26 U.S.C. § 415: Limitations on benefits and contribution under qualified plans

Final rules 2

(a) General rule

§ 1.415(a)-1 General rules with respect to limitations on benefits and contributions under qualified plans.

Amended 1976, 1981

1981 Pub. L. 97-34 Pub. L. 97–34, § 311(h)(3), struck out par. (3) which provided that par. (2) not apply to an account, annuity, or bond described in section 408(a), 408(b), or 409, established for the benefit of the spouse of the individual contributing to such account, or for such annuity or bond, if a deduction is allowed under section 220 to such individual with respect to such contribution for such year.
1976 Pub. L. 94-455 Pub. L. 94–455, § 1501(b)(3)(B), added par. (3).

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(1) Trusts A trust which is a part of a pension, profitsharing, or stock bonus plan shall not constitute a qualified trust under section 401(a) if—

Amended 1996

1996 Pub. L. 104-188 Pub. L. 104–188, § 1452(c)(1), inserted “or” at end of subpar. (A), struck out “, or” at end of subpar. (B), and struck out subpar. (C) which read as follows: “in any case in which an individual is a participant in both a defined benefit plan and a defined contribution plan maintained by the employer, the trust has been disqualified under subsection (g).”

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(A) in the case of a defined benefit plan, the plan provides for the payment of benefits with respect to a participant which exceed the limitation of subsection (b), or

(B) in the case of a defined contribution plan, contributions and other additions under the plan with respect to any participant for any taxable year exceed the limitation of subsection (c).

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(2) Section applies to certain annuities and accounts In the case of—

Amended 1976, 1978, 1981, 1984, 2001

2001 Pub. L. 107-16 Pub. L. 107–16, § 632(a)(3)(C), struck out “, and the amount of the contribution for such portion shall reduce the exclusion allowance as provided in section 403(b)(2)” before period at end.
1984 Pub. L. 98-369 Pub. L. 98–369, § 491(d)(28), struck out subpar. (D) which related to application of this section to a plan described in section 405(a), and in provision following subpar. (C) struck out “405(a),” after “403(b),”.
1981 Pub. L. 97-34 Pub. L. 97–34, § 311(g)(4)(A), struck out in provision preceding subpar. (A) “Except as provided in paragraph (3)”, redesignated former subpar. (E) as (C), and in subpar. (C) as so designated, inserted “described in section 408(k), or”, redesignated former subpar. (F) as (D), struck out former subpars. (C), relating to an individual retirement account described under section 408(a), (D), relating to an individual retirement annuity described in section 408(b), and (G), relating to a retirement bond described in section 409, and in provision following subpar. (D), substituted “such a contract, plan, or pension,” for “such contract, annuity plan, account, annuity, plan, or bond” and “408(k)” for “408(a), 408(b), or 409”.
1978 Pub. L. 95-600 Pub. L. 95–600, § 152(g)(1), (2), as amended by Pub. L. 96–222, § 101(a)(10)(J)(iii), added subpar. (E), redesignated former subpars. (E) and (F) as (F) and (G), respectively, and in provision following subpar. (G) as so redesignated, inserted “408(k),” after “408(b),”.
1976 Pub. L. 94-455 Pub. L. 94–455, § 1501(b)(3)(A), substituted “Except as provided in paragraph (3), in the case” for “In the case”.

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(A) an employee annuity plan described in section 403(a),

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(B) an annuity contract described in section 403(b), or

such a contract, plan, or pension shall not be considered to be described in section 403(a), 403(b), or 408(k), as the case may be, unless it satisfies the requirements of subparagraph (A) or subparagraph (B) of paragraph (1), whichever is appropriate, and has not been disqualified under subsection (g). In the case of an annuity contract described in section 403(b), the preceding sentence shall apply only to the portion of the annuity contract which exceeds the limitation of subsection (b) or the limitation of subsection (c), whichever is appropriate.

