IRC Sec. 415(c) After Pension Reform
(1) In general
Contributions and other additions with respect to a participant
exceed the limitation of this subsection if, when expressed as
an annual addition (within the meaning of paragraph (2)) to the
participant's account, such annual addition is greater than the
lesser of -
(A) $40,000, or
(B) 100 percent of the participant's compensation.
(2) Annual addition
For purposes of paragraph (1), the term ''annual addition'' means
the sum of any year of -
(A) employer contributions,
(B) the employee contributions, and
(C) forfeitures.
For the purposes of this paragraph, employee contributions under
subparagraph (B) are determined without regard to any rollover
contributions (as defined in sections 402(c), 403(a)(4),
403(b)(8), and 408(d)(3)) without regard to employee contributions
to a simplified employee pension which are excludable from gross
income under section 408(k)(6). Subparagraph (B) of paragraph
(1) shall not apply to any contribution for medical benefits
(within the meaning of section 419A(f)(2)) after separation
from service which is treated as an annual addition.
(3) Participant's compensation
For purposes of paragraph (1) -
(A) In general
The term ''participant's compensation'' means the compensation
of the participant from the employer for the year.
(B) Special rule for self-employed individuals
In the case of an employee within the meaning of section 401(c)(1),
subparagraph (A) shall be applied by substituting ''the participant's
earned income (within the meaning of section 401(c)(2) but determined
without regard to any exclusion under section 911)'' for ''compensation
of the participant from the employer''.
(C) Special rules for permanent and total
disability
In the case of a participant in any defined contribution plan
(i) who is permanently and totally disabled
(as defined in section 22(e)(3)),
(ii) who is not a highly compensated employee
(within the meaning of section 414(q)), and
(iii) with respect to whom the employer
elects, at such time and in such manner as the Secretary may
prescribe, to have this subparagraph apply, the term ''participant's
compensation'' means the compensation the participant would
have received for the year if the participant was paid at
the rate of compensation paid immediately before becoming
permanently and totally disabled.
This subparagraph shall apply only if contributions made with
respect to amounts treated as compensation under this subparagraph
are nonforfeitable when made. If a defined contribution plan
provides for the continuation of contributions on behalf of
all participants described in clause.
(i) for a fixed or determinable period,
this subparagraph shall be applied without regard to clauses
(ii) and (iii).
(D) Certain deferrals included
The term ''participant's compensation'' shall include -
(i) any elective deferral (as defined in
section 402(g)(3)), and
(ii) any amount which is contributed or
deferred by the employer at the election of the employee and
which is not includible in the gross income of the employee
by reason of section 125 or 457.
(E) ANNUITY CONTRACTS- In the case of an annuity
contract described in section 403(b), the term 'participant's
compensation' means the participant's includible compensation
determined under section 403(b)(3).
(4) Repealed
(5) Repealed
(6) Special rule for employee stock ownership
plans
If no more than one-third of the employer contributions to an
employee stock ownership plan (as described in section 4975(e)(7))
for a year which are deductible under paragraph (9) of section
404(a) are allocated to highly compensated employees (within the
meaning of section 414(q)), the limitations imposed by this section
shall not apply to —
(A) forfeitures of employer securities (within
the meaning of section 409) under such an employee stock ownership
plan if such securities were acquired with the proceeds of a
loan (as described in section 404(a)(9)(A)), or
(B) employer contributions to such an employee
stock ownership plan which are deductible under section 404(a)(9)(B)
and charged against the participant's account. The amount of
any qualified gratuitous transfer (as defined in section 664(g)(1))
allocated to a participant for any limitation year shall not
exceed the limitations imposed by this section, but such amount
shall not be taken into account in determining whether any other
amount exceeds the limitations imposed by this section.
(7) CERTAIN CONTRIBUTIONS BY CHURCH PLANS NOT
TREATED AS EXCEEDING LIMIT-
(A) IN GENERAL- Notwithstanding any other
provision of this subsection, at the election of a participant
who is an employee of a church or a convention or association
of churches, including an organization described in section
414(e)(3)(B)(ii), contributions and other additions for an annuity
contract or retirement income account described in section 403(b)
with respect to such participant, when expressed as an annual
addition to such participant's account, shall be treated as
not exceeding the limitation of paragraph (1) if such annual
addition is not in excess of $10,000.
(B) $40,000 AGGREGATE LIMITATION- The total
amount of additions with respect to any participant which may
be taken into account for purposes of this subparagraph for
all years may not exceed $40,000.
(C) ANNUAL ADDITION- For purposes of this
paragraph, the term `annual addition' has the meaning given
such term by paragraph (2).
