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March 15, 1989
TO: PENSION MEMBERS NO. 16-89
RE: IRS REVISES PUBLICATION CONCERNING SECTION 403(b)
ARRANGEMENTS
__________________________________________________________
Attached is a copy of the December 1988 revision of IRS
Publication 571, Tax-Sheltered Annuity Programs for Employees of
Public Schools and Certain Tax-Exempt Organizations. The new
version contains substantial revisions from the previous version,
reflecting numerous legislative changes since 1983.
The most significant changes appear in the section
describing the taxation of distributions. This section of the
publication discusses the repeal of the three-year rule with
respect to annuity distributions, and the applicability of
general rule and simplified general rule to individuals whose
annuity starting dates are after July 1, 1986. In addition, the
publication explains the various penalty taxes on early
distributions, excess distributions, and any failure to take
required minimum distributions. A section describing the
availability of rollovers to other section 403(b) arrangements
and IRAs has also been added.
Other changes include a discussion of the annual limit on
elective deferrals (and a corresponding worksheet), a summary of
coverage and nondiscrimination rules, and replacement of the sex-
based annuity table with a unisex table. The numerous citations
included in the footnotes to the 1983 version of the publication
have been deleted from the new version.
The section concerning exchanges of annuity contracts is
virtually identical to that in the 1983 version. Thus, the
revised publication discusses only the procedure that includes
employer involvement in such an exchange.
We will keep you informed of further developments.
Kathy D. Ireland
Assistant General Counsel
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Attachment