(b) Limitation for defined benefit plans

§ 1.415(b)-1 Limitations for defined benefit plans.§ 1.415(b)-2 Multiple annuity starting dates. [Reserved]

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(1) In general Benefits with respect to a participant exceed the limitation of this subsection if, when expressed as an annual benefit (within the meaning of paragraph (2)), such annual benefit is greater than the lesser of—

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(A) $160,000, or

Amended 1982, 2001

2001 Pub. L. 107-16 Pub. L. 107–16, § 611(a)(1)(A), substituted “$160,000” for “$90,000”.
1982 Pub. L. 97-248 Pub. L. 97–248, § 235(a)(1), substituted “$90,000” for “$75,000”.

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(B) 100 percent of the participant’s average compensation for his high 3 years.

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(2) Annual benefit

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(A) In general For purposes of paragraph (1), the term “annual benefit” means a benefit payable annually in the form of a straight life annuity (with no ancillary benefits) under a plan to which employees do not contribute and under which no rollover contributions (as defined in sections 402(c), 403(a)(4), 403(b)(8), 408(d)(3), and 457(e)(16)) are made.

Textual readingALL OF= an annual benefit

“a benefit payable annually in the form of a straight life annuity (with no ancillary benefits)”

“under a plan to which employees do not contribute”

“under which no rollover contributions (as defined in sections 402(c), 403(a)(4), 403(b)(8), 408(d)(3), and 457(e)(16)) are made”

Amended 1976, 1984, 1992, 2001

2001 Pub. L. 107-16 Pub. L. 107–16, § 641(e)(9), substituted “403(b)(8), 408(d)(3), and 457(e)(16)” for “and 408(d)(3)”.
1992 Pub. L. 102-318 Pub. L. 102–318 substituted “402(c)” for “402(a)(5)”.
1984 Pub. L. 98-369 Pub. L. 98–369, § 491(d)(29), (30), substituted “and 408(d)(3)” for “408(d)(3) and 409(b)(3)(C)”.
1976 Pub. L. 94-455 Pub. L. 94–455, § 1901(a)(65)(A), inserted closing parenthesis after “409(b)(3)(C)”.

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(B) Adjustment for certain other forms of benefit If the benefit under the plan is payable in any form other than the form described in subparagraph (A), or if the employees contribute to the plan or make rollover contributions (as defined in sections 402(c), 403(a)(4), 403(b)(8), 408(d)(3), and 457(e)(16)), the determinations as to whether the limitation described in paragraph (1) has been satisfied shall be made, in accordance with regulations prescribed by the Secretary by adjusting such benefit so that it is equivalent to the benefit described in subparagraph (A). For purposes of this subparagraph, any ancillary benefit which is not directly related to retirement income benefits shall not be taken into account; and that portion of any joint and survivor annuity which constitutes a qualified joint and survivor annuity (as defined in section 417) shall not be taken into account.

Amended 1976, 1984, 1986, 1992, 2001

2001 Pub. L. 107-16 Pub. L. 107–16, § 641(e)(9), substituted “403(b)(8), 408(d)(3), and 457(e)(16)” for “and 408(d)(3)”.
1992 Pub. L. 102-318 Pub. L. 102–318 substituted “402(c)” for “402(a)(5)”.
1986 Pub. L. 99-514 Pub. L. 99–514, § 1898(b)(15)(C), substituted reference to section 417 for reference to section 401(a)(11)(G)(iii).
1984 Pub. L. 98-369 Pub. L. 98–369, § 491(d)(29), (30), substituted “and 408(d)(3)” for “408(d)(3) and 409(b)(3)(C)”.
1976 Pub. L. 94-455 Pub. L. 94–455, §§ 1901(a)(65)(B), 1906(b)(13)(A), struck out “or his delegate” after “Secretary” and substituted “section 401(a)(11)(G)(iii)” for “section 401(a)(11)(H)(iii)”.

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(C) Adjustment to $160,000 limit where benefit begins before age 62 If the retirement income benefit under the plan begins before age 62, the determination as to whether the $160,000 limitation set forth in paragraph (1)(A) has been satisfied shall be made, in accordance with regulations prescribed by the Secretary, by reducing the limitation of paragraph (1)(A) so that such limitation (as so reduced) equals an annual benefit (beginning when such retirement income benefit begins) which is equivalent to a $160,000 annual benefit beginning at age 62.

