For qualified plans (see Q 343) and tax sheltered annuities (see Q 496), the date may be later if the individual works after age 70 1/2.
An "incidental benefit rule" applies to qualified plans Q 349 and tax sheltered annuities Q 498.
* The requirements for after-death distributions are explained at Q 236 (IRAs), Q 346 (qualified plans) and Q 499 (tax sheltered annuities).
4981A(c)(5) provides a special rule which permits an individual to avoid the 15% penalty to the extent of benefit values as of August 1, 1986 that were held in qualified plans, including Keogh plans and ESOPs, tax sheltered annuities, and IRAs.
The grandfather election is available as to the amounts accumulated as of August 1, 1986, in qualified plans, including Keogh plans and ESOPs, tax sheltered annuities, and IRAs.
Failure to take the steps could expose the individuals involved to unnecessary taxation on benefits held in pension, profit sharing, money purchase, target benefit, employee stock ownership and Keogh plans, and on amounts accumulated in tax sheltered annuities and IRAs.
(In the case of Section 403(b) tax sheltered annuities, the payor of the eligible rollover distribution is treated as the plan administrator.) Further, the plan administrator is not required to permit the participant to make a direct rollover of only a portion of the distribution at all if the full amount of the distribution totals less than $500.
For distributions received from tax sheltered annuities, any portion of the balance to the credit of an employee that is paid to the employee in the form of an eligible rollover distribution (see Q 455) and transferred to an eligible retirement plan (see Q 456) is not includable in income by the employee.
Such amounts may be transferred between tax sheltered annuities if the requirements of Revenue Ruling 90-24,10 can be met.
But in years beginning after 1988, (except for contracts purchased by certain churches or church-controlled organizations) tax sheltered annuities must be provided under a plan that meets certain nondiscrimination requirements.
(8) Also, ERISA generally does not apply to tax sheltered annuities of other employers unless the plan is "established or maintained" by the employer.
The limit on contributions and benefits applicable to qualified pension plans applies to tax sheltered annuities. (3) (see Q 479).