Part IV. Items of General Interest

List of Nonbank Trustees and Custodians

Announcement 2004–72

The following is a list of entities that have been approved by the Commissioner of the Internal Revenue Service, pursuant to §1.408–2(e) of the Income Tax Regulations, to serve as a nonbank trustee or custodian. This list updates and supercedes the list published with Announcement 2003–54, 2003–40 I.R.B. 761. Archer medical savings accounts (Archer MSAs) established under § 220 of the Internal Revenue Code, health savings accounts described in §223, custodial accounts of retirement plans qualified under § 401, custodial accounts described in § 403(b)(7), trust or custodial accounts of individual retirement accounts (IRAs) established under §§ 408 and 408A (Roth IRAs), Coverdell education savings accounts described in §530, and custodial accounts of eligible deferred compensation plans described in § 457(b) will not be tax exempt if the trustee or custodian of such accounts is not a bank (as defined in § 408(n)) (and in the case of Archer MSAs and health savings accounts, a bank within the meaning of § 408(n) or an insurance company within the meaning of § 816) or an approved nonbank trustee or custodian.

An entity that is not a bank (as defined in § 408(n)) (and in the case of Archer MSAs and health savings accounts a bank within the meaning of § 408(n) or an insurance company within the meaning of § 816) must receive approval from the Service to serve as a nonbank trustee or nonbank custodian. A prospective nonbank trustee or custodian must file a written application with the Commissioner of Internal Revenue demonstrating that the requirements of § 1.408–2(e)(2) through § 1.408–2(e)(7) of the regulations will be met. If the application is approved, a written notice of approval will be issued to the applicant. The notice of approval will state the day on which it becomes effective, and

(except as otherwise provided therein) will remain effective until revoked by the Service or withdrawn by the applicant. Entities that have received such approval from the Service may also sponsor certain retirement plans, custodial accounts under § 403(b)(7) and individual retirement arrangements established under §§ 408 and 408A. (See Rev. Proc. 2000–20, 2000–1 C.B. 553, and Rev. Proc. 87–50, 1987–2 C.B. 647, as modified.)

A prospective nonbank trustee or custodian may not accept any fiduciary account before such notice of approval becomes effective. In addition, a nonbank trustee or custodian may not accept a fiduciary account until after the plan administrator or the person for whose benefit the account is to be established is furnished with a copy of the written notice of approval issued to the applicant.

The continued reliance on a notice of approval is dependent upon the continued satisfaction of the nonbank trustee requirements set forth in the regulations. The notice of approval issued to an applicant will be revoked if the Commissioner determines that the applicant is unwilling or unable to administer fiduciary accounts in a manner consistent with the requirements of the regulations. Generally, the notice will not be revoked unless the Commissioner determines that the applicant has knowingly, willfully, or repeatedly failed to administer fiduciary accounts in a manner consistent with the requirements of the regulations, or has administered a fiduciary account in a grossly negligent manner.

The written notice of approval to serve as a nonbank trustee or nonbank custodian is not an endorsement of any investment made with respect to any retirement plan or arrangement handled by the approved nonbank trustee or custodian. The Internal Revenue Service does not review or approve investments.

If the trustee or custodian of an account described above is not a bank (and in the case of Archer MSAs and health savings

accounts, a bank or an insurance company) or an approved nonbank trustee or nonbank custodian, the amounts held in such account (including earned interest) will be deemed distributed and includible in gross income in the year(s) the account’s trustee or custodian was not a bank or, if applicable, an insurance company, or an approved nonbank trustee or nonbank custodian. Contributions made to such account are not deductible from gross income and will be disallowed if claimed on an income tax return.

This list of approved nonbank trustees and nonbank custodians includes their names, addresses, and the date each application was approved.

If an approved nonbank trustee or custodian believes that the information about it is incorrect, incomplete, or that it has been incorrectly omitted from this list, it may, on or before December 11, 2004, which is 60 days from the date of the publication of this list in the Internal Revenue Bulletin, notify the Service in writing of any changes it proposes to the list. This notification should include a copy of the notice of approval.

