"When considered in their totality," the proposed changes in the Internal Revenue Service formula, which presently integrates annunity, profit-sharing and stock bonus plans
, as well as pensions, with Social Security "would involve harmful changes," the Chamber said.
The withholding requirements apply to pension or annuity distributions from employer pensions, annuities, profit-sharing plans, stock bonus plans
, deferred compensation plans, individual retirement accounts (IRA), endowments, and life insurance contracts.
The IRS received many comments suggesting that partnerships, disregarded entities, trusts (including tax-exempt trusts, revocable trusts, charitable remainder trusts, grantor trusts, and nongrantor trusts), individual retirement accounts, nominees, qualified pension plans, profit sharing plans, and stock bonus plans
should be considered eligible partners.
It established legal status of employee stock ownership plans as an employee benefit and codified stock bonus plans
under the Internal Revenue Code.
The maximum amounts an employer may deduct are explained at Q 385 for pension plans, Q 395 for profit sharing or stock bonus plans
, and Q 422 for employee stock ownership plans (ESOPs).
ESOPs and stock bonus plans
are qualified defined contribution plans similar to profit sharing plans.
Stock bonus plans
are similar to profit sharing plans (see above).
Section 401 plans include stock bonus plans
, profit-sharing plans and pension plans.
The regulations give employees the option of applying their accrued paid time off to military leave or saving it until their return and govern contributions to and the administration of employee benefit pension plans, including profit sharing and stock bonus plans
. Employers should be ready to comply with the regulations, finalized shortly after November 2004.
This reference is supplemented with the latest legislative, judicial and administrative developments, taking into account a broad spectrum of circumstances and special issues, including: qualified plan lump-sum distributions and periodic payments and rollovers; stock options and stock bonus plans
; Social Security and healthcare benefits; and income tax and estate planning changes at retirement.
At a minimum, the requirement of an extended-payment option should be eliminated for profit-sharing and stock bonus plans
because (i) elimination would not actually deprive participants of a right to control the timing of receipt of distributions; (ii) elimination would significantly simplify plan administration; and (iii) an extended-payment option is not a necessary feature of a profit-sharing or stock-bonus plan.
Clearly, the intent of the bill is to protect employees from situations like this one, but many employers feel the bill runs counter to the philosophy of profit-sharing and stock bonus plans
. Traditionally, employers have viewed these plans as incentive and savings vehicles designed to supplement Social Security and defined-benefit plans.