• LinkedIn
  • YouTube
  • Twitter
  • Facebook
  • Google+

Amend your retirement plan to cite new cash-out rules

by on
in Small Business Tax,Small Business Tax Deduction Strategies

A recent IRS ruling on involuntary retirement plan cash-outs caught a lot of retirement plan administrators with their pants down. (See 2/7/05 issue.) Now, the IRS is giving those plan administrators a break for the 2005 plan year.
 

Here's the story: When employees leave the job, their employer can choose to cash out vested retirement benefits of less than $5,000 without the plan participant's consent. But a little-noticed provision in the 2001 tax law said that involuntary cash-outs of $1,000 or more must automatically be rolled into the employees' IRAs. That automatic-rollover default rule kicked in March 28.
 

But the IRS has decided to provide more time. It recently informed plan sponsors that they had until the end of the plan year ending after March 28—in other words, Dec. 31, 2005, for calendar-year plans—to comply with that new rule. The IRS also drafted a sample amendment for plan sponsors to adopt. (IRS Notice 2005-5)

To read the IRS notice and download the new sample amendment, go to www.benefitslink.com/IRS/notice2005-5.pdf.

Like what you've read? ...Republish it and share great business tips!

Attention: Readers, Publishers, Editors, Bloggers, Media, Webmasters and more...

We believe great content should be read and passed around. After all, knowledge IS power. And good business can become great with the right information at their fingertips. If you'd like to share any of the insightful articles on BusinessManagementDaily.com, you may republish or syndicate it without charge.

The only thing we ask is that you keep the article exactly as it was written and formatted. You also need to include an attribution statement and link to the article.

" This information is proudly provided by Business Management Daily.com: http://www.businessmanagementdaily.com/5655/amend-your-retirement-plan-to-cite-new-cash-out-rules "

Leave a Comment