Identifying highly compensated employees is necessary for keeping a plan qualified
Article Abstract:
Tax legislation changes necessitate the review of employee benefit plans to determine whether highly compensated employees are being favored. Compensation is defined according to the Internal Revenue Code as any amount received other than qualified compensation that is included in gross income for tax purposes. Highly compensated employees are any employee during the year or preceding year who was a five percent owner, received compensation in excess of $85,845 for plans beginning in 1990 or $81,720 for plans beginning in 1989, was an officer and received compensation greater than $45,000; or was in the top group of employees and received in excess of $56,990 for tax plans beginning in 1990 or in excess of $54,400 beginning 1990. Section 414(q) provides objective rules for identifying highly compensated employees.
Publication Name: Taxation for Accountants
Subject: Business
ISSN: 0040-0165
Year: 1990
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Plans must be amended to avoid age discrimination
Article Abstract:
Employers may have to make changes in their pension and profit-sharing plans as a result of the changes in rules regarding age discrimination and benefit accrual. Employers may have to increase the number of workers covered by their plans, change their benefit formulas, or terminate their plans. Section 401(a)(2) of the Omnibus Budget Reconciliation Act of 1986 (OBRA) states that a plan will lose its qualified status if any employee is excluded from the plan on the basis of age. A plan will not meet the minimum vesting requirements if the employer discontinues an employee's benefit accrual or the allocation to the employee's account, or if the employer reduces the rate of accrual as a result of the employee's age. Employers with plan years beginning after 1987 must change their plans to comply with OBRA.
Publication Name: Taxation for Accountants
Subject: Business
ISSN: 0040-0165
Year: 1991
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How the IRS reconstructs income without records
Article Abstract:
Section 446(b) of the Internal Revenue Code allows the IRS to use any method of income reconstruction that it believes will accurately reflect income. The IRS income reconstruction process is most frequently used when taxpayers are suspected of tax evasion. Methods of proof used in tax evasion investigations include the direct evidence method, the net worth method, the sources and applications of funds method, the bank deposit method, and the mark-up method. Tax penalties and tax additions are frequently levied on reconstructed income. These vary with each case, and may include the self-employment tax, delay damages, and fraud penalties.
Publication Name: Taxation for Accountants
Subject: Business
ISSN: 0040-0165
Year: 1992
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