Federal rates; adjusted federal rates; adjusted federal long-term rate and the long-term exempt rate. For purposes of sections 382, 642, 1274, 1288, and other sections of the Code, tables set forth the rates for March 2011.

Low-income housing tax credit; private activity bonds. Resident populations of the 50 states, the District of Columbia, Puerto Rico, and the insular areas for purposes of determining the 2011 calendar year (1) state housing credit ceiling under section 42(h) of the Code, (2) private activity bond volume cap under section 146, and (3) private activity bond volume limit under section 142(k) are reproduced.

This notice informs the public of the effect of Emancipation Day, a legal holiday in the District of Columbia, on the filing deadline for all tax forms required to be filed on April 15, including the Form 1040 series tax returns.

Section 403(b) plan termination. Final regulations under section 403(b) of the Code were published in 2007. Under the regulations a section 403(b) plan is permitted to contain provisions that provide for plan termination and that allow accumulated benefits to be distributed on termination. This ruling provides guidance clarifying how the section 403(b) plan termination provisions apply.

This announcement advises hospital organizations described in section 501(c)(3) of the Code to delay filing their 2010 Form 990 until July 1, 2011. Hospital organizations with return due dates prior to August 15, 2011, have been granted automatic three-month extensions of time to file and these affected hospital organizations may rely that no late filing penalties under section 6652(c)(1)(A)(i) will apply if they file by their extended due dates.

Whether a retirement plan that takes the actions described below has been terminated in accordance with the rules of § 1.403(b)-10(a) of the Income Tax Regulations and whether distributions made to participants or beneficiaries in connection with termination of the plan are included in gross income.

Section 403(b) applies to contributions made for employees who are performing services for a public school of a State or a local government or for employees of employers that are tax-exempt organizations under § 501(c)(3). Section 403(b) also applies to contributions made for certain ministers. Under § 403(b), contributions are excluded from gross income only if made to certain funding arrangements: (1) contracts issued by an insurance company qualified to issue annuities in a State that includes payment in the form of an annuity; (2) custodial accounts that are exclusively invested in stock of a regulated investment company (as defined in § 851(a) relating to mutual funds); or (3) a retirement income account for employees of a church-related organization (as defined in § 1.403(b)-2).

Final regulations under § 403(b) (T.D. 9340, 2007-2 C.B. 487) were published in the Federal Register (72 FR 41128) on July 26, 2007 (2007 Regulations). Subject to a number of special effective date rules, the 2007 Regulations are generally effective for taxable years beginning after December 31, 2008.

Section 1.403(b)-10(a) of the 2007 Regulations provides that an employer is permitted to amend its § 403(b) plan to eliminate future contributions for existing participants or to limit participation to existing participants and employees (to the extent consistent with § 1.403(b)-5). A § 403(b) plan is permitted to contain provisions that provide for plan termination and that allow accumulated benefits to be distributed on termination.

However, in the case of a § 403(b) contract that is subject to the distribution restrictions in § 1.403(b)-6(c) or (d) (relating to custodial accounts and § 403(b) elective deferrals), under § 1.403(b)-10(a), termination of the plan and the distribution of accumulated benefits is permitted only if the employer (taking into account all entities that are treated as the same employer under § 414(b), (c), (m), or (o) on the date of the termination) does not make contributions to any § 403(b) contract that is not part of the plan (any such contract is referred to below as “another § 403(b) plan”). For rules relating to entities that are treated as the same employer under § 414(c), see § 1.414(c)-5 and, for controlled group rules relating to governmental entities, see Notice 89-23, 1989-1 C.B. 654, as modified by Rev. Rul. 2009-18, 2009-2 C.B. 1.

For purposes of the requirement that, after plan termination, the employer make no contributions to any other § 403(b) plan, contributions are made to “another § 403(b) plan” if and only if contributions are made to a § 403(b) contract during the period beginning on the date of plan termination and ending 12 months after distribution of all assets from the terminated plan. However, if at all times during the period beginning 12 months before the termination and ending 12 months after distribution of all assets from the terminated plan, fewer than 2 percent of the employees who were eligible under the terminating § 403(b) plan as of the date of plan termination are eligible under another § 403(b) plan, that § 403(b) plan is disregarded. To the extent a contract fails to satisfy the nonforfeitability requirement of § 1.403(b)-3(a)(2) of the 2007 Regulations at the date of plan termination, the contract is not, and cannot later become, a § 403(b) contract.

