eilano Posted May 3, 2000 Posted May 3, 2000 Does anyone know the difference between a 403(B) and a 501©-18. We have a CPA that advised that a client was preparing W2s as if the plan was a 501©-18?
Ellie Lowder Posted May 4, 2000 Posted May 4, 2000 These are plans established before June of 1959 in which employees could make contributions of 25% of gross compensation to $7,500 per year - deductible instead of exludible from gross income. Don't see them too much anymore. The IRS position is that those contributions offset the 403(B) elective deferrals. While new employees may participate in grandfathered plans, no new 501©(18)s can be established.
eilano Posted May 8, 2000 Author Posted May 8, 2000 The plan was initially effective during the 1950's and then after various restatements, the plan was called a 403(B) plan beginning in the 1970's. At some point, the 5500's started being filed as a 403(B) plan. Do we have an issue here?
Ellie Lowder Posted May 9, 2000 Posted May 9, 2000 I'm not aware of restatement as 403(B) plans in the 70's. 501©(18)'s are still in existence with a limited # of employers, and while no new plans can be set up (since June 25, 1959), provision can be made in the plan to permit current employees to participate in it. Do you have a cite for restatement as 403(B) plans?
eilano Posted May 9, 2000 Author Posted May 9, 2000 I don't have a cite for the restatement. We're receiving the info from a CPA and the plan was restated to a 403(B) in the 70's. Do you think we have an issue with the form 5500's being filed as 403(B) plans? Thanks for your help.
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