Volume 4, Winter 2008 

A Look Inside 

SIMPLE IRA plan Q&As in our new 

column, “We’re Glad You Asked!” 

...more on page 2 

“Keeping Your Plan in Compliance” 

using IRS web products is good advice 

from Monika Templeman, EP Exam 

Director. ...more on page 3 

Using a Plan Amendment for 

Correction in the Self-Correction 

Program. ...more on page 4 

Videos on retirement topics are 

available, via links, on the Retirement 

Plans Community web page. ...more on 

page 7 

Also in this Issue

 New on the Web.......................... 2


 Recent Guidance......................... 4
 

The Filing Cabinet.......................6


 DOL News....................................8


 Mark Your Calendar...................9
 

Timing is Everything.................10
 

 Retirement News

 for Employers
 

Information for Sponsors of Retirement Plans 

Internal Revenue Service Tax Exempt and Government Entities 

How Much Can You Deduct in Your Retirement Plan? 

It’s tax time and the last chance to contribute to your retirement plan for 2007. Whether 

you contribute to a retirement plan for yourself or for your employees, you can deduct 

contributions (except Roth contributions, which are after-tax contributions), subject to 

limits. 

Here are the 2007 limits, listed by the type of plan that you sponsor: 

•	 SIMPLE IRA Plan: Maximum employee salary reduction contribution for 2007 

is $10,500. If the employee is age 50 or over, an additional catch-up contribution 

of $2,500 may be deferred. The required employer contribution is either a 3% 

dollar-for-dollar matching contribution or 2% of compensation given to all 

eligible employees. 

•	 SEP Plan: Maximum contribution is the smaller of 25% of an employee’s 

compensation (up to $225,000), or $45,000. Maximum deduction is 25% of all 

participants’ compensation that does not exceed $225,000. 

•	 Profit-Sharing and Money Purchase Pension Plans: Maximum contribution is 

the smaller of 25% of an employee’s compensation that does not exceed 

$225,000, or $45,000. Maximum deduction is 25% of all participants’ 

compensation that does not exceed $225,000. 

•	 401(k) Plan: Because a 401(k) plan is part of a profit-sharing plan, the same 

25% deduction limit applies to regular profit-sharing contributions. 

Contributions can be both employer and employee. The maximum employee 

salary reduction contribution is $15,500 for 2007. If the employee is age 50 or 

over, an additional catch-up contribution of $5,000 may be deferred. You can 

deduct the employees’ elective deferrals in addition to the 25% limit (for 

employer contributions) as long as an individual’s total contributions do not 

exceed $45,000 ($50,000 for those aged 50 and over). 

•	 Defined Benefit Plan: Maximum contribution is the amount needed to provide 

an annual benefit no larger than the smaller of $180,000 or 100% of the 

participant’s average compensation for his or her highest 3 consecutive calendar 

years. The maximum deduction is limited to the amount necessary to fund the 

plan for the year and is determined by an enrolled actuary. 

Self-employed individuals and partners must make an adjustment to their deduction for 

their own contributions on Form 1040, line 28. See “Table and Worksheets for the SelfEmployed” in Publication 560 for information on how to make this adjustment to your 

own contribution deduction. 
Winter 2008 Retirement News for Employers 

New on the Web 

Here are the latest postings to the Retirement 

Plans Community web page: 

• 	In order to better serve our customers and

 make it easier for you to find your way around

 the “Retirement Plans Community” web page,

 we have added two new links on our main

 page. The Plans and Programs link will take

 you to the different types of retirement plans

 (i.e., SEP, 401(k), 403(b), etc.) or the IRS

 Employee Plans Programs (i.e., Examinations,

 Determination, EPCRS, etc.). The 

Retirement Plans Community Site Map

 contains an alphabetical listing of main

 topics, linking you to specific topics on the

 “Retirement Plans Community” web page. 

• 	Nine EP video clips on retirement plan topics

 ranging from navigating information on

 retirement plans to starting a SEP or SIMPLE

 IRA plan are now available online (via links)

 on the Retirement Plans Community web

 page. Check out the article on page 7 for a

 description of the videos and where to find

 them. 

• 	We have reformatted the “EP FAQs” to match

 “Help with Tax Questions” on www.irs.gov. 

The link to the “EP FAQs” is located on the

 left pane of the “Retirement Plans

 Community” web page.• 

The Saver’s Credit is a special tax credit, based on income, which allows 

individuals to claim up to a $1,000 credit ($2,000 if filing jointly) on Form 

1040, line 53, (Form 1040A, Line 33). It is available for contributions to a 

traditional or Roth IRA, 401(k), 403(b), governmental 457, SARSEP, or 

SIMPLE plan. 

