| Test Your Human Resources Knowledge | ||
|
| Labor Law Journal Submissions | ||
|
| Labor Arbitrators' Awards and Biographies | ||
5500 Preparer's Manual for 2012 Plan Years
The premier resource in the field of Form 5500 preparation, 5500 Preparer's Manual will help you handle the required annual Form 5500 filings for both pension benefits and welfare benefit plans.
President Obama's fiscal year 2013 budget includes proposals to provide for automatic enrollment in individual retirement accounts or annuities and a doubling of the tax credit for small employer plan startup costs. The proposals are similar to those contained in the FY 2012 budget request. There are also new proposals relating to inherited plan and IRA accounts and minimum required distributions from IRAs.
Auto IRAs
Under the budget proposal, employers in business for at least two years that have more than ten employees would be required to offer an automatic IRA option to employees, under which regular contributions would be made to an IRA on a payroll-deduction basis. If the employer sponsored a qualified retirement plan, SEP, or SIMPLE plan for its employees, it would not be required to provide an automatic IRA option for its employees.
The employer offering automatic IRAs would be required to provide employees with a standard notice and election form informing them of the automatic IRA option and allowing them to elect to participate or opt out. Any employee who did not provide a written participation election would be enrolled at a default rate of 3% of the employee's compensation in an IRA. Employees could opt out or opt for a lower or higher contribution rate up to the IRA dollar limits. Employees could choose either a traditional IRA or a Roth IRA, with a Roth IRA being the default selection.
Contributions by employees to automatic IRAs would qualify for the saver's credit to the extent the contributor and the contributions are otherwise qualified.
Small employers that offer an automatic IRA arrangement could claim a temporary nonrefundable tax credit for the expenses associated with the arrangement up to $500 for the first year and $250 for the second year. These employers would also be entitled to an additional nonrefundable credit of $25 per enrolled employee up to $250 for six years.
The proposal would become effective after December 31, 2013.
Simplification of rules
The budget proposal would eliminate minimum required distribution rules for individual retirement account or annuity plan balances of $75,000 or less. The proposal would be effective for taxpayers attaining age 70 1/2 on or after December 31, 2012.
In addition, the budget proposal would allow all inherited plan and individual retirement account or annuity balances to be rolled over within 60 days. The proposal would be effective for distributions made after December 31, 2012.
Small employer startup credit
The budget proposal would also double the Code Sec. 45E tax credit for small employer plan startup costs from the current maximum of $500 per year for three years to a maximum of $1,000 per year for three years. This expanded startup costs credit for small employers, like the current startup costs credit, would not apply to automatic or other payroll deduction IRAs. The expanded credit is designed to encourage small employers that would otherwise adopt an automatic IRA to adopt a new 401(k), SIMPLE, or other employer plan instead, while also encouraging other small employers to adopt a new employer plan.
The proposal would become effective after December 31, 2013.
Source: Department of the Treasury, General Explanations of the Administration's Fiscal Year 2013 Revenue Proposals, February 2012.
For more information, visit http://www.wolterskluwerlb.com/rbcs.
For more information on this and related topics, consult the CCH Pension Plan Guide, CCH Employee Benefits Management, and Spencer's Benefits Reports.
Visit our News Library to read more news stories.
©2005-2025 CCH Incorporated or its affiliates