The notification should be addressed to:

Internal Revenue Service SE:T:EP:RA:T1 Announcement 2004–72 1111 Constitution Ave., NW Washington, DC 20224

Drafting Information

The principal author of this announcement is Calvin Thompson of the Employee Plans, Tax Exempt and Government Entities Division. Please contact Mr. Thompson at 1–202–283–9596 (not a toll-free number), if there are any questions regarding the publication of this list. Written inquiries concerning this announcement should be addressed to the Internal Revenue Service at the above address.

October 12, 2004 650 2004–41 I.R.B.

APPROVED Nonbank Trustees/Custodians as of December 31, 2003

2004–41 I.R.B. 651 October 12, 2004

APPROVED Nonbank Trustees/Custodians as of December 31, 2003

October 12, 2004 652 2004–41 I.R.B.

APPROVED Nonbank Trustees/Custodians as of December 31, 2003

2004–41 I.R.B. 653 October 12, 2004

APPROVED Nonbank Trustees/Custodians as of December 31, 2003

October 12, 2004 654 2004–41 I.R.B.

APPROVED Nonbank Trustees/Custodians as of December 31, 2003

2004–41 I.R.B. 655 October 12, 2004

APPROVED Nonbank Trustees/Custodians as of December 31, 2003

October 12, 2004 656 2004–41 I.R.B.

APPROVED Nonbank Trustees/Custodians as of December 31, 2003

2004–41 I.R.B. 657 October 12, 2004

APPROVED Nonbank Trustees/Custodians as of December 31, 2003

October 12, 2004 658 2004–41 I.R.B.

APPROVED Nonbank Trustees/Custodians as of December 31, 2003

2004–41 I.R.B. 659 October 12, 2004

APPROVED Nonbank Trustees/Custodians as of December 31, 2003

October 12, 2004 660 2004–41 I.R.B.

APPROVED Nonbank Trustees/Custodians as of December 31, 2003

2004–41 I.R.B. 661 October 12, 2004

APPROVED Nonbank Trustees/Custodians as of December 31, 2003

mation Reporting Program Customer Service Section toll-free at 866–455–7438.

Nature of Changes—Current Year (Tax Year 2004 )

.01 Part B, Electronic Filing Specifications, was completely revised. Please read carefully. We now offer an internet connection at http://fire.irs.gov.

.02 The following changes were made to the Transmitter ‘T’ Record:

(a) In position 199 a new field, Prior Year Data Indicator, was added.

(b) In positions 771–778 a new field, Record Sequence Number, was added.

.03 The following changes were made to Withholding Agent ‘W’ Record:

(a) In position 13, Withholding Agent’s EIN Indicator, the indicators were renumbered and a new indicator for NQI-EIN was added. Acceptable values are: 0, (zero) = EIN, 1, (one) = QI-EIN and 2 (two) = NQI-EIN

Florida Penalty Relief Extended

Announcement 2004–77

Announcement 2004–70 is amended to extend, through October 5, 2004, the relief from the penalty under section 6715 of the Internal Revenue Code for the highway use of dyed diesel fuel in the State of Florida.

The principal author of this announcement is Barbara B. Franklin of the Office of Associate Chief Counsel (Passthroughs & Special Industries). For further information regarding this announcement, contact Barbara B. Franklin at (202) 622–3291 (not a toll-free call).

Publication 1187, Specifications for Filing Forms 1042–S, Foreign Person’s U.S. Source Income Subject to Withholding, Electronically or Magnetically , Being Revised for Tax Year 2004

Announcement 2004–79

Publication 1187, Specification for Fil- ing Forms 1042–S, Foreign Person’s U.S. Source Income Subject to Withholding, Electronically or Magnetically, is being revised for Tax Year 2004. The Publication will not be available prior to the start of the testing season, November 1, 2004, through December 15, 2004. Since the Publication is unavailable, the Nature of Changes Section is printed here to assist those who wish to submit test files. For additional information, contact the Infor

October 12, 2004 662 2004–41 I.R.B.

participants, whether or not participants have account-based benefits.

Scatter 2—Provide participant count and average cash balance account for all active participants, whether or not participants have account-based benefits.