For additional information on the Saver’s Credit, see the “Timing is Everything” 

flyer in the Fall Edition of the RNE. For more information on contribution and 

deductions limits for various retirement plans, see Types of Plans on the left 

pane of the “Retirement Plans Community” web page.• 

We’re Glad You Asked!
 

Each issue of the RNE looks at a common question we receive and provides an answer and 

additional resources in response to the question. In this edition you are getting a two’fer. 

Our Company has a SIMPLE IRA plan for our employees. During 2007, an 

eligible employee ended employment. The employee had more than $5,000 

in wages. In January 2008, the Company made its 2007 contribution to its 

employees’ IRAs. Does the Company have to make a contribution (either as 

a match of employee elective contributions up to 3% or as a 2% nonelective contribution, whichever applies) for the former employee in 2007? 

Yes. A SIMPLE IRA plan may not require a participant to be employed on a 

specific date to receive an employer contribution. If a participant terminates 

service during the plan year, they would still be entitled to an employer 

contribution. It does not matter if they were fired or quit. 

Under §408(p) of the Internal Revenue Code, a SIMPLE IRA plan must base 

compensation and contributions on the entire calendar year. This rule applies 

regardless of when during the year the plan is put into effect or when the 

employee ends service. 

Our company’s SIMPLE IRA plan matches employee elective contributions 

dollar-for-dollar up to 3% of compensation. The company owner, age 49, 

took a $250,000 bonus in November 2007, bringing his total compensation 

for the year to $360,000. The match was made on the owner’s deferral of 

$10,500, limited to 3% of his $360,000 compensation. Is that OK, or is there 

a limit on the amount of compensation used for the 3% limit? 

Yes. In a SIMPLE IRA plan, the 3% limit on the match is based on an unlimited 

amount of an employee’s compensation. The match must equal the lesser of: the 

employee’s deferral (limited to $10,500, in 2007, for an employee under age 50) 

or 3% of the employee’s compensation. In this case, the matching contribution 

will be the lesser of the owner’s $10,500 deferral or 3% of compensation (3% of 

$360,000 is $10,800). Since the lesser amount is $10,500, this is the amount of 

the match in this case. This is different from the 2% nonelective contribution 

which can only be made on the Code’s maximum limits for compensation 

($225,000 in 2007). 

More information on SIMPLE IRA plans is available.• 

2 
Winter 2008 Retirement News for Employers 

Desk Side Chat With Monika Templeman 

Keeping Your Plan in Compliance 

Internal Revenue Service 

ax Exempt and Government Entities 

Employee Plans 

The Retirement 

Plan Products 

Navigator 

Resources to Help You Choose 

and Maintain the Right Retirement 

Plan for Your Business/Organization 

401(k) PLAN CHECKLIST 401(k) PLAN CHECKLIST

This Checklist is not a complete description of For Business Owner’s Use 


all plan requirements, and should not be used as (DO NOT SEND THIS WORKSHEET TO THE IRS )
 

a substitute for a complete plan review.
 

Every year it is important that you review the requirements for operating your 401(k) retirement plan.This checklist
 

is a “quick tool” to help you keep your plan in compliance with many of the important rules. Underlined text below
 

shows a link to expanded explanations and resources available at www.irs.gov/ep.
 

1. Has your plan document been Yes No 

updated within the past few years ■ ■ to reflect recent law changes? 

If your plan has not been updated to reflect EGTRRA, the 

plan needs to be revised. 

2. Have you notified the people who Yes No 

service your plan of any plan changes? ■ ■ 

Notify plan servicers right away with any changes in the 

form or operation of your plan, including acquisition or 

ownership changes affecting the employer. 

3. Is your plan’s operation based on Yes No 

the definitions and requirements ■ ■ (terms) written in your plan document? 

Failure to follow the terms of the plan is a common problem 

encountered on audit. 

4. Were all eligible employees identified Yes No 

and given the opportunity to make an ■ ■ elective deferral election? 

By supplying your third party administrator (TPA) or advisor 

with information regarding all employees who receive a 

Form W-2, you may reduce the risk of omitting eligible 

employees. 

5. Is the plan’s definition of Yes No 

compensation used for all deferrals ■ ■ 

and allocations? 

Because your plan may use different definitions of compensation for different purposes, it’s important that you apply 

the proper definition in a consistent manner when dealing 

with deferrals and allocations. 

