Clinton administration tax bill enhances value of deferred compensation

Article Abstract:

The Clinton administration's 1993 budget will have several effects on qualified and nonqualified deferred compensation plans. Tax increases will make section 401(k) plans more attractive to higher income persons and companies will place more emphasis on nonqualified plans. The limit on income taken into account for plan contributions and benefits has been reduced from $235,840 to $150,000. The Medicare wage base cap has been eliminated and a $1 million cap on the deductibility of executive compensation has been enacted. Other pension-related changes in the law are discussed.

Analysis, Interpretation and construction, Tax law, Salary reduction savings plans, 401K plans, Deferred compensation

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Proposed UBIT reform

Article Abstract:

Several tax bills considered by Congress in the early 1990s reflect a consensus on the need to reform unrelated business income tax (UBIT) rules. HR 4210 was vetoed by Bush and Congress was not able to override. However, its proposals on UBIT reflected three major factors: that the real estate market needs an injection of new capital, that the federal government wants to create a greater demand for properties being sold by the Resolution Trust Corp, and doubts about the necessity for some UBIT rules on real estate investment.

Real estate investment, Real estate investments, Unrelated business income tax

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New federal limitations on state taxation of retirement income

Article Abstract:

The Pension Source Act, which applies to income received after 1995, protects certain retirement income from state taxation in states where the receiver of this income is not a resident. The types of income are 401(k) and other qualified retirement plans, distributions made from certain nonqualified plans that result from termination of employment and periodic payments made from other nonqualified plans. The Act's background and possible interpretations of its more esoteric language are discussed.

United States, State taxation, Retirement income

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