Alternative B:

Scatter 1—Provide participant count and average compensation for all active participants, whether or not participants have account-based benefits ( i.e., identical to Scatter 1 in Alternative A).

Scatter 2—Provide participant count and average cash balance account for only those active participants with ac- count-based benefits . If the number of participants with account-based benefits in a bin is fewer than 20, the average account should not be shown even if there are more than 20 participants in this bin on Scatter 1.

In general, information should be determined as of the valuation date. Average cash balance accounts may be determined as of either: (1) the valuation date or (2) the day immediately preceding the valuation date. If the cash balance account information as of the 2003 valuation date is not readily available, information as of another date within 12 months of the valuation date (before or after this date) may be used. This date must be clearly indicated on the attachment, along with an explanation, if the date is also used for another purpose, such as determining a participant’s age and service.

Average cash balance accounts that are offset by amounts from another plan may be reported either as amounts prior to taking into account the offset, or as amounts after taking into account the offset. Do not report the offset amount. For any other unusual or unique situation, the attachment should include an explanation of what is being provided.”

(b) In positions 771–778 a new field, Record Sequence Number, was added.

.04 The following change was made to the Recipient ‘Q’ Record:

(a) In positions 771–778 a new field, Record Sequence Number, was added.

.05 The following change was made to Reconciliation ‘C’ Record:

(a) In positions 771–778 a new field, Record Sequence Number, was added.

.06 The following change was made to the End of Transmission ‘F’ Record:

(a) In positions 771–778 a new field, Record Sequence Number, was added.

.07 Additional editorial changes of a clarifying nature have been made throughout Publication 1187. Please read the entire publication carefully.

.08 The dates for sending test data are November 1, 2004, through December 15, 2004.

Replacement Instructions for the 2003 Schedule B (Form 5500), Actuarial Information

Announcement 2004–80

I. Background

This announcement provides additional instructions for Line 8c on the 2003 Schedule B (Form 5500). In order to provide government agencies and plan participants with contribution information on defined benefit plans, plan sponsors must annually file the Schedule B as an attachment to the Form 5500 Series ( Annual Return/Re- port of Employee Benefit Plans ). Because many plan sponsors have had difficulty reporting the data required by line 8c of the 2003 Schedule B, this announcement is intended to provide flexible options to comply with existing reporting requirements. This announcement merely replaces certain instructions in order to clarify and simplify the method for reporting data. Because this announcement is not a request for new data, and does not contain a new reporting requirement, if plans have already filed under published instructions prior to the issuance of this announcement, do not file again.

The 2003 instructions for Line 8c regarding cash balance plans require that

“such plans reporting 1,000 or more active participants on line 2b(3) must also provide average cash balance account data.” The 2003 instructions did not provide a specific method for reporting the required data.

II. New Line 8c Instructions for Schedule B

The following replaces paragraph 5 of line 8c of the 2003 Schedule B instructions:

“Cash balance plans (or any plans using plan characteristic code 1C on line 8a of Form 5500), reporting 1,000 or more active participants on line 2b(3) must also provide average cash balance account data, regardless of whether all active participants have cash balance accounts. For each age/service bin, enter the average cash balance account of the active participants in that bin. Do not enter the average cash balance account in any age/service bin that contains fewer than 20 active participants.

General Rule . In general, data to be shown in each age/service bin includes: (1) the number of active participants in the age/service bin, (2) the average compensation of the active participants in the age/service bin, and (3) the average cash balance account of the active participant in the age/service bin, using $0 for anyone who has no cash balance account-based benefit. If the accrued benefit is the greater of a cash balance benefit or some other benefit, average in only the cash balance account. If the accrued benefit is the sum of a cash balance account benefit and some other benefit, average in only the cash balance account. For both the average compensation and the average cash balance account, do not enter an amount for age/service bins with fewer than 20 participants.

In lieu of the above, two alternatives are provided for showing compensation and cash balance accounts. Each alternative provides for two age/service scatters (one showing compensation and one showing cash balance accounts) as follows:

Alternative A:

Scatter 1—Provide participant count and average compensation for all active

2004–41 I.R.B. 663 October 12, 2004