No interest or penalties will be imposed if an employer failed to withhold income and employment taxes on excludable educational assistance or failed to report such educational assistance. These modifications apply for taxable years beginning after June 30, 1996. The new limit equals the maximum combined IRA contributions allowable if both spouses work, which remains unchanged. The increase is effective beginning in 1997. The provision is effective for taxable years beginning after Dec. 31, 1996.
All contributions are nonforfeitable.
No discrimination testing is required and reduced administrative and reporting requirements also apply. The employer may not simultaneously maintain a qualified retirement plan or annuity for employees. The new simple retirement accounts are effective for years beginning after 1996. The provision is effective for plan years beginning after 1996. Unused credits may be carried forward for up to five years.