Part IV. Items of General Interest

riod consists of the year for which the credit is claimed, the period after the end of that year and before the due date (with extensions) for filing the taxpayer’s return for that year, and the two taxable years that precede the year for which the credit is claimed. In the case of a distribution from a Roth IRA, this reduction applies to any such distribution, whether or not taxable, that is not rolled over. An amount does not count as a distribution for purposes of the reduction rule if the distribution is a return of a contribution to an IRA (including a Roth IRA) made during the tax year and (1) the distribution is made before the due date (including extensions) of the individual’s tax return for that year, (2) no deduction is taken with respect to the contribution, and (3) the distribution includes any income attributable to the contribution.

For example, if an individual contributes $3,000 to a 401(k) plan during 2002, but had taken a $500 IRA withdrawal during that year and a $900 IRA withdrawal during 2001 and neither of these withdrawals was rolled over, the amount of that individual’s 2002 plan contribution eligible for the credit is $1,600 ($3,000 $500 - $900), instead of the $2,000 that would have been eligible for the credit if no withdrawals had been taken.

Q-5: What types of contributions are eligible for the saver’s credit?

A-5: Salary reduction contributions to the following arrangements are eligible for the credit: a 401(k) plan (including a SIMPLE 401(k)), a section 403(b) annuity, an eligible deferred compensation plan of a state or local government (a “governmental 457 plan”), a SIMPLE IRA plan, or a salary reduction SEP. The saver’s credit is also available for voluntary after-tax employee contributions to a tax-qualified retirement plan or section 403(b) annuity. For purposes of the credit, an employee contribution will be “voluntary” as long as it is not required as a condition of employment. Finally, the saver’s credit is available for contributions to a traditional or Roth IRA.

An amount contributed to an individual’s IRA is not a contribution eligible for the

Reporting Elective Deferral Catch–up Contributions on the 2002 Form W-2

Announcement 2001–93

Purpose

This is to advise employers how to report elective deferral catch-up contributions beginning after December 31, 2001.

Statutory Change

The Economic Growth and Tax Relief Reconciliation Act of 2001 (P.L. 107–16) added section 414(v) to the Internal Revenue Code of 1986. For 2002, section 414(v) enables applicable employer plans to allow eligible participants who are age 50 or over to make additional elective deferrals, i.e., “catch-up” contributions.

Reporting on Form W-2

For 2002, employers are required to report participants’ elective pension deferrals on Form W-2 in box 12 using Codes D through H and S. For employees’ qualified catch-up contributions after 2001, employers must report the elective deferral catch-up contributions in the totals reported for Codes D through H and S.

Reporting on Form 5498

The reporting of catch-up contributions will be addressed in the 2002 Instructions for Forms 1099-R and 5498. No major changes are anticipated.

Saver’s Tax Credit for Contributions by Individuals to Employer Retirement Plans and IRAs

Announcement 2001–106

This announcement describes the new “saver’s credit,” an income tax credit that is available to eligible taxpayers who contribute to a retirement plan or IRA. This announcement includes a sample notice that employers can give to employees explaining the credit.

Q-1: What is the saver’s credit?

A-1: The saver’s credit is a nonrefundable income tax credit for certain taxpayers with adjusted gross income that does not exceed $50,000. It is equal to a specified percentage of certain employee contributions made to an employer-sponsored retirement plan or of certain individual or spousal contributions to an individual retirement arrangement (IRA) for taxable years beginning after December 31, 2001, and before January 1, 2007. The saver’s credit is contained in § 25B of the Internal Revenue Code, which was added by section 618 of the Economic Growth and Tax Relief Reconciliation Act of 2001.

Q-2: Who is eligible for the saver’s credit?

A-2: Taxpayers who are age 18 or over before the end of their taxable year, other than full-time students or persons claimed as dependents on another taxpayer’s return, are eligible for the credit.

For this purpose, students include individuals who, during some part of each of five months during the year, are (a) enrolled at a school that has a regular teaching staff, course of study, and regularly enrolled body of students in attendance, or (b) taking an on-farm training course given by such a school or a state, county, or local government. A student is a full-time student if he or she is enrolled for the number of hours or courses the school considers to be full-time.

Q-3: What is the maximum annual contribution eligible for the saver’s credit?

