Due to the passage of the Tax Increase Prevention and Reconciliation Act of 2005 (TIPRA) the IRS put out a request for comments in Notice 2006-65 on their website. TIPRA will affect both “plan entities” and “non-plan entities.”
Plan entities include Section 403(a) and Section 403(b) annuity plans, Section 529 tuition savings programs, Section 457(b) retirement plans, medical savings accounts, individual retirement accounts, Coverdell education savings accounts and health savings accounts. Non-plan entities will include charities, voluntary employees’ beneficiary associations, insurance companies and many other organizations.
Some of the proposed punishments for non-plan entities include excise tax of 35 to 100 percent depending on if the entity had reason to know if the transaction was a prohibited tax shelter.
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