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.
What special rules apply to tax sheltered annuities for church employees?
What types of organizations can make tax sheltered annuities available to their employees?
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.
Distributions from qualified retirement plans, tax sheltered annuities, and eligible Section 457 governmental plans are subject to a mandatory income tax withholding rate of 20% unless the transfer is handled by means of a direct rollover.
Rollover distributions from tax sheltered annuities may be made to another tax sheltered annuity, an IRA, a qualified plan, a Section 403(a) plan, and an eligible Section 457 governmental plan (provided the IRC Section 457 plan agrees to separately account for such funds).
Such amounts may be transferred between tax sheltered annuities if the requirements of Revenue Ruling 90-24,10 can be met.
10) A safe harbor explanation that a payor may give to recipients of "eligible rollover distributions" from tax sheltered annuities is provided in Notice 2002-3.
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.
Also, transitional safe harbors were generally available for tax sheltered annuities to meet most of these requirements.