The Service seeks increased enforcement of tax-sheltered annuities

Article Abstract:

Tax-exempt organizations offering IRC section 403(b) tax-sheltered annuity plans to their employees should review their plan for compliance with contribution limits, nondiscrimination tests, distribution rules and reporting requirements. Contribution limit calculations must be integrated with other benefit plans offered by the employer. Information returns must be filed annually on Form 5500 unless the employer meets exemption criteria. The IRS is increasing its scrutiny of 403(b) plans, but the Voluntary Compliance Program may be opened to employers in the near future.

Retirement planning, Nonprofit organizations

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Plan distributions to nonresident aliens

Article Abstract:

Tax issues concerning profit-sharing and pension plan distributions to non-resident aliens are discussed. A distribution requires that some event has occurred such as separation from the company. However, US law maintains that separation per se is insufficient and there are provisos concerning projectable employment with affiliates. International treaties exist concerning pension taxation, and if none supercedes, the distribution is taxable as US income.

Mutual funds, Non-resident aliens, Nonresident aliens

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New direct rollover and withholding rules require plan amendment

Article Abstract:

Pension or annuity plans must be amended to accommodate the new rules for withholding and direct rollover. The rules cover rollovers under IRC section 402(c)(4) or annuities under IRC section 403(b). A direct rollover option must be included in a plan to avoid a 20% distribution withholding. Distributees of the plan must receive a required notice and rollovers must be reported on Form 1099-R.

Laws, regulations and rules, Rollovers (Finance), Withholding tax

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