6. Have you timely deposited employee Yes No 

deferrals each pay period? ■ ■ 

You are required to deposit deferrals as soon as they can be 

segregated from the employer’s assets. Most employers 

deposit salary deferrals when making payroll tax deposits. 

7. Have you identified all your highly Yes No 

compensated employees and key ■ ■ employees, including owners and their 

family members, so that your TPA can 

perform your nondiscrimination tests? 

Failure to provide this information prevents yourTPA from 

properly performing your nondiscrimination tests. 

8. Have the 401(k) nondiscrimination Yes No 

tests (ADP, ACP, and Top-Heavy) been ■ ■ performed counting all eligible employees? 

You may not need to—find out how a safe harbor 401(k) plan 

may allow you to completely avoid these tests. 

9. Have you filed a Form 5500 series Yes No 

return, and have you distributed a ■ ■ 

Summary Annual Report (SAR) to all 

plan participants this year? 

Responsibility for filing the Form 5500 and distributing 

the SAR lies with you, the plan sponsor. 

10. Are elective deferrals limited to Yes No 

the amounts under IRC 402(g) for the ■ ■ 

calendar year? 

Elective deferrals are limited to $15,000 for 2006, including 

any designated Roth contributions made by participants, and 

exclusive of any catch-up contributions. 

If you answered “No” to any of the above questions, you may have a mistake in the operation of 

your 401(k) plan.This list is only a guide to a more compliant plan, so answering yes to each question may not mean 

your plan is 100% compliant. Many mistakes can be corrected easily, without penalty and without notifying the IRS. 

■ contact your benefits professional ■ visit the IRS at www.irs.gov/ep ■ call the IRS at (877) 829-5500 

Department of the Treasury Publication 4531 (7-2006)
 

Internal Revenue Service Catalog Number 48552T
 

www.irs.gov

In each issue, Monika Templeman, Director of EP Examinations, responds to questions and 

offers insights on retirement plan topics uncovered during audits. You may provide feedback or 

suggest future topics for discussion by e-mailing her at: RetirementPlanComments@irs.gov. 

Monika, in your last Desk Side Chat, you discussed the errors found in IRAbased plans. Most of these errors are not found until one of your agents does 

an examination of the plan, right? 

Correct. This is unfortunate, because most of these mistakes are the kind that 

could be identified and corrected quickly, if found by the plan sponsor. 

Employers are then ultimately responsible for operating their plans 

correctly? 

Yes. I really want to stress how important it is for plan sponsors to understand 

their responsibilities. A retirement plan is an excellent tool for employers. Plans 

provide numerous business and employee benefits. However, to keep these 

benefits alive and well, employers need to keep their plans up-to-date with current 

law in both form and operation. Think of a swan on the water looking graceful and 

balanced. While it appears that the swan glides effortlessly, underneath the water, 

the swan’s legs are constantly in motion to keep the swan afloat. A retirement plan 

also requires ongoing effort to ensure “smooth sailing.” The plan can provide 

excellent benefits for the employer and the employees. However, the employer has 

to work behind the scenes to make sure the plan stays compliant. 

This is an important responsibility. Does the IRS have any brochures or web 

material to assist plan sponsors? 

We have plenty of excellent, user-friendly materials to assist employers. First, I 

would highly recommend our online Navigator. In addition to providing 

invaluable help in choosing an appropriate retirement plan, the Navigator provides 

terrific tools to help plan sponsors operate their plans and correct mistakes. For 

example, there are “check-up” brochures and plan checklists that will assist 

employers in performing regular maintenance on their plans. The Navigator covers 

many plan types, so I would suggest visiting our web site to find information 

specific to your plan. 

Where can employers find this Navigator? 

We have created a button exclusively for Plan Sponsors/Employers on our 

“Retirement Plans Community” web page (www.irs.gov/ep). This button will take 

plan sponsors to all of the materials for operating and correcting their plan. Along 

with the Navigator, this web page also provides tips on preparing for an audit, 

error trends/tips by plan type, access to publications and forms, and other useful 

material. 

What about information for employers if, while maintaining their plan, they 

find an error they need to correct? 

There is a link on our web page that takes users to our Correcting Plan Errors 

page. On this page, employers can find information on the three types of 

correction programs available to them and when each would apply. The 

information on this page includes a list of the top ten errors submitted by plan 

sponsors as part of the Voluntary Compliance Program plus other trends/tips. 