A-3: $2,000 per year.

Q-4: Is the amount of the annual contribution eligible for the saver’s credit ever reduced?

A-4: Yes. The amount of any contribution eligible for the saver’s credit is reduced by the amount of any taxable distribution received by the taxpayer (or by the taxpayer’s spouse if the taxpayer filed jointly with that spouse both for the year during which a distribution was made and the year for which the credit is taken) from any plan described in A-5 below during the testing period. The testing pe

October 29, 2001 416 2001–44 I.R.B.

the taxable year for which the credit is claimed, as follows:

saver’s credit if (1) the amount is distributed to the individual before the due date (including extensions) of the individual’s tax return for the year in which the contribution was made, (2) no deduction is taken with respect to the contribution,

and (3) the distribution includes any income attributable to the contribution.

Q-6: What is the saver’s credit rate?

A-6: The saver’s credit rate is based on the taxpayer’s adjusted gross income for

Adjusted Gross Income

Married filing joint Head of household All other filers Credit

$0-$30,000 $0-$22,500 $0-$15,000 50% of contribution $30,001-$32,500 $22,501-$24,375 $15,001-$16,250 20% of contribution $32,501-$50,000 $24,376-$37,500 $16,251-$25,000 10% of contribution Over $50,000 Over $37,500 Over $25,000 credit not available

For example, a taxpayer whose filing status is single with adjusted gross income of $15,000 may be entitled to a credit equal to 50% of his or her contributions (up to $2,000 of contributions) to a plan described in A-5 above.

Q-7: Does the saver’s credit affect an eligible individual’s entitlement to any deduction or exclusion that would otherwise apply to the contribution?

A-7: No. Eligible individuals entitled to deduct IRA contributions or to exclude plan contributions from gross income will be able to deduct or exclude those amounts and also claim the saver’s credit.

Q-8: Can a taxpayer use the saver’s credit to offset both an alternative minimum tax liability and a regular income tax liability?

A-8: Yes.

Q-9: For married taxpayers filing jointly, do contributions by or for either or both spouses give rise to the saver’s credit?

A-9: Yes, contributions by or for either or both spouses, up to $2,000 per year for each spouse, can give rise to the saver’s credit.

Q-10: Are salary reduction and after-tax employee contributions that are eligible for the saver’s credit taken into account in the ADP and ACP nondiscrimination tests of §§ 401(k) and (m) of the Internal Revenue Code?

A-10: Yes. Salary reduction contributions to a 401(k) plan, whether or not those contributions give rise to the saver’s credit, are taken into account in the nondiscrimination test for salary

reduction contributions (the ADP test) for plans subject to that test. Also, voluntary after-tax employee contributions to a qualified plan, whether or not those contributions give rise to the saver’s credit, are taken into account in the nondiscrimination test for employee after-tax contributions (the ACP test) for plans subject to that test.

Q-11: Can an individual claim the saver’s credit for an amount contributed to a plan pursuant to automatic enrollment?

A-11: Yes. Any amount that is treated as an elective contribution on behalf of an eligible individual to an employer plan described in A-5 above can give rise to the saver’s credit.

Q-12: Can an individual take a projected saver’s credit into account in figuring the allowable number of withholding allowances on Form W-4?

A-12: Yes. For information on converting credits into withholding allowances, see IRS Publication 919, “How Do I Ad- just My Withholding?”

Q-13: Is there a sample notice that employers can use to help explain the saver’s credit to employees?

A-13: Yes. Employers are encouraged to tell their employees about the credit. Employers can inform employees in any way they choose, including use of the notice set out below.

Drafting Information

The principal author of this announcement is Roger Kuehnle of the Employee

Plans, Tax Exempt and Government Entities Division. For further information regarding this announcement, please contact the Employee Plans’ taxpayer assistance telephone service at 1-877829-5500 (a toll-free number), between the hours of 8:00 a.m. and 9:30 p.m. Eastern Time, Monday through Friday. Mr. Kuehnle may be reached at (202) 2839888 (not a toll-free number).

Notice to Employees Regarding Saver’s Credit:

This notice explains how you may be able to pay less tax by contributing to [insert name of employer’s plan] (the “Plan”) or to an individual retirement arrangement (“IRA”).

