It's time to begin making required amendments to qualified plan documents

Article Abstract:

Amendments to pension plans and profit-sharing plans required by the Tax Reform Act of 1986 will require special documentation formats and due dates depending on the type of plan. The IRS has provided a remedial amendment period so that plan revisions can be corrected retroactively. The compliance date is either the end of the 1989 plan year, or the income tax return due date that ends with or within the 1989 plan year. Individually designed plans may be submitted in a Volume Submitter Program which requires a $100 fee for each employer and pre-approval of lead plan submissions. National office prototype programs comprised of constant basic plan documents and variable adoption agreements require a $100 fee for each determination letter. Regional prototype plans require a $1000 fee per adoption agreement and may be submitted to the IRS commencing in July 1989. Other important plans considerations include plan termination and interim model amendments.

Analysis, Accounting and auditing, Pension funds, Employee benefits, Salary reduction savings plans, 401K plans

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Qualifying for early reelection of S status can achieve tax savings after tax reform

Article Abstract:

The tax benefits of Subchapter S status for corporations with fewer than 35 shareholders are especially important in light of the Tax Reform Act of 1986. Subchapter S corporations are not taxed as corporations. Corporate income for Subchapter S corporations is passed through to individuals, similar in effect to the method of taxing partnerships; therefore, 'corporate' income is taxable at individual rates rather than the higher corporate rates. Election of Subchapter S status and ways of maintaining such status are discussed. Subchapter S corporations that lose their status cannot apply for reinstatement until five years have elapsed from the time of terminated status. Early reelection, inadvertent termination of status, waiting periods related to such elections, and stock ownership rules affecting Subchapter S status are explained.

Methods, Taxation, Economic aspects, Tax reform, S corporations

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