Amended 1976, 1982, 1984, 1986, 2001

2001 Pub. L. 107-16 Pub. L. 107–16, § 611(a)(1)(B), (2), in heading substituted “$160,000” for “$90,000” and “age 62” for “the social security retirement age” and in text substituted “age 62” for “the social security retirement age” in two places, “$160,000” for “$90,000” in two places, and struck out at end “The reduction under this subparagraph shall be made in such manner as the Secretary may prescribe which is consistent with the reduction for old-age insurance benefits commencing before the social security retirement age under the Social Security Act.”
1986 Pub. L. 99-514 Pub. L. 99–514, § 1106(b)(1)(A), substituted in heading and in two places in text “the social security retirement age” for “age 62” and substituted new last sentence for “The reduction under this subparagraph shall not reduce the limitation of paragraph (1)(A) below—
“(i) if the benefit begins at or after age 55, $75,000, or
“(ii) if the benefit begins before age 55, the amount which is the equivalent of the $75,000 limitation for age 55.”
1984 Pub. L. 98-369 Pub. L. 98–369, § 713(a)(1)(A), substituted provision respecting determination as to whether $90,000 limitation has been satisfied by reducing the limitation of par. (1)(A) so that such limitation (as so reduced) equals an annual benefit (beginning when such retirement income benefit begins) which is equivalent to a $90,000 annual benefit beginning at age 62 for provision for such determination by adjusting the benefit so that it is equivalent to such a benefit beginning at age 62.
1982 Pub. L. 97-248 Pub. L. 97–248, § 235(a)(3)(A), (e)(1), (2), inserted provisions relating to reduction under this subparagraph, and substituted “$90,000” for “$75,000” and “62” for “55”, wherever appearing.
1976 Pub. L. 94-455 Pub. L. 94–455, § 1906(b)(13)(A), struck out “or his delegate” after “Secretary”.

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(D) Adjustment to $160,000 limit where benefit begins after age 65 If the retirement income benefit under the plan begins after age 65, the determination as to whether the $160,000 limitation set forth in paragraph (1)(A) has been satisfied shall be made, in accordance with regulations prescribed by the Secretary, by increasing the limitation of paragraph (1)(A) so that such limitation (as so increased) equals an annual benefit (beginning when such retirement income benefit begins) which is equivalent to a $160,000 annual benefit beginning at age 65.

Amended 1982, 1984, 1986, 2001

2001 Pub. L. 107-16 Pub. L. 107–16, § 611(a)(1)(B), (3), in heading substituted “$160,000” for “$90,000” and “age 65” for “the social security retirement age” and in text substituted “age 65” for “the social security retirement age” in two places and “$160,000” for “$90,000” in two places.
1986 Pub. L. 99-514 Pub. L. 99–514, § 1106(b)(1)(A)(i), substituted in heading and in two places in text “the social security retirement age” for “age 65”.
1984 Pub. L. 98-369 Pub. L. 98–369, § 713(a)(1)(B), substituted “limit” for “limitation” in heading, and in text substituted provision respecting determination as to whether $90,000 limitation has been satisfied by increasing the limitation of par. (1)(A) so that such limitation (as so increased) equals an annual benefit (beginning when such retirement income benefit begins) which is equivalent to a $90,000 annual benefit beginning at age 65 for provision for such determination by adjusting the benefit so that it is equivalent to such a benefit beginning at age 65.
1982 Pub. L. 97-248 Pub. L. 97–248, § 235(e)(3), (4), added subpars. (D) and (E).

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(E) Limitation on certain assumptions

Amended 1982, 1984, 1994

1994 Pub. L. 103-465 Pub. L. 103–465, § 767(b), added cls. (i), (ii), and (v), redesignated former cls. (ii) and (iii) as (iii) and (iv), respectively, and struck out former cl. (i) which read as follows: “For purposes of adjusting any benefit or limitation under subparagraph (B) or (C), the interest rate assumption shall not be less than the greater of 5 percent or the rate specified in the plan.”
1984 Pub. L. 98-369 Pub. L. 98–369, § 713(a)(1)(C), provided in cls. (i) and (iii) for adjustment of any limitation and substituted in cl. (ii) “any limitation” for “any benefit”.
1982 Pub. L. 97-248 Pub. L. 97–248, § 235(e)(3), (4), added subpars. (D) and (E).