In order for a § 403(b) plan to be considered terminated under § 1.403(b)-10(a), all accumulated benefits under the plan must be distributed to all participants and beneficiaries as soon as administratively practicable after termination of the plan. (For rules relating to when distributions to all participants and beneficiaries are made as soon as administratively practicable after plan termination in the case of a plan qualified under § 401(a), see Rev. Rul. 89-87, 1989-2 C.B. 81, and Internal Revenue Manual 7.12.1.2.3, paragraph 5.) For this purpose, delivery of a fully paid individual insurance annuity contract is treated as a distribution. The mere provision for, and making of, benefit distributions to participants or beneficiaries upon plan termination does not cause a contract to cease to be a § 403(b) contract. Section 1.403(b)-7 provides rules regarding the tax treatment of benefit distributions, including § 1.403(b)-7(b)(1) under which an eligible rollover distribution is not included in gross income if paid in a direct rollover to an eligible retirement plan or if transferred to an eligible retirement plan within 60 days.

The employer in Situation 1 adopted a resolution to cease contributions and terminate the plan at a specified date, including full vesting for all benefits at that date. Since the employer took action to fully vest any participants with respect to amounts not otherwise fully vested at the date of plan termination, all contracts under the plan will be § 403(b) contracts upon plan termination. See §§ 1.403(b)-3(d)(2) and 1.403(b)-10(a)(1). Such contracts may permit benefits to begin immediately upon plan termination, or may permit the participant to begin benefits at a later date to the extent provided in the plan document and the termination resolution, subject to applicable Code (and ERISA rules where applicable.)

Distribution in Situation 1 was made by delivery of a fully paid individual annuity contract or a single-sum payment to each participant or beneficiary as soon as administratively practicable after the termination date. Because the plan is funded solely through fully paid individual insurance annuity contracts, no further action is required to be taken in order to distribute the contracts. In addition, neither the sponsoring employer nor any other entity that is treated as the same employer under § 414(b), (c), (m), or (o) on the date of the termination makes contributions to any § 403(b) contract that is not part of Plan A, including during the period beginning on the date of plan termination and ending 12 months after distribution of all assets from the terminated plan. Accordingly, the actions taken by the employer to terminate the plan and distribute accumulated benefits satisfy the requirements of § 403(b) and § 1.403(b)-10(a) of the 2007 Regulations for plan termination. Following termination of the plan, participants and beneficiaries who hold fully paid insurance annuity contracts are entitled to payments in accordance with the terms of the contracts (which may permit single-sum payments in connection with plan termination).

In Situation 2, the same actions were taken, except that the employer provided an individual certificate evidencing fully paid benefits under the contract to each participant or beneficiary whose accumulated benefits are funded by a group annuity contract. The issuance of this certificate to each participant or beneficiary constitutes a distribution of the participant’s or beneficiary’s accumulated benefit in the group annuity contract for purposes of § 1.403(b)-10(a) of the 2007 Regulations (but no amount is included in gross income until amounts are paid out of the policy).

In Situations 3 and 4, the employer also distributed all amounts in the individual and group custodial accounts by payment either to the participant or beneficiary or to an IRA established by the participant or beneficiary or another eligible retirement plan, in accordance with § 1.403(b)-7(b) of the 2007 Regulations, or by delivery of a fully paid individual annuity contract. The actions taken by the employer satisfy the requirements of § 403(b) and § 1.403(b)-10(a) of the 2007 Regulations for plan termination. The amounts paid to a participant or beneficiary from custodial accounts in connection with the termination are not included in gross income to the extent those amounts are rolled over to an IRA or other eligible retirement plan.

With respect to Situations 1 through 4, the delivery of a fully paid individual annuity contract to participants or beneficiaries, or of an individual certificate evidencing fully paid benefits under a group annuity contract, is not included in gross income until amounts are actually paid to the participant or beneficiary out of the contract, so long as the contract maintains its status as a § 403(b) contract. The § 403(b) status of any such contract is generally maintained if the contract thereafter adheres to the requirements of § 403(b) that are in effect at the time of the delivery of such contract. Any other amount paid to a participant or beneficiary, such as a single-sum payment, is included in the gross income of the participant or beneficiary, except to the extent the amount is rolled over to an IRA or other eligible retirement plan by a direct rollover or by a transfer made within 60 days after the distribution.

In each of Situations 1 through 4, Plan A has been terminated in accordance with the rules of § 1.403(b)-10(a). Delivery of a fully paid individual annuity contract to participants or beneficiaries, or of an individual certificate evidencing fully paid benefits under a group annuity contract, is not included in gross income until amounts are actually paid to the participant or beneficiary out of the contract, so long as the contract maintains its status as a § 403(b) contract. Any other distributions to a participant or beneficiary to effectuate plan termination, whether from an insurance annuity contract, an individual certificate evidencing fully paid benefits under a group annuity contract, or a custodial account, are included in gross income, except to the extent the amount is rolled over to an IRA or other eligible retirement plan by a direct rollover or by a transfer made within 60 days after the distribution.