3 
Winter 2008 Retirement News for Employers 

Recent Guidance 

• Proposed Regulations REG133300-07, which were published 

with reliance under §§401(k), 

401(m), 402(c), 411(a), 414(w), 

and 4979(f), pertain to certain 

automatic contribution 

arrangements. 

• Rev. Rul. 2007-67 addresses the 

mortality tables required by 

§417(e)(3) of the Code for single 

sum distributions as amended by 

§302 of PPA. 

• Rev. Proc. 2007-71 contains 

model amendments that may be 

used by public schools in creating 

or amending their §403(b) plans 

and also contains certain 

transitional relief. 

• Notice 2008-7 extends transitional 

guidance in Notice 2006-107, 

and the transitional relief in 

paragraph 4 of Part III.D of Notice 

2006-107 provided to certain 

defined contribution plans holding 

publicly traded employer 

securities until the regulations 

related to §401(a)(35) become 

effective. 

• Notice 2007-99 alters Q&A-23 of 

Notice 2007-7 by deleting the 

word “insurance” from the term 

“accident or health insurance 

plan,” relating to the §402(l)(4)(D) 

definition of qualified health 

insurance premiums and the 

§402(l)(5)(A) definition of direct 

payment requirement. 

• Notice 2007-94 contains the 2007 

Cumulative List of Plan 

Qualification changes.• 

An employer that maintains a 401(k) plan should visit the 401(k) Fix-it Guide 

which describes common 401(k) mistakes with tips on how to find, fix, and avoid 

them. The guide contains a wealth of practical information. Another excellent 

source for information is EP Compliance Trends & Tips which provides 

information on additional common 401(k) mistakes, as well as common mistakes 

found in 403(b)/457 plans, Defined Benefit plans, Multiemployer plans, 

SIMPLE IRA plans and SARSEPs. 

Employers may also send in a question about correcting plan errors if they 

happen upon a situation that is not answered in the material on our web page. 

Do you have final words of wisdom for employers? 

Periodically check our web pages for updates and new materials. This information 

and our web-based tools will assist employers in keeping that plan looking like a 

swan...I should say operating in compliance with the Code.• 

Fixing Common Plan Mistakes: 

Using a Plan Amendment for Correction in the 

Self-Correction Program 

Each issue of the RNE looks at a common error that occurs in retirement plans and provides 

information on fixing the problem and lessening the odds of it happening again. 

The Problem: 

Failing to follow the plan terms in its operation: When can a plan amendment be 

used to correct a mistake in the operation of the plan under the Self-Correction 

Program? 

The Fix: 

EPCRS is a system of correction programs that can be used to correct plan 

mistakes that, if left uncorrected, could result in a retirement plan losing its taxfavored benefits. EPCRS includes the Self-Correction Program (SCP), where 

correction can be made without paying a fee or contacting the IRS. SCP is only 

available for correcting operational failures (i.e., mistakes that are made when 

terms of the plan are not followed in its operation). An overview of SCP appeared 

in the Winter 2007 edition of the RNE. 

In general, the failure to follow the plan’s terms may be corrected by using one of 

the following approaches. First, the plan can fix what was done in the plan’s 

operation by correcting the mistake to match the plan’s terms. Or, the employer 

may retroactively amend the plan so that its provisions match the way the plan 

was operated. In general, SCP is only available if correction is made using the first 

approach. However, in very limited circumstances an operational failure may be 

corrected by making a plan amendment under SCP. 

SCP may be used to correct an operational failure by amending the plan to match 

the terms of the plan to the plan’s prior operations only for the three operational 

failures listed in Revenue Procedure 2006-27, Appendix B, section 2.07. The 

failures that can be corrected by plan amendment in accordance with the 

correction methods set forth in Appendix B are described as follows: 

Maximum Compensation (§401(a)(17)) Failures. A defined contribution plan that 

allocates contributions or forfeitures based on a participant’s compensation that 

exceeds the §401(a)(17) limit may be corrected by amending the plan. The 

affected participant’s allocation rate (after taking into account only compensation 

4 
Winter 2008 Retirement News for Employers 

Contributors to 

this Issue: 

Avaneesh Bhagat 

Kathy Davis 

Roger Kuehnle 

Peter McConkey 

Mark O’Donnell 

Nancy Payne 

Keith Ruprecht 

John Schmidt 

Brenda Smith-Custer 

Monika Templeman 

Mikio Thomas 

Kathy Tuite • 

up to the §401(a)(17) limit) must be recalculated and extra amounts contributed 

to the other employees. The following example shows how this is done: 

Company A maintains a money purchase pension plan. Under the plan, John, an 

eligible employee, is entitled to an employer contribution of 8% of his 

compensation up to the §401(a)(17) limit ($220,000 for 2006). During the 2006 

plan year, John earned $250,000 and was credited with a contribution in the 

amount of $20,000 (8% of $250,000). Under the terms of the plan, John’s 

contribution should have been $17,600 (8% of $220,000). John received $2,400 

too much. 