Beginning in 2002, if you make contributions to the Plan or to an IRA, you may be eligible for a tax credit, called the “saver’s credit.” This credit could reduce the federal income tax you pay dollar-for-dollar. The amount of the credit you can get is based on the contributions you make and your credit rate. The credit rate can be as low as 10% or as high as 50%, depending on your adjusted gross income — the lower your income, the higher the credit rate. The credit rate also depends on your filing status. See the tables at the end of this notice to determine your credit rate.

The maximum contribution taken into account for the credit for an individual is $2,000. If you are married filing jointly, the maximum contribution taken into account for the credit is $2,000 each for you and your spouse.

2001–44 I.R.B. 417 October 29, 2001

The credit is available to you if you:

• are 18 or older,

• are not a full-time student,

• are not claimed as a dependent on someone else’s return, and

• have adjusted gross income (shown on your tax return for the year of the credit) that does not exceed:

$50,000 if you are married filing jointly, $37,500 if you are a head of household with a qualifying person, or $25,000 if you are single or married filing separately.

Example: Susan and John are married and file their federal income tax return jointly. For 2002, their adjusted gross income would have been $34,000 if they had not made any retirement contributions. During 2002, Susan elected to have $2,000 contributed to her employer’s 401(k) plan. John made a deductible contribution of $2,000 to an IRA for 2002. As a result of these contributions, their 2002 adjusted gross income is $30,000. If their Federal income tax would have been $3,000 (after applying any other credits to which they are entitled) without having made any retirement contributions, then their federal income tax as a result of making the $4,000 retirement contributions will be only $400 after application of the saver’s credit and other tax benefits for the retirement contributions. Thus, by saving $4,000 for their retirement, Susan and John have also reduced their taxes by $2,600.

The annual contribution eligible for the credit may have to be reduced by any taxable distributions from a retirement plan or IRA that you or your spouse receive during the year you claim the credit, during the 2 preceding years, or during the period after the end of the year for which you claim the credit and before the due date for filing your return for that year. A distribution from a Roth IRA that is not rolled over is taken into account for this reduction, even if the distribution is not taxable. After these reductions, the maximum annual contribution eligible for the credit per person is $2,000.

Example: Mark’s adjusted gross income for 2002 is low enough for him to be eli

gible for the credit that year and he defers $3,000 of his pay to his employer’s 401(k) plan during 2002. During 2001, Mark took a $400 hardship withdrawal from his employer’s plan and during 2002 he takes an $800 IRA withdrawal. Mark’s 2002 saver’s credit will be based on contributions of $1,800 ($3,000 - $400 - $800).

The amount of your saver’s credit will not change the amount of your refundable tax credits. A refundable tax credit, such as the earned income credit or the refundable amount of your child tax credit, is an amount that you would receive as a refund even if you did not otherwise owe any taxes.

The amount of your saver’s credit in any year cannot exceed the amount of tax that you would otherwise pay (not counting any refundable credits or the adoption credit) in any year. If your tax liability is reduced to zero because of other nonrefundable credits, such as the Hope Scholarship Credit, then you will not be entitled to the saver’s credit.

If your income tax filing status is “married filing joint” and your adjusted gross income is: Your saver’s credit rate is: $0-$30,000 50% of contribution $30,001-$32,500 20% of contribution $32,501-$50,000 10% of contribution Over $50,000 credit not available

If your income tax filing status is “head of household” and your adjusted gross income is: Your saver’s credit rate is: $0-$22,500 50% of contribution $22,501-$24,375 20% of contribution $24,376-$37,500 10% of contribution Over $37,500 credit not available

If your income tax filing status is “single,” “married filing separate,” or “qualifying widow(er)” and your adjusted gross income is: Your saver’s credit rate is: $0-$15,000 50% of contribution $15,001-$16,250 20% of contribution $16,251-$25,000 10% of contribution Over $25,000 credit not available

October 29, 2001 418 2001–44 I.R.B.

