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Topic 77: Other Tax-Advantaged Retirement Plans - 261 Individuals can bene t from a broad range of investments Plan can be funded in part from salary reductions by employees Annual contributions are restricted to lesser amounts than provided by a quali ed plan Distributions are not eligible for 10-year averaging If an employer adopts a SIMPLE IRA plan, it cannot maintain a quali ed plan, SEP, 403(a) annuity, 403(b) plan, or 457 plan (8) Employee elective deferrals are excludable for income, employer contributions are deductible, earnings are tax-deferred (9) Direct employer contributions are not subject to FICA and FUTA taxes Employee salary reduction contributions are subject to FICA and FUTA (10) There are no nondiscrimination testing and top-heavy rules (11) Two conditions must be met in order to be eligible to establish plan: (a) Employer has no more than 100 employees (counting only those employees earning at least $5,000 in compensation) If the employer grows beyond the 100employee limit, the law does allow the employer to sponsor the plan for an additional two-year grace period (b) Employer cannot maintain any other quali ed plan, 403(b), 403(a) annuity, 457 plan, or SEP at the same time it has a SIMPLE B Contributions (1) Employees who earned at least $5,000 from the employer in any two preceding years, and are expected to earn $5,000 in the current year, can contribute $8,000 in 2003 Catch-up is $1,000 in 2003 (2) Participants must be age 21 or older with one year of service (1,000 hours) (3) The employer is required to make a contribution equal to either (a) A dollar-for-dollar contribution up to a limit of 3 percent of the employee s compensation This is permitted to be reduced at the option of the employer if i The limit is not reduced below 1 percent ii The limit is not reduced for more than two years of a ve-year period that ends (and includes) the year for which the election is effective iii Employees are noti ed of the reduced limit within a reasonable period of time Important: For the 3 percent match, the annual compensation limit does not apply Example: Baby Corporation sets-up a SIMPLE IRA plan in 2002 The president, Jim, earns compensation of $220,000 If Jim elects to defer $7,000, Baby Corporation must match an additional $6,600 (220,000 3%) Therefore, a total of $13,600 will be contributed to Jim s SIMPLE IRA (b) A 2 percent nonelective contribution for the matching contribution, but only if i Eligible employees are noti ed that a 2 percent nonelective contribution will be made instead of a matching contribution, and ii This notice is provided within a reasonable period of time Important: For purposes of the 2 percent nonelective contribution, the annual compensation limitation ($200,000 in 2003) does apply Example: Assume the same facts as in the earlier example, except that Baby Corporation has elected to make a nonelective contribution of 2 percent of compensation Therefore, the total contribution made to Jim s SIMPLE IRA will equal $11,000 [$7,000 + $4,000 (2% 200,000)] (3) (4) (5) (6) (7).



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which results in significantly less communication overhead! What we've learned here is this: It can be more efficient to develop remote methods that permit bulk processing (that is, they take lists of objects that need to be processed) Here's another example in the same domain Suppose our applet allows students to find out who is teaching a particular class Also suppose that the following remote methods exist:

([regex] href=\ \S*\ ).matches($WebPage)

/* Given a course name like "Art 101", returns its course ID */ public int getCourseId(String a_courseName); /* Gets the instructor ID for the given course ID */ public int getInstructorId(int a_courseId); /* Gets the instructor full name for the given instructor ID */ public String getInstructorName(int a_instructorId);

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Protecting the integrity (incorruptibility) of information is a key component of a security plan. Hackers routinely modify configuration files, databases, programs, and so forth in order to cover their tracks and to wreak havoc on your business.

This means that the client applet needs to contain code that "chases around" a lot of data something like the following

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262 - Retirement Planning C Distributions (1) Rollovers permitted: (a) SIMPLE plan to SIMPLE plan (b) SIMPLE plan to IRA or SEP if in SIMPLE plan for two years (2) Discontinuing participation after two years, a SIMPLE is treated as a traditional IRA (3) Early withdrawals: (a) 25 percent penalty if withdrawal is during rst two years of participation (b) 10 percent penalty after two years of participation (4) Loans are not permitted (5) There is no protection under anticreditor provisions 5 Section 403(b) plans (also called tax-deferred annuity plans or tax-sheltered annuity plans) A Eligibility (1) If offered, such a plan must be offered to all employees regardless of age, service, or union af liation (2) An organization must be one of the following to adopt a Section 403(b) plan: (a) A tax-exempt employer described in Section 501(c)(3) of the Code (b) An educational organization (most public schools and colleges) (3) A self-employed duly ordained or licensed minister of a church who works for an employer that is not a quali ed tax-exempt organization is treated as working for such an organization for the purposes of participating in a tax-sheltered annuity (TSA) plan B Plan characteristics (1) Funded by employee contributions (2) Permitted rollovers: (a) TSA to TSA, 401(k), or 457 plan maintained by a state/local government (b) TSA to traditional IRA (3) Not considered a quali ed plan, although subject to similar restrictions (4) A TSA is subject to ERISA if an employer contributes (a) Subject to ERISA s minimum vesting schedules, but seldom used usually 100 percent vested (b) Must comply with nondiscrimination tests (5) A TSA is not subject to ERISA if the following conditions are met: (a) Employee participation is voluntary (b) All rights under the annuity contract or the custodial account are controlled by the participant, participant s bene ciary, or his or her designee (c) The employer s involvement is primarily limited to activities such as collecting salary reductions for deposit into TSA accounts or providing information of the TSA vendors to the participants C Plan investments limited to (1) Annuity contracts (2) Mutual fund shares (3) Life insurance, with some restrictions (4) Retirement income accounts (DCP) maintained by churches or certain church-related organizations.

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public class RegistrationApplet extends Applet { public String identifyInstructor(String a_courseName) { RegistrationManager serverApp = (RegistrationManager)Naminglookup( "//remotehost/RegistrationManager"); /* Remote request #1 */ int courseId = serverAppgetCourseId(a_courseName); /* Remote request #2 */ int instructorId = serverAppgetInstructorId(courseId); /* Remote request #3 */ String instructorName = serverAppgetInstructorName(instructorId); return instructorName; } }

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