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February 15, 2009

Small Business Job Protection Act of 1996



Small Business Job Protection Act of 1996, Pub. L. 104-188 (SBJPA )

Act which include provisions that provided tax relief for small businesses, protect jobs, and increased the take home pay of workers.

Retirement plans related provisions under SBJPA include the following:

  • Introduced the safe harbor provisions for 401(k) and 403(b) plans. Under this provision, nondiscrimination testing is not required if contributions satisfy the safe harbor formula.  See safe harbor 401(k) plans  and safe harbor 403(b) Plans

  • Introduced SIMPLE 401(k) Plans

  • Created Section 529 qualified tuition programs

  • Repealed SARSEPs effective January 1, 1997

  • Repealed the family aggregation rule that applies to ADP testing

  • Changed the definition of an HCE

Referring Cite

Public Law 104–188

Additional Helpful Information

  • SARSEPs that were adopted by December 31, 2006 were grandfathered. This allowed employers to continue maintaining those SARSEPs and transfer them between financial institutions

Keep Learning

Applicable RMD Age

Applicable RMD Age The first year for which an IRA owner or plan participant must begin to take RMDs from their tax-deferred retirement account. RMDs

SIMPLE 401(k) Plan

Definition A SIMPLE 401(k) plan is a 401(k) plan established by a small business for it’s employees. Earnings accrue on a tax-deferred basis and distributions

Required Minimum Distribution (RMD)

Definition The minimum amount that must be withdrawn from retirement accounts, including qualified plans, 403(b) accounts, 457(b) accounts or IRAs, each year.  For retirement account

Required beginning date (RBD)

Definition The date by which a retirement account owner must begin distributing required minimum distribution (RMD) amounts from a Traditional,  SEP or SIMPLE IRA, a

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