Children of God Ministries-Childheart

Ministries International, Dallas, TX Christ Outreach Center, Marion, OH C.I.E.L.O. Project/Radio Ranch,

Olympia, WA Citrus 20-20, Inc., Homosassa, FL Citywide Youth Basketball League of

Information Reporting Program Call Site Update

Announcement 2001–107

IRS Martinsburg Commputing Center (MCC) Information Reporting Program Call Site Now Has a Toll-Free Telephone Number

The Call Site is located at IRS/MCC and operates in conjunction with the Information Reporting Program. The Call Site provides service to the payer community (financial institutions, employers, and other transmitters of information returns).

The Information Reporting Program Call Site answers both magnetic media and tax law questions relating to the filing of information returns (Forms 1096, 1098, 1099, 5498, 8027, W-2G, and W-4). The Call Site also answers magnetic media questions related to Forms 1042-S, and tax law and paper filing related questions about Forms W-2 and W-3, as well as handling inquiries dealing with backup withholding and reasonable cause requirements due to missing and incorrect taxpayer identification numbers.

The Call Site accepts calls from all areas of the country. The new toll-free number is 866-455-7438. Payers and transmitters may still use the original telephone number, which is 304-263-8700 or Telecommunications Device for the Deaf (TDD) 304-267-3367. These are toll calls. The Call Site can also be reached via email at mccirp@irs.gov. Hours of operation for the Call Site are Monday through Friday, 8:30 a.m. to 4:30 p.m. Eastern time. The Call Site is in operation throughout the year to handle the questions of payers, transmitters, and employers. Due to the high demand for assistance at the end of January and February, it is advisable to call as soon as possible to avoid these peak filing seasons.

Foundations Status of Certain Organizations

Announcement 2001–108

The following organizations have failed to establish or have been unable to maintain their status as public charities

or as operating foundations. Accordingly, grantors and contributors may not, after this date, rely on previous rulings or designations in the Cumulative List of Organizations (Publication 78), or on the presumption arising from the filing of notices under section 508(b) of the Code. This listing does not indicate that the organizations have lost their status as organizations described in section 501(c)(3), eligible to receive deductible contributions.

Former Public Charities. The following organizations (which have been treated as organizations that are not private foundations described in section 509(a) of the Code) are now classified as private foundations:

Houston, Inc., Houston, TX Clinton School Committee for

Curriculum Advancement, Clinton, MT Clyde Drexler Foundation, Inc.,

Houston, TX Common Sense Forum, Inc.,

Milwaukee, WI Community Advocacy Foundation

Fresno, CA Community Housing and Development

A-1 Universal Care, Inc., Hempstead, NY Albany-El Cerrito Access, El Cerrito, CA Alliance for Youth Services Project, Inc.,

Fund, Torrance, CA Community Housing and Redevelopment

Trust, Inc., Homestead, FL Creative Arts Institute, Port Hadlock, WA Darley Park Community Association,

Long Beach, CA Amateur Baseball Association of Texas,

Inc., Houston, TX Ambassador Baptist Church of Houston,

Inc., Baltimore, MD Desert Arts Unlimited, Lakeview, OR Devoted Care Home, Inc.,

Houston, TX American Friends of Children of

Chernobyl, Inc., New York, NY American Samoan Medical Team, Inc.,

Las Vegas, NV Amigas-Assisting Mexicans in Gaining

Missouri City, TX Dunamis Connection, Inc.,

Brookshire, TX Earning by Learning Stanislaus,

Academic Success, Houston, TX Amos York Ministries, Inc., Houston, TX Asian-American Culture Center,

Modesto, CA Emmaus Ministries, Yakima, WA Enchanted Womanhood, Inc.,

Baytown, TX Encore Theatre, Houston, TX Environmental Exchange, Inc.,

Houston, TX Asociacion Boliviana De Houston, Inc.,

Houston, TX Balance Ministries, Houston, TX Barrett Station Youth Enrichment Project,

Forest Hills, NY Falmouth Youth Basketball Association,

Falmouth, ME Families for Effective Autism Treatment,

Inc., Crosby, TX Bay Area School Reform Collaborative,

San Francisco, CA Bevcomm Internet Technology, Davis, CA Binghampton Revitalization Association,

