New legislation offers opportunities for closely-held business owners. Closely-held business provisions that will become effective in 2007 and 2008, involved funding rules for single employer and multi-employer defined benefit plans. Reformed funding rules for single employer and multi-employer defined benefit plans. The Act’s newly created prohibited transaction exemption under ERISA that allows related parties to provide investment advice to plan participants and IRA owners of certain requirements, including detailed disclosure requirements, are satisfied. Increases in the maximum value of deductions for single-employer plans. New reporting and disclosure requirements for defined benefit plans. New diversification conditions for employee contributions, elective deferrals and employer contributions with respect to investing in employer securities. Revised vesting requirements for employer contributions to defined contribution plans. For policies issued after enactment, new limitations on amounts an employer may receive tax-free from COLI benefit proceeds.
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