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(i) For purposes of adjusting any limitation under subparagraph (C) and, except as provided in clause (ii), for purposes of adjusting any benefit under subparagraph (B), the interest rate assumption shall not be less than the greater of 5 percent or the rate specified in the plan.

Amended 1996

1996 Pub. L. 104-188 Pub. L. 104–188, § 1449(b)(1), substituted “For purposes of adjusting any limitation under subparagraph (C) and, except as provided in clause (ii), for purposes of adjusting any benefit under subparagraph (B),” for “Except as provided in clause (ii), for purposes of adjusting any benefit or limitation under subparagraph (B) or (C),”.

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(ii) For purposes of adjusting any benefit under subparagraph (B) for any form of benefit subject to section 417(e)(3), the interest rate assumption shall not be less than the greatest of—

Amended 1996, 2004, 2006

2006 Pub. L. 109-280 Pub. L. 109–280, § 303(a), amended cl. (ii) generally. Prior to amendment, cl. (ii) read as follows: “For purposes of adjusting any benefit under subparagraph (B) for any form of benefit subject to section 417(e)(3), the applicable interest rate (as defined in section 417(e)(3)) shall be substituted for ‘5 percent’ in clause (i), except that in the case of plan years beginning in 2004 or 2005, ‘5.5 percent’ shall be substituted for ‘5 percent’ in clause (i).”
2004 Pub. L. 108-218 Pub. L. 108–218 inserted before period at end “, except that in the case of plan years beginning in 2004 or 2005, ‘5.5 percent’ shall be substituted for ‘5 percent’ in clause (i)”.
1996 Pub. L. 104-188 Pub. L. 104–188, § 1449(b)(2), substituted “For purposes of adjusting any benefit under subparagraph (B) for any form of benefit subject to section 417(e)(3),” for “For purposes of adjusting the benefit or limitation of any form of benefit subject to section 417(e)(3),”.

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(I) 5.5 percent,

(II) the rate that provides a benefit of not more than 105 percent of the benefit that would be provided if the applicable interest rate (as defined in section 417(e)(3)) were the interest rate assumption, or

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(III) the rate specified under the plan.

(iii) For purposes of adjusting any limitation under subparagraph (D), the interest rate assumption shall not be greater than the lesser of 5 percent or the rate specified in the plan.

Amended 1986

1986 Pub. L. 99-514 Pub. L. 99–514, § 1875(c)(9), substituted “this subsection” for “adjusting any benefit or limitation under subparagraph (B), (C), or (D)”.

(iv) For purposes of this subsection, no adjustments under subsection (d)(1) shall be taken into account before the year for which such adjustment first takes effect.

(v) For purposes of adjusting any benefit or limitation under subparagraph (B), (C), or (D), the mortality table used shall be the applicable mortality table (within the meaning of section 417(e)(3)(B)).

Amended 2008

2008 Pub. L. 110-458 Pub. L. 110–458, § 103(b)(2)(B)(i), amended cl. (v) generally. Prior to amendment, cl. (v) read as follows: “For purposes of adjusting any benefit or limitation under subparagraph (B), (C), or (D), the mortality table used shall be the table prescribed by the Secretary. Such table shall be based on the prevailing commissioners’ standard table (described in section 807(d)(5)(A)) used to determine reserves for group annuity contracts issued on the date the adjustment is being made (without regard to any other subparagraph of section 807(d)(5)).”

(vi) In the case of a plan maintained by an eligible employer (as defined in section 408(p)(2)(C)(i)), clause (ii) shall be applied without regard to subclause (II) thereof.

Amended 2008

2008 Pub. L. 110-458 Pub. L. 110–458, § 122(a), added cl. (vi).

[(F) Repealed. Pub. L. 107–16, title VI, § 611(a)(5)(A), June 7, 2001, 115 Stat. 97]

Amended 1986, 2001

2001 Pub. L. 107-16 Pub. L. 107–16, § 611(a)(5)(A), struck out subpar. (F), which related to the application of subpars. (C) and (D) in the case of a governmental plan, a plan maintained by a tax-exempt organization, or a qualified merchant marine plan and defined “qualified merchant marine plan”.
1986 Pub. L. 99-514 Pub. L. 99–514, § 1106(b)(2), added subpars. (F) to (H).