Inc., Minnetonka, MN Faye and A.J. Wolf Foundation,

Houston, TX Federation of African American

Contractors, Oakland, CA Fort Bend Cultural Arts Council,

Inc., Memphis, TN Brazos River Preservation Society,

Sugar Land, TX Cape Cod Discovery Museum, Inc.,

Dennisport, MA Capital District Field of Dreams, Inc.,

Albany, NY Caregivers Empowered, Houston, TX Caring Neighbor Services, Inc.,

Missouri City, TX Frank Steele Foundation, Inc., Geary, OK Fraternal Organization, Killeen, TX Friends of Arch, Inc.,

New Hyde Park, NY Friends of the Paragon Carousel, Inc.,

Jersey City, NJ Center for Value Inquiry, St. Paul, MN Child and Adult Development Center of

Hull, MA GLT Foundation, Omaha, NE Golden Shadow Associates,

St. Charles, MO Goose Creek Navy Community

Foundation, Inc., Baytown, TX

Houston, Inc., Houston, TX

2001–44 I.R.B. 419 October 29, 2001

Greater Houston Academic Challenge,

Little Brothers & Little Sisters Program,

Inc., Visalia, CA Lucky Community Improvement Club,

Porter County Railroad Educational &

Historical Fund, Valparaiso, IN Prehospital Advisory Board, Moline, IL Prevention Intervention Program,

Inc., Houston, TX Greg Crawford Ministries, Inc.,

Huffman, TX Heavenly Acres Foundation,

Hugo, OK Hematology-Oncology Assistance

McMinnville, TN Lyric Theatre, Ltd., Weehawken, NJ Madison Township Volunteer Fire

Plano, TX Pulaski Court Residents Association of

Resource Coalition, Kingwood, TX Hidalgo Coordination, Inc.,

Department, Inc., Greencastle, IN Main Thing Ministries, Houston, TX Mark Williams Charities, Houston, TX Masters Watchmen Ministry, Inc.,

Lordsburg, NM Highland Belle Booster Club, Inc.,

Dallas, TX Highland Park Dance Theater Company,

Fresno, CA Hmong Foundation, Inc., Milwaukee, WI Home Growth Program & Associates,

Augusta, GA Mat Rats, Inc., Hillsboro, OR Metropolitan Children Services, Inc.,

Matteson, IL Michigan Legal Foundation, Midland, MI Mind Body and Science Institute,

San Antonio, TX Mountain View Resident Council,

Garfield, Inc., Garfield, NJ Quality Connections, Inc., Seminole, OK Rainbow Tribe Institution Foundation,

Inc., Albany, NY Reach Me, Inc., Houston, TX Recovery Campuses of Texas Caring for

the Indigent, Galveston, TX Responsibility is Ours Trio, Houston, TX Richmond Historic Preservation

Committee, Richmond, TX Rolla Area Lutheran for Life

Inc., Sacramento, CA Hospice Lights Foundation, Inc.,

New Freedom, PA Houston Pride Band, Inc., Houston, TX Houston Roundup, Houston, TX Human Focus, Daly City, CA Hyde Park Foundation, Houston, TX Independent Heights Baptist Pastors

and Ministers Alliance, Inc., Houston, TX Intellidebt Corp., Garland, TX International Marinelife Alliance, Inc.,

Big Stone Gap, VA Muslim American Youth, Inc.,

St. Michaels, AZ Needham Ministries, Incorporated,

Lindenhurst, NY Na Kokua Ministries Haaii, Inc., Home

Fellowship Church of Jesus, Honolulu, HI National Collegiate Exposure Program,

Organization, Rolla, MO Rophe Ministries, Philadelphia, PA Roseberg Roughnecks Football Club,

Rosenburg, TX Roz House of New Found Hope,

Washington, DC Salt of the Earth A New Jersey Non

Chicago, IL Russell Community, Corporation,

Houston, TX Navajo Scouting Organization,

Profit Corporation, Bagota, NJ Samskriti Society for Indian Performing

Arts, Incorporated, Houston, TX San Francisco Italian Athletic Club

Honolulu, HI Jackson Hole Community Radio,

Incorporated, Jackson, WY Jackson Park Preservation Corporation,

Chicago, IL Jafria Council USA, Inc., Corona, NY James M. Tirella Memorial Foundation

