IRS Looks to Boost Tax Incentives for Retirement Savings

Retirement Plans

The IRS issued pre-approved automatic enrollment guidance in

Notice 2009-65 that allows 401(k) plan sponsors to not have to seek approval to adopt automatic enrollment.  The notice includes two sample plans amendments to help plan sponsors move quickly on this change.

Notice 2009-66 and

Notice 2009-67 address the same autom

The IRS also issued a ruling that allows 401(k) plans to institute voluntary automatic contribution increases.  Revenue Ruling 2009-30 illustrates two specific fact situations:  One involves a basic automatic contribution arrangement, and the other involves an eligible automatic contribution arrangement described in IRC § 414(w)

.

Tax Refund Savings

Another initiative that was announced will allow taxpayers to purchase US savings bonds with their tax refunds by checking a box on the return.  This will be implemented in 2010, and in 2011, taxpayers will be able to add

co-owners to the bonds.  Taxpayer won’t have to have a Treasury account or even a bank account – the bonds will simply be mailed to those who check the box.

Converting Vacation Time into Savings

Two new revenue rulings will allow workers who leave their jobs and receive cash payments for their unused vacation time to contribute those amounts to the 401(k) plans (Revenue Ruling 2009-31 and Revenue Ruling 2009-32).

Plain-English Explanation of Rollovers

The IRS also has issued updated “plain English” explanations of the various options involved in rolling money from a retirement plan when changing jobs.  This is designed to make it easier for people to understand the sometimes arcane rules governing these plans. 

Notice 2009-68 covers the explanations for distributions from Roth and other accounts.

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