Tag Archives: Internal Revenue Code section 415
Governmental Plans Answer Book, Fifth Edition
Maximum Benefits and Contributions Limits
(Posted on November 9, 2020 by Carol V. Calhoun)
2021 IRS Benefits & Contributions Limits Announced
(Posted on October 26, 2020 by Carol V. Calhoun)
On October 26, 2020, the IRS issued IRS Notice 2020-79, announcing the changes in pensions and benefits limits for 2021. The maximum limit on annual additions (primarily to defined contribution plans) rose from $57,000 to $58,000 and the annual limit on compensation taken into account rose from $285,000 to $290,000. Most other limits stayed the same.
A chart showing details, and limits from 1996 to 2021, can be found at this link.
2021 Social Security Wage Base Increases
(Posted on October 13, 2020 by Carol V. Calhoun)
The Social Security Administration today announced that the wage base for 2021 will increase to $142,800 from $137,700. The limits for 1996 through 2021 are shown at this link.
Comparison of 457(b) Plans, 401(k) Plans, 403(b) Plans, and Deemed IRAs Updated
(Posted on June 16, 2020 by Carol V. Calhoun)
The Comparison of 457(b) Plans, 401(k) Plans, 403(b) Plans, and Deemed IRAs chart has now been updated to reflect recent developments, including:
- 2020 limits on contributions and benefits
- Changes in the Employee Plans Compliance Resolution System (EPCRS)
- Changes in the IRS determination letter program for 401(k) plans
- The IRS opinion letter program for pre-approved 403(b) plans
Comparison of 457(b) Plans, 401(k) Plans, 403(b) Plans, and Deemed IRAs
(Posted on June 5, 2020 by Carol V. Calhoun)
The attractiveness of a 457(b) plan as compared with a 403(b) plan or a 401(k) plan may vary greatly depending on the circumstances. Read more
Checklist of Federal Tax Law Rules Applicable to Public Retirement Systems
(Posted on October 8, 2016 by Carol V. Calhoun)
Note: This outline is a basic summary of the principal Internal Revenue Code qualification requirements that apply to governmental plans, other than plans described in Code
Determination Letters for Governmental Plans Don’t Address Pick-Up Contributions and Excess Benefit Arrangements
(Posted on January 23, 2015 by Carol V. Calhoun)
The IRS has issued a reminder that governmental plan sponsors who apply for IRS determination letters covering the qualified status of their plans can’t rely on a favorable letter for whether:
- contributions made to the plan are the employer’s “pick-up contributions” (i.e., pretax employee contributions under section 414(h)(2) of the Internal Revenue Code), or
- the plan has a qualified governmental excess benefit arrangement (i.e., a separate trust that provides only a participant’s annual benefit in excess of the limits under Internal Revenue Code section 415).
Final IRS Regulations Clarify Maximum Limits for Governmental Qualified Plans
(Posted on April 5, 2007 by Carol V. Calhoun)
On April 5, 2007, the IRS proposed new regulations under section 415 of the Internal Revenue Code (IRC), as amended. Section 415 limits the benefits that may be paid by defined benefit plans and contributions that may be made to defined contribution plans. While some of the provisions may be a restatement of the current rules or a codification of guidance issued over the years since the current regulations were adopted, other provisions may represent new interpretations that need to be studied carefully. Read more
Future Cost-of-Living Increases Included in 415(b) Calculation
(Posted on January 4, 2005 by Carol V. Calhoun)
Private Letter Ruling 200452039 discussed the situation of a plan that provided a 3% cost-of-living adjustment to the benefits of each retired participant each year, beginning on the January 1 following the third anniversary of the participant’s retirement date. The private letter ruling held, in effect, that a participant whose annual benefit beginning in 2005 was equal to the dollar limit for 2005 ($170,000 per year), but whose benefit was subject to a cost of living increase starting in January 2009, would be in violation of the limit. Read more