Lanterna Rally

Author: Vorris J. Blankenship

Publisher:

Published: 2016

Total Pages: 7

ISBN-13:

Tax-exempt entities may establish as many as three different types of tax-favored retirement plans. They may of course establish qualified retirement plans. They may also establish section 403(b) plans, generally known as tax sheltered annuities (TSAs). The tax law treats distributions from qualified plans and TSAs similarly, a treatment generally familiar to tax practitioners.Less familiar, though, is the tax treatment of distributions from "eligible" retirement plans that most types of tax-exempt entities can establish. These plans are unfunded plans designed for select groups of management or highly compensated individuals (so-called “top hat” plans).Though unfunded, eligible exempt entity plans may involve related trusts or other vehicles that invest amounts deferred under the plans, and may give plan participants the right to choose among selected investments. However, all property rights in the deferred funds and related income (whether or not segregated or invested) must belong exclusively to the eligible exempt entity and must be subject to the claims of the entity's creditors.Distribution elections are varied and may be tailored to the needs and goals of retirees and their beneficiaries.