(G) Special limitation for qualified police or firefighters In the case of a qualified participant, subparagraph (C) of this paragraph shall not apply.

Amended 1986, 1997

1997 Pub. L. 105-34 Pub. L. 105–34, § 1527(a), substituted “participant, subparagraph (C) of this paragraph shall not apply.” for “participant—
“(i) subparagraph (C) shall not reduce the limitation of paragraph (1)(A) to an amount less than $50,000, and
“(ii) the rules of subparagraph (F) shall apply.
The Secretary shall adjust the $50,000 amount in clause (i) at the same time and in the same manner as under section 415(d).”
1986 Pub. L. 99-514 Pub. L. 99–514, § 1106(b)(2), added subpars. (F) to (H).

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(H) Qualified participant defined For purposes of subparagraph (G), the term “qualified participant” means a participant—

Amended 1986

1986 Pub. L. 99-514 Pub. L. 99–514, § 1106(b)(2), added subpars. (F) to (H).

(i) in a defined benefit plan which is maintained by a State, Indian tribal government (as defined in section 7701(a)(40)), or any political subdivision thereof,

Amended 2006

2006 Pub. L. 109-280 Pub. L. 109–280, § 906(b)(1)(A)(i), substituted “State, Indian tribal government (as defined in section 7701(a)(40)), or any political subdivision” for “State or political subdivision”.

(ii) with respect to whom the period of service taken into account in determining the amount of the benefit under such defined benefit plan includes at least 15 years of service of the participant—

Amended 1988

1988 Pub. L. 100-647 Pub. L. 100–647, § 6059(a), substituted “15” for “20”.

(I) as a full-time employee of any police department or fire department which is organized and operated by the State, Indian tribal government (as so defined), or any political subdivision maintaining such defined benefit plan to provide police protection, firefighting services, or emergency medical services for any area within the jurisdiction of such State, Indian tribal government (as so defined), or any political subdivision, or

Amended 2006

2006 Pub. L. 109-280 Pub. L. 109–280, § 906(b)(1)(A)(ii), substituted “State, Indian tribal government (as so defined), or any political subdivision” for “State or political subdivision” in two places.

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(II) as a member of the Armed Forces of the United States.

(I) Exemption for survivor and disability benefits provided under governmental plans Subparagraph (C) of this paragraph and paragraph (5) shall not apply to—

Amended 1996

1996 Pub. L. 104-188 Pub. L. 104–188, § 1444(c), added subpar. (I).

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(i) income received from a governmental plan (as defined in section 414(d)) as a pension, annuity, or similar allowance as the result of the recipient becoming disabled by reason of personal injuries or sickness, or

(ii) amounts received from a governmental plan by the beneficiaries, survivors, or the estate of an employee as the result of the death of the employee.

(3) Average compensation for high 3 years For purposes of paragraph (1), a participant’s high 3 years shall be the period of consecutive calendar years (not more than 3) during which the participant had the greatest aggregate compensation from the employer. In the case of an employee within the meaning of section 401(c)(1), the preceding sentence shall be applied by substituting for “compensation from the employer” the following: “the participant’s earned income (within the meaning of section 401(c)(2) but determined without regard to any exclusion under section 911)”.

Amended 2006

2006 Pub. L. 109-280 Pub. L. 109–280, § 832(a), struck out “both was an active participant in the plan and” before “had the greatest”.

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(4) Total annual benefits not in excess of $10,000 Notwithstanding the preceding provisions of this subsection, the benefits payable with respect to a participant under any defined benefit plan shall be deemed not to exceed the limitation of this subsection if—

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(A) the retirement benefits payable with respect to such participant under such plan and under all other defined benefit plans of the employer do not exceed $10,000 for the plan year, or for any prior plan year, and

(B) the employer has not at any time maintained a defined contribution plan in which the participant participated.

(5) Reduction for participation or service of less than 10 years

Amended 1986

1986 Pub. L. 99-514 Pub. L. 99–514, § 1106(f), substituted “Reduction for participation or service of less than 10 years” for “Reduction for service less than 10 years” in heading and amended text generally. Prior to amendment, text read as follows: “In the case of an employee who has less than 10 years of service with the employer, the limitation referred to in paragraph (1), and the limitation referred to in paragraph (4), shall be the limitation determined under such paragraph (without regard to this paragraph), multiplied by a fraction, the numerator of which is the number of years (or part thereof) of service with the employer and the denominator of which is 10.”