Company A may correct the failure by giving extra amounts to eligible 

employees (other than John) and amending the plan to reflect the higher 

contribution percentage that was allocated to John. The plan’s corrected 

contribution percentage (and the additional amount that must be contributed to 

all other eligible employees) is determined by dividing John’s contribution 

($20,000) by the §401(a)(17) limit ($220,000). Therefore, the plan must be 

amended back to the first day of plan year 2006 to increase the contribution 

percentage to 9.09% ($20,000/$220,000). In addition, each eligible employee 

(other than John) receives an extra contribution of 1.09% (9.09% - 8%) 

multiplied by his/her 2006 compensation. The extra contribution must be 

adjusted for earnings. 

Hardship Distribution and Plan Loan Failures. The operational failure of 

making hardship distributions or plan loans to employees under a plan that does 

not allow them may be corrected by retroactively amending the plan to provide 

for the hardship distributions or plan loans that were already given. The 

retroactive plan amendment is permissible provided that the plan loans or 

hardship distributions were mostly made to individuals who were not highly 

compensated employees, loans were made according to the limits in §72(p), and, 

in the case of a 401(k) plan, hardship distributions complied with the applicable 

401(k) rules relating to hardship distributions. 

Early Inclusion of Otherwise Eligible Employee Failures. The operational 

failure of including an otherwise eligible employee in the plan too early may be 

corrected by retroactively amending the plan. This would apply to an employee 

who either (i) has not completed the plan’s minimum age or service 

requirements, or (ii) has completed the plan’s minimum age or service 

requirements but became a participant in the plan earlier than the plan entry date. 

The amendment, permitting the ineligible employee’s inclusion, serves to reflect 

the plan’s actual operations. In order to be entitled to make this retroactive 

amendment, employees affected by the amendment should be mainly nonhighly 

compensated employees. 

A plan sponsor who amends a plan to correct a failure using SCP must submit a 

determination letter application on the corrective amendments, identifying the 

amendments separately in the application. The determination letter application 

must be submitted before the end of the plan’s applicable remedial amendment 

period described in Revenue Procedure 2007-44. 

Making Sure It Doesn’t Happen Again 

The failure to operate the plan in accordance with its terms can be prevented by 

ensuring that all of the parties involved with plan administration are familiar 

with the plan’s terms. Periodic plan reviews should be performed. 

Keep in mind that, despite all of your good efforts, mistakes can happen. In that 

case, the Service can help you correct the problem and retain the benefits of your 

qualified plan.• 5 
Winter 2008 Retirement News for Employers 

Department of the Treasury 

Internal Revenue Service 

Publication 590 Cat. No. 15160X 

Individual

Retirement

Arrangements

(IRAs)

For use in preparing 

2007 Returns 

Get forms and other information 

faster and easier by: 

Internet • www.irs.gov 

Contents 

What’s New for 2007 ........................ 2
 

What’s New for 2008 ........................ 2
 

Reminders ................................ 3
 

Introduction .............................. 4
 

1. Traditional IRAs	 ......................... 7
 

What Is a Traditional IRA? ................. 7
 

Who Can Set Up a Traditional IRA? .......... 8
 

When Can a Traditional IRA Be Set Up? ...... 9
 

How Can a Traditional IRA Be Set Up? ........ 9
 

How Much Can Be Contributed? ............. 10
 

When Can Contributions Be Made? .......... 12
 

How Much Can You Deduct? ............... 13
 

What if You Inherit an IRA? ................ 20
 

Can You Move Retirement Plan Assets? ...... 21
 

When Can You Withdraw or Use Assets? ...... 32
 

When Must You Withdraw Assets?
 

