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New Retirement Plans Rules Could Burden By Charles W. Kimple Malin, Bergquist and Company, LLP
If you work for a non-profit organization, public school, church or other tax-exempt entity, listen closely. New requirements for 403(b) retirements plans could hit you with extra taxes if your employer isn’t careful. The appeal of 403(b) plans (as compared to 401[k] plans) for employers was low overhead and administrative costs to maintain the plan. These new rules established by the Internal Revenue Service, however, require that 403(b) plans now be in writing and contain all terms and conditions for eligibility, as well as limitations and benefits of the plan. If an employer doesn’t follow these new regulations, they will be in violation of laws for tax-exempt organizations. As a result, the 403(b) contracts would fail to qualify for tax-deferral treatment. The good news is that most of these new regulations don’t take effect until Jan. 1, 2009. But employers and employees should expect more paperwork and administrative costs associated with their retirement plans. Organizations should discuss these new regulations with their 403(b) providers. The intent of these new regulations is to increase the similarity in the rules governing 403(b) plans, 401(k) plans for the private sector, and 457(b) plans for the government sector. Mr. Kimple is a staff accountant with Malin, Bergquist & Company, LLP, a Pittsburgh “Top 20” CPA firm, and is a member of the firm’s Not-for-Profit Organizations niche. For more information, visit www.malinbergquist.com/nfporgs.htm. This article was published in the November 2007 edition of Duquesne University's Non-Profit Leadership Institute E-Newsletter
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