee’s spouse or surviving spouse for purposes of the minimum distribution requirements? What is the effect of a QDRO?
Q 349 What is the “incidental benefit rule” for qualified plans?
Q 350 How is an individual taxed when a qualified plan distribution fails to meet the minimum distribution requirements?
Q 353 What do the top-heavy rules require with respect to a qualified plan?

Q 354 When is a plan top-heavy?

Q 355 What are the special qualification requirements that apply to top-heavy plans?

Q 360 Who is a key employee for purposes of the top-heavy rules for qualified plans?
Q 374 How are the Section 415 limits applied to defined benefit plans?
Q 379 How are the Section 415 limits applied to defined contribution plans?
Q 397 What is a 401(k) plan?

Q 398 What special qualification requirements apply to 401(k) plans?
Q 399 What is the limit on elective deferrals to employer-sponsored plans?
Q 414 What is a fully insured, or 412(i) plan?

Q 415 What requirements must a fully insured, or 412(i) plan, meet in order to be exempt from the minimum funding requirements?

Q 436 How is an employee taxed on preretirement distributions from a qualified plan?

Q 437 What is an early (premature) distribution from a qualified plan, and what penalties relate to it?

Q 482 What is the limit on excludable amounts that may be contributed to tax sheltered annuity plans under salary reduction agreements? What are the consequences of exceeding the limit?

Indexed Employee Benefit Limits - 2006-2010
RMD Tables - Uniform Lifetime
RMD Tables - Single Life
RMD Tables - Joint and Survivor
RMD Tables - MDIB Joint and Survivor Annuity
401(k) Navigator
Fully Insured (412(i)) Plan Navigator
Required Minimum Distribution Navigator
Rollover
Q 453 What is a rollover, or rollover contribution? What are its tax effects?

Q 454 What is a charitable IRA rollover or qualified charitable distribution?

Q 455 What is required to roll over a distribution received from a qualified retirement plan or an eligible Section 457 governmental plan?

Q 456 What is an eligible retirement plan?

Q 457 Must a participant receiving an eligible rollover distribution have the option of making the rollover by means of a “direct rollover”?

Q 458 If a rollover is not made through a direct rollover, must income tax be withheld from the distribution?

Q 459 May an individual who is not a participant in a qualified plan roll over amounts received from the plan by reason of a divorce or separation agreement?
Q 460 May a participant who receives a distribution of an annuity from a qualified pension or profit sharing plan surrender the annuity and roll over the proceeds?

Q 461 Under what circumstances may a participant roll over permitted distributions from a Section 403(b) tax sheltered annuity?
Q 462 Under what circumstances may rollover contributions be made from an IRA by the owner of the plan?
Q 463 May a surviving spouse or other beneficiary make a rollover contribution?

Q 464 How is the 60-day time limitation on rollovers applied?

Q 465 May an individual who has attained age 70½ make a rollover?

Q 466 May the recipient of a distribution roll the amount over into another person’s individual retirement plan?