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February 15, 2009

Small Business Job Protection Act of 1996

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Definition

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  • Repealed SARSEPs effective January 1, 1997

  • Repealed the family aggregation rule that applies to ADP testing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

Written By

Denise Appleby

Denise is CEO of Appleby Retirement Consulting Inc., a firm that provides IRA resources for financial/ tax/legal professionals. She has over 20 years of experience in the retirement plans field, which includes training and technical consultation.

Denise writes and publishes educational /marketing tools for advisors; available at http://irapublications.com. Denise co-authored several books on IRAs

Denise is a graduate of The John Marshall Law School, where she obtained a Masters of Jurisprudence in Employee Benefits, and has earned 5 professional retirement designations.
She has appeared on numerous media programs, sharing her insights on retirement tax laws.

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Keep Learning

Saver’s Credit

Definition Also known as the Saver’s Tax Credit: Nonrefundable tax credit available to eligible individuals who make contributions to their retirement account. The saver’s credit

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

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