(Required Minimum Distributions) ......... 34
 

Are Distributions Taxable? ................. 40
 

What Acts Result in Penalties or Additional
 

Taxes? ............................. 44
 

2. Roth IRAs	 .............................. 58
 

What Is a Roth IRA? ...................... 59
 

When Can a Roth IRA Be Set Up? ........... 60
 

Can You Contribute to a Roth IRA? .......... 60
 

Can You Move Amounts Into a Roth IRA? ..... 64
 

Are Distributions Taxable? ................. 65
 

Must You Withdraw or Use Assets? .......... 68
 

3. Savings Incentive Match Plans for
 

Employees (SIMPLE) .................... 69
 

What Is a SIMPLE Plan? .................. 69
 

How Are Contributions Made? .............. 70
 

How Much Can Be Contributed on Your
 

Behalf? ............................ 71
 

When Can You Withdraw or Use Assets? ...... 72
 

4. Hurricane-Related Relief	 .................. 72
 

Qualified Hurricane Distributions ............. 73
 

5. Retirement Savings Contributions Credit
 

(Saver’s Credit) ......................... 75
 

6. How To Get Tax Help ..................... 76
 

Appendices 

Appendix A. Summary Record of Traditional
 

IRA(s) for 2007 and Worksheet for
 

Determining Required Minimum
 

Distributions ......................... 80
 

Appendix B. Worksheets for Social
 

Security Recipients Who Contribute to a
 

Traditional IRA ....................... 82
 

Appendix C. Life Expectancy Tables
 

Table I (Single Life Expectancy) .......... 88
 

Table II (Joint Life and Last Survivor
 

Expectancy) ...................... 90
 

Table III (Uniform Lifetime) .............. 104
 

Index .................................... 105
 

The Filing Cabinet 

Revised Forms and Publications Now Available 

The following forms have been revised: 

•	 Form 4461-A. A “new” version of the Application for Approval of 

Master or Prototype or Volume Submitter Defined Benefit Plan (revised 

December 2007), used when submitting an application for either a 

specimen defined benefit master or prototype (M&P) plan or a specimen 

defined benefit volume submitter (VS) plan as described in Rev. Proc. 

2007-44, is available. 

•	 Form 5329. Additional Taxes on Qualified Plans (Including IRAs) and 

Other Tax-Favored Accounts for 2007 reflects a change in IRS policy for 

taxpayers who miss taking their required minimum distribution from an 

IRA because of a reasonable error. Taxpayers who feel they meet the 

reasonable cause criteria (set out in IRC §4974(d)) are now allowed to 

not pay the 50% excise tax when they file their Form 1040. The 

Instructions for Form 5329, under Waiver of Tax on page six, instruct 

taxpayers to attach a statement of explanation, complete Part VIII of the 

form, make the appropriate “RC” annotation, and enter the amount to be 

waived on line 52. 

•	 Form 5330. The Return of Excise Taxes Related to Employee Benefit 

Plans (revised January 2008), has been redesigned, grouping various 

excise taxes by due date and adding new taxes brought about by the 

Pension Protection Act. 

•	 Form 5558. The updated Application for Extension of Time To File 

Certain Employee Plan Returns (revised January 2008), is now available 

to request an extension to file Form 5500 or 5330. Due to the fact that 

notices regarding the approval/denial of extension requests for Form 

5330 filers have been automated, all sections below the signature and 

date lines have been eliminated. 

The following publications have also been updated: 

•	 Tax-Sheltered Annuity Plans (403(b) Plans) For Employees of Public 

Schools and Certain Tax-Exempt Organizations (Publication 571). 

•	 Pension and Annuity Income (Publication 575). 

•	 Individual Retirement Arrangements (IRAs) (Publication 590). 

•	 2008 IRS Tax Calendar for Small Businesses and Self-Employed 

(Publication 1518). 

These forms and publications are available on the Retirement Plans 

Community web page by clicking on “EP Forms/Pubs/Products” in the left pane 

or by calling (800) TAX-FORM (829-3676).• 

6 
Winter 2008 Retirement News for Employers 

IRS Employee Plans Videos - Now Available Online 

Nine EP video clips on a range of retirement plan topics are now available online via links on the Retirement Plans 

Community web page (www.irs.gov/ep). These videos can be used in combination with the related web page content to 

provide both employers and participants useful information for meeting their retirement plan needs. 

The following is a guide to these videos and how to find them: 

Video Title Description Video Link on www.irs.gov/ep 

available at: 

"The Navigator" - Navigating 

Employer Information on 

Retirement Plans 

Small business owner uses "The 

Navigator" to help choose and operate 

a retirement plan. (2:52 min.) 

Plan Sponsor/Employer web 

page, select The Navigator 

Maintaining Your Plan Tips on what employers/sponsors 

need to do to keep their retirement 

plan healthy. (6:45 min.) 