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(A) Dollar limitation In the case of an employee who has less than 10 years of participation in a defined benefit plan, the limitation referred to in paragraph (1)(A) shall be the limitation determined under such paragraph (without regard to this paragraph) multiplied by a fraction—

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(i) the numerator of which is the number of years (or part thereof) of participation in the defined benefit plan of the employer, and

(ii) the denominator of which is 10.

(B) Compensation and benefits limitations The provisions of subparagraph (A) shall apply to the limitations under paragraphs (1)(B) and (4), except that such subparagraph shall be applied with respect to years of service with an employer rather than years of participation in a plan.

Amended 1988, 1996

1996 Pub. L. 104-188 Pub. L. 104–188, § 1452(c)(2), struck out “and subsection (e)” after “and (4)”.
1988 Pub. L. 100-647 Pub. L. 100–647, § 1011(d)(6), inserted “and subsection (e)” after “paragraphs (1)(B) and (4)”.

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(C) Limitation on reduction In no event shall subparagraph (A) or (B) reduce the limitations referred to in paragraphs (1) and (4) to an amount less than ⅒ of such limitation (determined without regard to this paragraph).

(D) Application to changes in benefit structure To the extent provided in regulations, subparagraph (A) shall be applied separately with respect to each change in the benefit structure of a plan.

Amended 1988

1988 Pub. L. 100-647 Pub. L. 100–647, § 1011(d)(2), substituted “subparagraph (A)” for “this paragraph”.

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(6) Computation of benefits and contributions The computation of—

Amended 1976

1976 Pub. L. 94-455 Pub. L. 94–455, § 1906(b)(13)(A), struck out “or his delegate” after “Secretary”.

(A) benefits under a defined contribution plan, for purposes of section 401(a)(4),

(B) contributions made on behalf of a participant in a defined benefit plan, for purposes of section 401(a)(4), and

(C) contributions and benefits provided for a participant in a plan described in section 414(k), for purposes of this section

shall not be made on a basis inconsistent with regulations prescribed by the Secretary.

(7) Benefits under certain collectively bargained plans For a year, the limitation referred to in paragraph (1)(B) shall not apply to benefits with respect to a participant under a defined benefit plan (other than a multiemployer plan)—

Amended 1978, 1980, 1982, 2001

2001 Pub. L. 107-16 Pub. L. 107–16, § 654(a)(2), inserted “(other than a multiemployer plan)” after “defined benefit plan” in introductory provisions.
2001 Pub. L. 107-16 Pub. L. 107–16, § 611(a)(1)(C), substituted “one-half the amount otherwise applicable for such year under paragraph (1)(A) for ‘$160,000’ ” for “the greater of $68,212 or one-half the amount otherwise applicable for such year under paragraph (1)(A) for ‘$90,000’ ” in concluding provisions.
1982 Pub. L. 97-248 Pub. L. 97–248, § 235(a)(3)(B), substituted “the greater of $68,212 or one-half the amount otherwise applicable for such year under paragraph (1)(A) for ‘$90,000’ ” for “ ‘37,500’ for ‘75,000’ ”.
1980 Pub. L. 96-222 Pub. L. 96–222, § 101(a)(11), substituted in subpar. (C) “under which benefits are determined solely by reference to length of service, the particular years during which service was rendered, age at retirement, and date of retirement” for “benefits under which are determined by multiplying a specified amount (which is the same amount for each participant) by the number of the participant’s years of service” and inserted in text following subpar. (E) provisions requiring that this paragraph not apply to a participant for any period for which he is a participant under another plan to which this section applies which is maintained by an employer maintaining this plan.
1978 Pub. L. 95-600 Pub. L. 95–600, § 153(a), added par. (7).

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(A) which is maintained for such year pursuant to a collective bargaining agreement between employee representatives and one or more employers,

(B) which, at all times during such year, has at least 100 participants,

(C) under which benefits are determined solely by reference to length of service, the particular years during which service was rendered, age at retirement, and date of retirement,

(D) which provides that an employee who has at least 4 years of service has a nonforfeitable right to 100 percent of his accrued benefit derived from employer contributions, and

(E) which requires, as a condition of participation in the plan, that an employee complete a period of not more than 60 consecutive days of service with the employer or employers maintaining the plan.