The principal authors of this revenue ruling are Kathleen Herrmann and Sherri Edelman of the Employee Plans, Tax Exempt and Government Entities Division. Ms. Herrmann and Edelman may be reached by e-mail at RetirementPlanQuestions@irs.gov .

This revenue ruling provides various prescribed rates for federal income tax purposes for March 2011 (the current month). Table 1 contains the short-term, mid-term, and long-term applicable federal rates (AFR) for the current month for purposes of section 1274(d) of the Internal Revenue Code. Table 2 contains the short-term, mid-term, and long-term adjusted applicable federal rates (adjusted AFR) for the current month for purposes of section 1288(b). Table 3 sets forth the adjusted federal long-term rate and the long-term tax-exempt rate described in section 382(f). Table 4 contains the appropriate percentages for determining the low-income housing credit described in section 42(b)(1) for buildings placed in service during the current month. However, under section 42(b)(2), the applicable percentage for non-federally subsidized new buildings placed in service after July 30, 2008, and before December 31, 2013, shall not be less than 9%. Finally, Table 5 contains the federal rate for determining the present value of an annuity, an interest for life or for a term of years, or a remainder or a reversionary interest for purposes of section 7520.

This notice informs (1) State and local housing credit agencies that allocate low-income housing tax credits under § 42 of the Internal Revenue Code and (2) States and other issuers of tax-exempt private activity bonds under § 141, of the proper population figures to be used for calculating the 2011 calendar year population-based component of the State housing credit ceiling (Credit Ceiling) under § 42(h)(3)(C)(ii), the 2011 calendar year volume cap (Volume Cap) under § 146, and the 2011 volume limit (Volume Limit) under § 142(k)(5).

The population figures for both the population-based component of the Credit Ceiling and the Volume Cap are determined by reference to § 146(j). That section provides generally that determinations of population for any calendar year are made on the basis of the most recent census estimate of the resident population of a State (or issuing authority) released by the U.S. Census Bureau before the beginning of such calendar year. Section 142(k)(5) provides that the Volume Limit is based on the State population.

The population-based component of the Credit Ceiling and the Volume Cap are adjusted for inflation pursuant to §§ 42(h)(3)(H) and 146(d)(2), respectively. The adjustments for the 2011 calendar year are published in Rev. Proc. 2010-40, 2010-46 I.R.B. 663. Section 3.04 of Rev. Proc. 2010-40 provides that, for calendar year 2011, the amounts used under § 42(h)(3)(C)(ii) to calculate the Credit Ceiling is the greater of $2.15 multiplied by the State population (see the resident population figures provided below) or $2,465,000. Further, section 3.09 of Rev. Proc. 2010-40 provides that the amounts used under § 146(d)(1) to calculate the Volume Cap for calendar year 2011 is the greater of $95 multiplied by the State population (see the resident population figures provided below) or $277,820,000.

The proper population figures for calculating the Credit Ceiling, the Volume Cap, and the Volume Limit for the 2011 calendar year are the resident population of the 50 states, the District of Columbia, and Puerto Rico released electronically by the U.S. Census Bureau on December 21, 2010, in Press Release CB10-CN.93. The proper population figures for calculating the Credit Ceiling, the Volume Cap, and the Volume Limit for the 2011 calendar year for Guam and the U.S. Virgin Islands are the figures released electronically by the U.S. Census Bureau on July 17, 2003, and referenced in Census Bureau Tip Sheet TP03-16, dated August 8, 2003. The figures for these two areas are in the U.S. Census Bureau’s International Data Base (IDB) as 2010 midyear population figures. The proper population figure for calculating the Credit Ceiling, the Volume Cap, and the Volume Limit for the 2011 calendar year for American Samoa is the figure released electronically by the U.S. Census Bureau in an IDB release note dated June 18, 2008, which is also in the IDB as a 2010 midyear population figure. The proper population figure for calculating the Credit Ceiling, the Volume Cap, and the Volume Limit for the 2011 calendar year for the Northern Mariana Islands is the figure released electronically by the U.S. Census Bureau in an IDB release note dated June 23, 2009, which is also in the IDB as a 2010 midyear population figure.

For convenience, these figures are reprinted below.

The principal authors of this notice are Julie Hanlon Bolton, Office of the Associate Chief Counsel (Passthroughs and Special Industries) and Timothy L. Jones, Office of the Associate Chief Counsel (Financial Institutions and Products). For further information regarding this notice, contact Ms. Hanlon Bolton at (202) 622-3040 (not a toll-free call).

