Section 401(k) plans have complex operational rules
Article Abstract:
Sec. 401(k) plans offer significant benefits for employers as well as employees. Also referred to as cash-or-deferred arrangements (CODAs), these schemes enable employees to make contributions of their pre-tax earnings to their own retirement savings. Employers, on the other hand, can enjoy a deduction for these contributions. Moreover, the cost of maintaining a retirement plan that an employer has to shoulder may be lowered because employees contribute at least partially to the plan. However, CODAs must satisfy several rules to stay tax qualified which may make maintenance a complicated experience. The rules that should be followed concern contribution limits, contribution deadlines, family aggregation, inadvertent CODAs and top-heavy plans.
Publication Name: Taxation for Accountants
Subject: Business
ISSN: 0040-0165
Year: 1996
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How to avoid the sanctions imposed for prohibited transactions with retirement plans
Article Abstract:
Profit-sharing and pension plans can be used to furnish retirement benefits via tax deferred accumulations and tax deductible contributions, resulting in new opportunities for misuse by owners, employers, and fiduciaries. Many of the transactions are prohibited by transaction regulations for retirement plans and such owners, fiduciaries, and employees. An exchange transaction between plan fiduciaries or plan sponsors may warrant investigation.
Publication Name: Taxation for Accountants
Subject: Business
ISSN: 0040-0165
Year: 1986
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