JOURNAL OF ENDODONTICS [ VOL 1, NO 12, DECEMBER 1975

LAW AND ECONOMICS REGISTRY FOR ASSOCIATES

P e n s i o n R e f o r m A c t o f 1 9 7 4

What is the practical effect of the Pension Reform Act of 1974 on the professional corporation retirement plans for endodontists? Although the Pension Reform Act was aimed at an- other problem, that is, the problem of employees of large corporations who cannot or will not fulfill their promises for pensions at retirement, the new law takes endodontists and other professionals into its web. There are several points that are relevant to the professional.

�9 Maximum Limitation of 25%. For defined contribution plans, the new annual limit for any one doctor is 25% of compensation. Be careful here; the 25% limit applies to cor- porate contributions, voluntary contri- butions, and shares of forfeitures in profit sharing plans. When reviewing your plans, you may wish to revise them so you can still participate in forfeitures. The 25% limit does not apply to defined benefit plans, which are plans requiring the services of an actuary .each year.

�9 Vesting Schedules are Changed. The Internal Revenue Service is going to make vesting schedules uniform. We can expect that most corporations will have plans that do not start to vest until after four years of service and do not become 100% vested until after 11 years. Vesting will be based on years of service with the corporation and not on years of participation in the plans. Old plans can be amended to include the benefits of these new vesting schedules.

�9 Reporting to the Department of Labor. All plans were required to have filed a preliminary report to the D e -

partment of Labor by August 31, 1975. More detailed reports must be submitted to the Department of Labor by May 1976.

�9 Revisions. Every pension and profit sharing plan in existence will have to be revised to conform to the new law. An easier approach would be to submit a new plan as a sub- stitute instead of revising an old plan.

�9 Announcements. More informa- tion to employees is going to be neces- sary, including plan descriptions and summary plan descriptions.

�9 Insurance. A bond is required for the trustees or fiduciaries of the plans. This bond can be purchased individ- ually, or as a part of a fidelity bond covering all employees of the corpora- tion, or as part of an office package policy. Professional corporations are not exempt from this bond require- ment. Small corporations such as pro- fessional corporations are exempt from the requirements of the federal guar- antee provisions whereby some cor- porations must submit to a federal in- surance fund to guarantee pensions to employees if their employer defaults.

�9 Trustee. We discussed this point in an earlier "Law and Economics" column (January 1975). We do not see any substantial risk in the doctor continuing as his own trustee of the retirement plan if he acts reasonably in making the investment decisions.

�9 Tax Forms. I have seen many instances where the accountant fails to file the proper tax forms (especial- ly form 990-P) for professional cor- poration retirement plans. The Pension Reform Act provides a penalty for failure to file these reports.

Harvey Sarner

Note: There is no charge ]or plac- ing an ad in the Registry For As- sociates; however, due to limited space, and the increasing interest in this service, ads will be printed only once. Direct all inquiries to Journal of Endodontics Associate Registry, PO Box 11728, North- side Station, Atlanta, Ga 30305. Refer to registry number.

Endodontist, age 29, family. Com- pleting graduate program summer 1976. North East Regional Boards. Working experience in endodontic of- fice and as general practitioner. Desire association, group affiliation in North- eastern region (AR3)

Long-established, growing, two-man endodontic practice in Brooklyn, NY (Flatbush) seeks part-time (two days weekly) associate, leading to full part- nership. Second-year graduate student preferred. (AR4)

Endodontist wanted to join established endodontic practice in New Jersey. Association leading to early partner- ship. Send complete resume. (AR5)

Endodontist, board eligible, 30 years old, desires association in the North- east. (AR6)

Associate wanted for purchase of en- dodontic practice in a Southwestern city. Please send complete personal resume with reply. (AR7)

Age 30, family, completing postgrad- uate endodontic program in June 1976, military obligation completed, has experience in private practice and teaching, desires association in Flor- ida. (AR8)

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