Houston, TX Netday, Irvine, CA Neurosurgical Peruvian American

McComb, MS New Hope Outreach Ministries,

Foundation, Huntington Beach, CA New Century Development, Inc.,

Foundation, San Francisco, CA San Gabriel-Pomona Valleys Cocaine

Anonymous, Arcadia, CA Save Our Shores, Dickinson, TX Senior Assistance Fund Elite,

for the Arts, New York, NY James River Blues Society,

Houston, TX Seymour Community School Scholarship

Trust, Seymour, WI Sharp Ministries International, Inc.,

Oklahoma City, OK Social Assistance and Fundamental

Lynchburg, VA Jehovah Jirah Outreach Ministries, Inc.,

Incorporated, Lexington, NC Newburgh Housing Authoritys Outreach

Development Corp., Newburgh, NY NWLRC Legends Rowing Club,

Winston-Salem, NC John F. and Annie M. Hurley Howells

Everett, WA Ohitare Global for Family & Youth,

Family Foundation, Inc., Salt Lake City, UT Jojo Community Vocational and

Rehabilitation Services, Denver, CO Jude-25 Christian Stewardship Fund,

Inc., Palm Desert, CA Kansas Alliance of Alcohol and Other

Tacoma, WA Options of Ohio, Inc., Dellroy, OH Orange Area Boxing Club, Inc.,

Orange, TX Outrage, Inc., Houston, TX Palm Beach County Alzheimers Care

Association, Inc., Boca Raton, FL Parental Alcohol-Drug Services,

Education, Inc.-SAFE, Houston, TX Societe Italiana Di Cultura, Chicago, IL Soul Ministries, Inc., La Marque, TX Southeast Texas Area Emissions

Reduction Credit Organization, Port Arthur, TX Southwestern Illinois Business Council,

Inc., East St. Louis, IL Space America Foundation for Education,

Drug Services, Inc., Abilene, KS Kenner Housing Authority Resident

Inc., Houston, TX Springfield Eagles Charity, Inc.,

Association, Kenner, LA Korean Civic Alliance, Incorporated,

Alameda, CA Path of Life, Inc., Houston, TX Pathways to Freedom, Inc.,

Bronx, NY Laguna Hills Aquatics,

Springfield, OH St. Stephen Christian Center,

Cathedral City, CA Les Amis, St. Louis, MO Light Club 8, Incorporated,

Brentwood, TN Perry N. Finley Foundation, Ltd.,

Boston, MA Pleasant Hill Community Development

Corporation, Houston, TX

Houston, TX Story Center, A Historical Museum and

Cultural Center, Ames, IA Success, Inc., Carpinteria, CA

Coral Springs, FL

October 29, 2001 420 2001–44 I.R.B.

Success of Minority Students, Inc.,

Trinity Gardens Integral Forces, Inc.,

Catskill, NY Sweeny Historical Society, Inc.,

issue a ruling or determination letter with the revised classification as to foundation status. Grantors and contributors may thereafter rely upon such ruling or determination letter as provided in section 1.509(a)–7 of the Income Tax Regulations. It is not the practice of the Service to announce such revised classification of foundation status in the Internal Revenue Bulletin.

Sweeny, TX Teen Life Community Action Group,

Houston, TX Upstate Alive 95, Inc., Greenville, SC USA Joshinmon Shorin-Ryu Karate-Do

Federation, Houston, TX Vision Entertainment, Inc., Dallas, TX Volunteers for Increased Public Safety,

Pfafftown, NC Teenage Incentive Program, Inc.,

Houston, TX Texas Raptor & Wildlife Rehab &

Education Center, Inc., Houston, TX Thai Association of San Diego County,

La Quinta, CA Watts Home, Inc., Beaumont, TX Wings for Wildlife, Denver, CO Wolf Laurel Historical Society,

Mars Hill, NC Yorkshire Village Resident Council, Inc.,

Excondido, CA Three Corners Counseling Center,

Concord, CA Timberlawn Psychiatric Research

Foundation, Inc., Greensboro, NC Tomball Njotc Booster Club,

Houston, TX Ziggurratt Christian Ministries,

Richland, WA

Tomball, TX Tournament Teams, Inc., Katy, TX Tri-County Revitalization

Industrialization Pac-People Again, Ellicott, MD

If an organization listed above submits information that warrants the renewal of its classification as a public charity or as a private operating foundation, the Internal Revenue Service will

2001–44 I.R.B. 421 October 29, 2001