Final IRS Regulations Clarify Maximum Limits for Governmental Qualified Plans
(Posted on April 5, 2007 by )

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

New Mandatory Rollover Rules Will Apply to Government, Church Plans
(Posted on December 29, 2004 by )

Section 657 of the Economic Growth and Tax Relief Reconciliation Act of 2001 (“EGTRRA”) amended Internal Revenue Code (“Code”) section 401(a)(31) to provide that a distribution from an “eligible plan” of more than $1,000 had to be directly rolled over to an individual retirement account unless a participant affirmatively elected another form of distribution (e.g., to receive the amount in cash). The term “eligible plan” was defined as follows:

a plan which provides that any nonforfeitable accrued benefit for which the present value (as determined under section 411(a)(11)) does not exceed $5,000 shall be immediately distributed to the participant.

The effective date of the provision was tied to the issuance of regulations by the Department of Labor. Thus, the question arose as to whether a plan that was not subject to either Department of Labor regulations or section 411 (a governmental plan or a nonelecting church plan) would be subject to the EGTRRA change. Read more

Alban K. Barrus and Hattie C. Barrus, Plaintiffs v. United States of America, Defendant, 69-1 U.S. Tax Cas. (CCH) ¶ 9281 (ED NC 1969)
(Posted on February 24, 1969 by )

While this case by its terms dealt only with the taxation of a retirement distribution under a now-repealed section of the Internal Revenue Code, it has been used by analogy to determine whether an individual has had a termination of employment that would permit a distribution before age 62 in the case of a pension plan, or before age 59½ in the case of a 401(k) plan. See General Information Letter 2000-0245 (September 6, 2000).

LARKINS, JR., District Judge: This civil action was instituted by the plaintiffs to recover certain income taxes and interest thereon paid to the defendant as a result of certain assessments made by certain of the defendant’s employees.

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