9- 403(b) Plan Issues Flashcards
a U.S. tax-advantaged retirement savings plan available for public education organizations, some non-profit employers, cooperative hospital service organizations, and self-employed ministers in the United States. It has tax treatment similar to a 401(k) plan, especially after the Economic Growth and Tax Relief Reconciliation Act of 2001.
A 403(b) plan
A qualified employer for purposes of being permitted to offer a 403(b) plan must be either:
- (a) A nonprofit organization
- (b) A public school system or public college or university
is the 402(g) limit affected by either employer contributions or employee contributions to other retirement plans?
no
How did EGTRRA impact upon
(a) the iRC section 415 limit and
(b) the iRC section 401(a)(17) limit?
- increased both the dollar amount limit and the percentage of compensation limit applicable to defined contribution plans that existed under Internal Revenue Code Section 415.
- (b) EGTRRA increased the previous lower compensation limit of $170,000 to $200,000 in 2002 and indexed its escalation in future years in $5,000 increments instead of the $10,000 increments that existed prior to the enactment of EGTRRA. In 2013, this indexed limit was $255,000.
In addition to insurance company annuities, the range of permissible investments was expanded by ERISA in ____. With the addition of Section 403(b)(7), the range of permissible investments includes _______ of regulated investment companies or _______, as well as insurance company separate accounts.
1974
custodial accounts
mutual funds
Any lump-sum distribution from a 403(b) plan is taxable to the participant at ________
ordinary income tax rates.
What types of annuity contracts may be used to provide a tax-deferred annuity? (3)
Any annuity contract (individual or group)
Describe those components of a 403(b) plan that would not be eligible for rollover. (3)
- Any distribution required to be made as a ________
- Any distribution that is part of a ____ of substantially equal periodic payments made at least annually over the life or life expectancy of the employee
- Any distribution made on account of _____.
- required minimum distribution
- series
- hardship
How did egtRRA affect the use of eligible section 457(b) deferred compensation plans by tax-exempt employers that were using section 403(b) plans as their primary retirement plans for senior managers and highly compensated employees?
EGTRRA eliminated the requirement to coordinate the limits under both types of plans.
A 403(b) plan can be structured in (2) different ways:
- on a fully contributory and elective basis without employer contributions.
- employer contributions with or without employee contributions.
______ contributions are those that the employer makes on behalf of the participant to the employer’s basic retirement plan. _____ contributions to 403(b) plans are those voluntary contributions made by an eligible employee to a tax- deferred annuity under a salary reduction agreement made with his or her employer.
Nonelective
Elective
EGTRRA also made provision for employees who have attained the age of __ by the end of the tax year to contribute additional elective deferral amounts for years beginning after ____.
- 50
- 2001
EGTRRA
economic growth and tax Relief Reconciliation Act of 2001
the maximum amount an individual may contribute on an annual basis to all 403(b) plans in which he or she participates (pursuant to a salary reduction agreement) is determined by internal Revenue Code section ____. At the time of egtRRA’s passage in 2001, the limit of elective deferrals was set at ____. egtRRA increased the elective deferral limit for 2002 and scheduled it to increase in subsequent years according to a preset schedule. in 2013, the 402(g) limit had reached ____.
- 402(g)
- $10,500
- $17,500
in special cases, an amount above the annual 402(g) limit may be contributed by an employee to a 403(b) plan under a salary reduction agreement. explain which employees are eligible and how much they may contribute
ee’s w/ 15 years of service $15k in additional not but more than $3k in a single year