Other Retirement Plans
Section 401(k) Plans
Beginning in 1998, matching contributions to a qualified cash or deferred
arrangement (section 401(k) plan) on behalf of a self-employed individual
will no longer be treated as elective contributions subject to the limit
on elective deferrals. They will receive the same treatment as the matching
contributions of employees.
For more information about employee and employer contributions to
a 401(k) plan, see Keogh Plans in Publication
560, Retirement Plans for Small Business (SEP, SIMPLE, and Keogh Plans).
New Recovery Method for Joint and Survivor
Annuity Payments
For annuity starting dates beginning in 1998, a new method is used to figure
the tax-free portion of an annuity that is payable over the lives of more
than one annuitant. Under this new recovery method, the number of anticipated
monthly payments used to recover the tax-free investment in the contract
(or basis) is determined by combining the ages of the annuitants.
Publication 575, Pension
and Annuity Income, explains how to figure the tax treatment of
payments based on the lives of more than one annuitant. The number of payments
used for the combined ages is shown below.
| Combined Ages of Annuitants |
Number of Payments |
| Not more than 110................................................
|
410 |
| More than 110, but not more than 120................
|
360 |
| More than 120, but not more than 130................ |
310 |
| More than 130, but not more than 140................
|
260 |
| More than 140...................................................... |
210 |
Section 403(b) Plans
The following provisions affect tax-sheltered annuity programs for
employees of public schools and certain tax-exempt organizations (section
403(b) plans).
Includible compensation. Beginning in
1998, for purposes of figuring your exclusion allowance, your includible
compensation includes the following amounts.
- Elective deferrals (your employer's contributions made on your behalf
under a salary reduction agreement).
- Amounts contributed or deferred by your employer under a section
125 cafeteria plan.
- Amounts contributed or deferred under a section 457 plan (state
or local government or tax-exempt organization plan).
For more information on includible compensation, see Publication
571, Tax-Sheltered Annuity Programs for Employees of Public Schools
and Certain Tax-Exempt Organizations.
Contributions of employed ministers. Beginning
in 1998, contributions made to a church plan on behalf of a minister employed
by an employer other than the church are excluded from the minister's gross
income if they would have been excluded had the minister been an employee
of the church.
For purposes of this rule, a minister who is an employee of a church
also includes the following persons.
- A self-employed minister.
- A minister employed by an organization other than a tax-exempt organization
that shares a common religious bond with the minister.
For more information on the exclusion of contributions to church
plans, see Publication 571.
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