| Economic Stimulus Bill Includes
Pension Fixes (3-21-02)
- 457(b) Changes and Clarifications. Among provisions
affecting 457(b) governmental eligible deferred compensation plans
are 1) conforming the definition of compensation so that participants
in 457(b)s are eligible for the same contribution limits as are participants
in other types of defined contribution plans; and 2) clarifying that
a 457(b) participant may make catch-up contributions in an amount
equal to the greater of the amount permitted under the new catch-up
rule and the amount permitted under a special catch-up rule.
- Other Changes and Clarifications. First, individuals
who will attain age 50 by the end of the taxable year will be eligible
for the catch up, rather than only at his/her attainment of age 50.
Second, catch-up contributions can be made only to a qualified defined
contribution plan, not to a qualified defined benefit plan. Third,
a qualified employer plan for "deemed IRAs" includes 403(b)s
and 457(b)s, among other types of plans. Under a "deemed IRA,"
a qualified employer plan may provide for voluntary employee contributions
to a separate account that is deemed to be an IRA.
- Those who work with teacher retirement systems will
be interested in a provision that, while not relating to pensions,
provides direct help to teachers. Teachers will now have available
to them a $250 above the line deduction for out of pocket expenses
for supplies they bring into the classroom, as provided for under
the Teacher Tax Relief Act sponsored by Senator Susan Collins (R-ME),
Senator John Warner (R-VA), and others.
The House passed the final version of the Act March
7, with the Senate approving it and sending it to the President on March
8. He signed it the following day. The measure, known as the Job Creation
and Worker Assistance Act of 2002, has been a source of partisan bickering
since its introduction in light of the 9/11 attacks. Many factors prompted
congressional Republicans and Democrats to reach agreement, including
the six month anniversary of the attacks.
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