tax-qualified plans, and under Section 1081.01(a) of the Puerto Rico Internal Revenue Code (P.R.
"And there are independent firms out there who have decided not to allow their advisors to use brokerage products, transactional products with
tax-qualified plans," he said.
According to the brief, this means that while the most important purpose of the plan must be to provide deferred compensation to a select group of management or highly compensated employees, a top hat plan may have other, secondary, purposes, such as retaining top talent, allowing highly compensated individuals to realize earnings in later tax years with presumably lower marginal tax rates, or avoiding limitations in the Internal Revenue Code (IRC) that apply to
tax-qualified plans. The DOL says it does not mean that the "select group" may be primarily composed of management or highly compensated individuals.
"For those fortunate enough to be covered by a pension, there is a concern that much of the tax benefits flow to higher income employees, and in many instances the financial constraints on lower wage workers limit their ability to contribute to
tax-qualified plans and thus, to benefit from those subsidies."
For
tax-qualified plans, first-year premiums averaged $2,180, while for non-qualified plans, premiums averaged $1,483.
As Robertson is a case of first impression in Florida, the authors believe it addresses an issue of great importance, potentially affecting thousands of nonspouse beneficiaries of IRAs and other types of
tax-qualified plans or accounts in Florida.
Employer plans are
tax-qualified plans described in IRC Sec.
General types of
tax-qualified plans under Section 125:
"Instead, the purchase is conducted in the form of a contribution, similar to other
tax-qualified plans."
Two recent developments with regard to bankruptcy are substantially changing the landscape regarding the attractiveness of IRA rollovers for employees with large accounts in
tax-qualified plans.
The Code does not require
tax-qualified plans to make mandatory distributions, so only plans that make them need to be amended to comply with the automatic rollover rules.
The Internal Revenue Service (IRS) studied 401(k) plan compliance with Internal Revenue Code requirements for
tax-qualified plans. GAO found that IRS's estimates of noncompliance were inaccurate.
