Bulletin - BenefitsLink
Retirement Plans
Newsletter
Supplement to September 14, 2007
Official Guidance; News
ASPPA Announces Reversal of IRS Position on Combined Plan Limit; Consider Additional Contribution Today (Sept. 14) or Tomorrow (Sept. 15)Excerpt: "Q&A 9 of Notice 2007-28 will not be enforced and, in a defined benefit/defined contribution plan combination situation, if the DC contribution was not greater than 6%, Code §404(a)(7) does not apply to the defined benefit plan. This is effective for the 2006 plan year and has two primary IMMEDIATE effects: Employers who contributed in excess of 25% of compensation to their defined benefit plan (and in excess of Unfunded Current Liability) in 2006 based on an interpretation in conflict with Q&A 9 of Notice 2007-28 need not pay an excise tax; and employers who move fast for 2006 (who were previously limited by Notice 2007-28), have until tomorrow to increase their 2006 deductible contribution." (American Society of Pension Professionals and Actuaries (ASPPA))
Text of Treasury Letter to Congress
Excerpt: "You also indicated that [pursuant to a technical correction in pending legislation] if contributions to the defined contribution plan or plans are less than 6 percent of compensation, the defined benefit plan is not subject to the overall deduction limit. The Treasury Department and the Internal Revenue Service will administer sections 801 and 803 of the Pension Protection Act of 2006 consistent with the language in sections 9(a) and 9(b) of S. 1974 and H.R. 3361, as introduced on August 3, 2007, in anticipation of the enactment of this legislation." (Eric Solomon, Assistant Secretary (Tax Policy), Department of the Treasury)
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