Retirement Plans

10 Key Questions to Ask About Your 403b Plan

View the IRS checklist to help determine whether your 403b plan is in compliance with many important tax rules.

"Welcome to a New World of 403b" — Part II

As a follow up to the recently issued 403b regulations, the Employee Benefits Security Administration issued revised rules related to Form 5500 reporting. Beginning with the 2009 plan years, 403b plans will be required to file Form 5500, as well as obtain an audit by an independent qualified public accountant. View the full notice.  More information on this requirement will be released by Plante & Moran's Employee Benefit Plan Audit group.

Retirement Payments to University Faculty

The U.S. Court of Appeals 3rd Circuit court held that early retirement payments by a university to its tenured faculty were taxable FICA wages. The court opinion held that eligibility for the payments for tenured and nontentured faculty was based on the employee's age and years of service and not on the relinquishment of tenure. University of Pittsburgh v. U.S., 100 AFTR 2d 2007-6504 (3rd Cir).

Last year, the U.S. Court of Appeals 6th Circuit held that payments made by a school district to public school teachers who relinquished their tenure rights were wages taxable under FICA (Appoloni v. U.S., 450 F.3d 185(6th Cir). The decision affirmed a federal district court's judgment that the payments were for a right arising from the employment relationship and, therefore, were wages for FICA purposes and reversed a separate district court's judgment that the payments were not wages for FICA purposes. The Sixth Circuit declined to follow North Dakota State University and determined that the definition of wages as "remuneration for employment" should be interpreted broadly for purposes of FICA. The payments fit within the definition of wages because they arose out of the employment relationship and were conditioned on a minimum number of years of service. Such eligibility requirements indicated that the payments were for services performed, rather than for the relinquishment of tenure rights. Further, the payments were not in exchange solely for the teachers' tenure rights. They were also in exchange for the teachers' early retirement and, therefore, were essentially severance payments.