Correcting Plan Errors web page 

Self-Correcting Plan Mistakes A discussion on using the SelfCorrection Program for a common 

plan mistake. (1:59 min.) 

Correcting Plan Errors web page 

Fixing Plan Mistakes Found 

During an IRS Audit 

IRS EP Examinations Director 

discusses what happens when EP 

agents find mistakes while examining 

retirement plans. (4:45 min.) 

Correcting Plan Errors web page 

Increasing Your Retirement 

Savings 

A short discussion on Individual 

Retirement Arrangements (IRAs) as a 

tool to use in planning for retirement 

years. (1:17 min.) 

Plan Participant/Employee web 

page, select "Resources for 

Retirement Plan 

Participant/Employee," then IRA 

Online Resource Guide 

Managing Your IRA A discussion on basic principals of 

investing. (3:00 min.) 

Plan Participant/Employee web 

page, select "Resources for 

Retirement Plan 

Participant/Employee," then "IRA 

Online Resource Guide," then 

Information about Traditional 

IRAs or Information about Roth 

IRAs 

Starting a SEP or SIMPLE IRA 

Plan 

A discussion on two types of 

retirement plans (SEP and SIMPLE 

IRA) that are tailored for many small 

businesses. (2:00 min.) 

Plan Sponsor/Employer web 

page, then select "Types of 

Retirement Plans," then SEPs or 

SIMPLE IRAs 

Stopping Abuses in Retirement 

Plans 

IRS EP Examinations Director 

discusses stopping abuses in 

retirement plans. (2:33 min.) 

Examinations/Enforcement web 

page, then select EP Abusive Tax 

Transactions 

IRS Enforcement Priorities IRS EP Examinations Director 

discusses 2008 Employee Plans 

Examination priorities. (3:24 min.) 

Examinations/Enforcement web 

page, then select "Critical 

Priorities" - EP Examinations 

Priorities/Goals 

The IRS Employee Plans videos are hosted on stayexempt.org, the same web site that hosts IRS Exempt Organizations’ 

online workshop – Stay Exempt – Tax Basics for 501(c)(3)s. 

7 
Winter 2008 Retirement News for Employers 

DOL News 

The Department of Labor’s Employee Benefits Security Administration 

(DOL/EBSA) announced new guidance and tools to assist plan sponsors in 

complying with ERISA, including those featured below. You can subscribe to 

DOL/EBSA’s web site homepage or PPA page for updates. 

Proposed Regulation to Increase Disclosure of Fees 

and Conflicts of Interest 

A proposed rule was published that will enhance disclosure to fiduciaries by 

requiring that contracts between certain service providers and plans provide 

for specific and detailed information. The proposal requires that all 

compensation, direct and indirect, to be received by the service provider in 

connection with services furnished to the plan be disclosed in writing. The 

proposal also requires the disclosure of possible conflicts of interest of the 

service provider that may affect the performance of plan services. 

A proposed class exemption was published to provide relief to fiduciaries who 

enter into deficient contracts with service providers that, unbeknownst to the 

fiduciary, failed to comply with their disclosure obligations. 

Proposed Regulation on Civil Penalties 

A proposed regulation was published for assessing civil penalties against 

plan administrators who fail to disclose certain documents to participants, 

beneficiaries and others as required by PPA. 

The PPA established new disclosure provisions relating to: funding limits on 

benefit accruals and certain forms of benefit distributions; plan actuarial and 

financial reports; withdrawal liability of contributing employers; and 

participants’ rights and obligations under automatic contribution 

arrangements. The PPA gives DOL/EBSA the authority to assess civil 

monetary penalties of up to $1,000 per day against plan administrators for 

violations of the new requirements. 

Comments should be submitted to DOL/EBSA by February 19, 2008. 

Proposed Expansion of Class Exemption on Settlement of Litigation 

A proposed amendment to Prohibited Transaction Exemption 2003-39 was 

published to expand the categories of assets that can be accepted under the 

exemption to settle litigation with related parties, if the transaction is 

otherwise beneficial to the plan. 

2009 Form 5500 Annual Return/Report 

A final rule and a notice of adoption of revisions were published for revisions 

to the Form 5500 Annual Return/Report for plan year 2009, including a 

deferral for one year to the wholly electronic filing system. 

The forms also include changes required by the PPA for defined benefit 

pension plans and multiemployer plans. Those changes are required to be 

implemented and will be included for the 2008 plan year Form 5500. 

