Corrective legislation?

[Guest STLGiant]

I just got an email regarding the economic stimulus package that might contain some corrective legislation issues. I haven't seen it as I'm logging in remotely, but does anyone know if anything with respect to 403(B) or 457 was addressed?

[Ellie Lowder]

Among other things, the includible compensation definition used for 457 plans is now that described in Section 415©(3) removing the old definition of the amount actually reported as taxable. Also, some clean up language (e.g., removing 403(B) references to nonforfeitures by elimination 403(B)(6), and changing wording in 403(B)(1). Provides real clarity that aggregation of 50+ catch up options do not extend to 457 plans, e.g., just as we thought, there are two separate age 50+ catch ups for those contributing to both a 457(B) and a 403(B) (or other elective deferral) plan.

[Guest STLGiant]

Thanks Ellie!

[Ellie Lowder]

You are welcome. I forgot to say that there is a tiny bit of "clean up" in 403(B)(3) that permits employers to make contributions on behalf of departed employees for a period of 5 tax years after the year of severance of employment - still, not too good, but we knew what it meant anyhow, yes?

Deemed IRAs were also extended to 457(B) gov't plans - guess that's about it for 457 and 403(B).

I still have to go through the bill with a "fine tooth comb" to report it out to the industry, so may have missed something!

[Carol V. Calhoun]

The bill text and Joint Committee on Taxation explanation of the portions of the bill relating to pension funding and EGTRRA technical corrections affecting benefits are now available by clicking here.