This notice advises of the effect of Emancipation Day, a legal holiday in the District of Columbia, on the filing deadline for all tax forms and payments required to be filed or completed on or before April 15, including the Form 1040 series tax returns.

Section 6072(a) of the Internal Revenue Code imposes a deadline of April 15 for filing income tax returns. When April 15 falls on a Saturday, Sunday, or legal holiday, a return is considered timely filed if filed on the next succeeding day that is not a Saturday, Sunday, or legal holiday. I.R.C. § 7503. Legal holiday means a legal holiday in the District of Columbia. Id.

Under District of Columbia law, Emancipation Day, April 16, is a legal holiday. D.C. Code § 28-2701 (2010). When April 16 falls on a Saturday, the preceding day is the observed holiday, and when it falls on a Sunday, the succeeding day is the observed holiday. Id. Because Emancipation Day is a legal holiday in the District of Columbia, in certain years it will have implications for taxpayers nationwide with respect to the filing deadlines for all tax forms and payments required to be filed or completed on or before April 15, including the Form 1040 series tax returns.

For taxpayers nationwide, when Emancipation Day, April 16, falls on a:

For example, in 2011, Emancipation Day falls on a Saturday, meaning that it will be observed on Friday, April 15, 2011. The filing deadline for all tax forms and payments required to be filed or completed on or before April 15 (as described in Section 6072(a), including the Form 1040 series of returns) will be Monday, April 18, 2011. The IRS will widely publicize the rule in this notice in affected years to remind the public that the filing deadline is extended.

The principal author of this notice is Channpreet Singh of the Office of Associate Chief Counsel (Procedure & Administration). For further information regarding this notice, contact Procedure & Administration, Branches 6 & 7, at (202) 622-4570 (not a toll-free call).

This announcement grants tax-exempt organizations that operate one or more hospital facilities (hospital organizations), and that would otherwise be required to file Form 990, Return of Organization Exempt From Income Tax, including Schedule H, Hospitals, for the 2010 tax year before August 15, 2011, an automatic three-month extension of time to file the Form 990 for 2010. In addition, this announcement directs these hospital organizations not to file the 2010 Form 990 before July 1, 2011.

In order to complete implementation of changes to IRS forms and systems that are required to reflect additional requirements for charitable hospitals enacted by Section 9007 of the Patient Protection and Affordable Care Act of 2010 (Pub. L. 111-148), the IRS is delaying the start of the 2010 filing season for certain hospital organizations. Pursuant to section 6081 of the Internal Revenue Code, this announcement grants hospital organizations with original 2010 tax year filing due dates before August 15, 2011, an automatic three-month extension of time to file the Form 990. This automatic extension of the filing due date applies only to hospital organizations that are required to file Schedule H with the 2010 Form 990 and that would otherwise be required to file the 2010 Form 990 before August 15, 2011. This automatic extension of the filing due date does not apply to any other tax-exempt organization required to file Form 990.

In addition, this announcement directs hospital organizations not to file 2010 Forms 990 (with Schedule H attached) before July 1, 2011, regardless of whether the hospital organization files an electronic return or a paper return. This delay of the filing season does not apply to any other tax-exempt organization required to file Form 990.

Hospital organizations affected by this announcement are not required to file Form 8868, Application for Extension of Time To File an Exempt Organization Return in order to take advantage of the automatic extension. Nevertheless, recently formed hospital organizations that did not file Form 990 Schedule H for tax year 2009, and who believe they are entitled to the extension of time under this announcement, are encouraged to file Form 8868 to reduce the risk that they may incorrectly receive a penalty notice from the IRS.

No late filing penalties under Section 6652(c)(1)(A)(i) will apply to a tax year 2010 Form 990 (with Schedule H attached) filed by an affected hospital organization on or before the extended due date described in this announcement. If an affected hospital organization determines that it needs additional time beyond the automatic three-month extension period to file its Form 990, the hospital organization may request an additional three-month extension of time to file by properly completing and filing Form 8868, Part II. An affected hospital organization may receive no more than a six-month extension of time to file for its 2010 tax year. If a hospital organization that was granted an automatic extension of time to file pursuant to this announcement and filed by its extended due date receives a late filing penalty notice from the IRS, the hospital organization should call the telephone number on the penalty notice to request that the IRS abate the late filing penalty.

The principal author of this announcement is Chris Giosa of the Tax Exempt and Government Entities Division. For further information regarding this announcement, please contact Mr. Giosa at (202) 283-9851 (not a toll-free number).