Free Compliance Assistance Events: For dates and locations of free 

compliance assistance events sponsored by EBSA for both retirement and 

health benefit plans, visit EBSA’s homepage.• 8 
 

Winter 2008 Retirement News for Employers 

Retirement News for Employers 

Retirement News for Employers (RNE) is a 

free, quarterly newsletter aimed at keeping 

employers informed about retirement plan 

sponsorship. RNE is prepared by the IRS’s 

Employee Plans (Tax Exempt and 

Government Entities) office. 

For your convenience, RNE includes Internet 

links – identified by the blue underlined text – 

to referenced materials. 

How to Subscribe 

RNE is distributed exclusively through IRS email. Sign up for your free subscription by 

going to the Retirement Plans Community 

web page and selecting “Newsletters” in the 

left pane. Prior editions of the RNE are also 

archived there. 

Send Comments/Suggestions to: 

EP Customer Education & Outreach 

SE:T:EP:CEO 

1111 Constitution Ave., N.W., PE-4C3 

Washington, DC 20224 

FAX: (202) 283-9525 

E-Mail: RetirementPlanComments@irs.gov 

Have a Question? 

For taxpayer assistance with retirement 

plans technical and procedural questions: 

Please call (877) 829-5500 or visit the 

“Contact EP/Services” section at 

www.irs.gov/ep. 

For questions relating to retirement income, 

IRAs, Roth IRAs, educational IRAs, 

medical savings accounts, and §125 

cafeteria plans: 

Please call (800) 829-1040.• 

Mark Your Calendar 

Meeting deadlines is a sometimes cumbersome part of operating your retirement 

plan. To help, we’ve listed some upcoming important deadlines. Please note that 

the dates are for calendar-year plans. 

FEBRUARY 28 

Paper Forms 1099-R for 2007 distributions due to IRS. 

MARCH 15 

•	 Application of Waiver for Minimum Funding Standard for defined benefit

 plans due. 

•	 ADP/ACP distributions of excess amounts, with earnings, due to participants

 to avoid 10% excise tax. 

MARCH 17 

Note: The following usually are due on March 15, which falls on Saturday in 

2008 

•	 Forms 1042S, Foreign Person’s U.S. Source Income Subject to Withholding,

 and 1042, Annual Withholding Tax Return for U.S. Source Income of

 Foreign Persons, due to IRS to report retirement plan distributions and

 income tax withheld from distributions made to nonresident aliens. 

•	 2007 corporate employer contributions due in order to take tax-deduction

 (with no corporate filing extension). 

MARCH 31 

Electronic filing of Forms 1099-R for 2007 distributions due to IRS. 

APRIL 1 

Initial age 701⁄2 minimum required distributions due to participants who turned 

age 701⁄2 in 2007 for IRA and IRA-based plans. For all other retirement plans, 

first required distribution for 5% owners and for non-5% owners who retired in 

2007. 

APRIL 15 

•	 Deadline for returning 2007 participant deferrals in excess of $15,500

 ($20,500, if 50 or older). 

•	 Deadline to establish an IRA for possible deduction in 2007. 

•	 First quarterly defined benefit contribution installment due for the 2008 plan

 year. 

•	 2007 self-employed individual and partnership contributions due in order to

 take tax deduction (with no filing extension). 

For a comprehensive list of upcoming EP Educational Events, visit the 

Retirement Plans Community web page, select “Plan Sponsor/Employer,” 

then “Questions: Where to Get Answers,” and click on “Upcoming EP 

Educational Events.”• 

Department of the Treasury 

Internal Revenue Service 

Publication 4278 (02-2008) 

Catalog Number 37968B 

www.irs.gov 

9 
Winter 2008 Retirement News for Employers 

Timing is Everything
 


Some helpful retirement tips for employees from the IRS... 

How much can I contribute to my IRA for 2007?  the lesser of: 

o your taxable compensation 

o or $4,000 ($5,000 if 50 or older) 

When must I make the contribution? 

By April 15, 2008 

Is my contribution deductible? 

If it is a Roth IRA – no 

If it is a traditional IRA – maybe 

See page 28 of the 2007 Form 1040 Instructions,

 page 27 of the 2007 Form 1040A Instructions, or

 page 16 of the 2007 Form 1040NR Instructions. 

For more retirement tips, talk to your employer or visit www.irs.gov/ep, select “Plan Participant/ 

Employee” and click on “Timing is Everything.” 

Department of the Treasury Publication 4278-B (02-2008) 

Internal Revenue Service Catalog Number 47978D 

www.irs.gov