This paragraph shall not apply to a participant whose compensation for any 3 years during the 10-year period immediately preceding the year in which he separates from service exceeded the average compensation for such 3 years of all participants in such plan. This paragraph shall not apply to a participant for any period for which he is a participant under another plan to which this section applies which is maintained by an employer maintaining this plan. For any year for which the paragraph applies to benefits with respect to a participant, paragraph (1)(A) and subsection (d)(1)(A) shall be applied with respect to such participant by substituting one-half the amount otherwise applicable for such year under paragraph (1)(A) for “$160,000”.

(8) Social security retirement age defined For purposes of this subsection, the term “social security retirement age” means the age used as the retirement age under section 216(l) of the Social Security Act, except that such section shall be applied—

Amended 1986

1986 Pub. L. 99-514 Pub. L. 99–514, § 1106(b)(1)(B), added par. (8).

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(A) without regard to the age increase factor, and

(B) as if the early retirement age under section 216(l)(2) of such Act were 62.

(9) Special rule for commercial airline pilots

Amended 1986, 2001

2001 Pub. L. 107-16 Pub. L. 107–16, § 611(a)(5)(B), amended par. (9) generally, substituting present provisions for provisions which provided that, in the case of any participant who was a commercial airline pilot, the rule of par. (2)(F)(i)(II) would apply, and if, as of the time of the participant’s retirement, regulations prescribed by the Federal Aviation Administration required an individual to separate from service as a commercial airline pilot after attaining any age occurring on or after age 60 and before the social security retirement age, par. (2)(C) would be applied by substituting such age for the social security retirement age, and provisions which provided that if a participant separated from service before age 60, the rules of par. (2)(F) would apply.
1986 Pub. L. 99-514 Pub. L. 99–514, § 1106(b)(3), added par. (9).

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(A) In general Except as provided in subparagraph (B), in the case of any participant who is a commercial airline pilot, if, as of the time of the participant’s retirement, regulations prescribed by the Federal Aviation Administration require an individual to separate from service as a commercial airline pilot after attaining any age occurring on or after age 60 and before age 62, paragraph (2)(C) shall be applied by substituting such age for age 62.

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(B) Individuals who separate from service before age 60 If a participant described in subparagraph (A) separates from service before age 60, the rules of paragraph (2)(C) shall apply.

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(10) Special rule for State, Indian tribal, and local government plans

Amended 1988, 2006, 2008

2008 Pub. L. 110-458 Pub. L. 110–458, § 109(d)(1), made technical correction to directory language of Pub. L. 109–280, § 906(b)(1)(B)(ii). See 2006 Amendment note below.
2006 Pub. L. 109-280 Pub. L. 109–280, § 906(b)(1)(B)(ii), as amended by Pub. L. 110–458, § 109(d)(1), substituted “State, Indian tribal, and” for “State and” in heading.
1988 Pub. L. 100-647 Pub. L. 100–647, § 6054(a), added par. (10).

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(A) Limitation to equal accrued benefit In the case of a plan maintained for its employees by any State or political subdivision thereof, or by any agency or instrumentality of the foregoing, or a governmental plan described in the last sentence of section 414(d) (relating to plans of Indian tribal governments), the limitation with respect to a qualified participant under this subsection shall not be less than the accrued benefit of the participant under the plan (determined without regard to any amendment of the plan made after October 14, 1987).

Amended 2006

2006 Pub. L. 109-280 Pub. L. 109–280, § 906(b)(1)(B)(i), inserted “or a governmental plan described in the last sentence of section 414(d) (relating to plans of Indian tribal governments),” after “foregoing,”.

(B) Qualified participant For purposes of this paragraph, the term “qualified participant” means a participant who first became a participant in the plan maintained by the employer before January 1, 1990.

Amended 1996

1996 Pub. L. 104-188 Pub. L. 104–188, § 1444(d), designated existing provisions as cl. (i), inserted heading, and added cl. (ii).

(i) In general This paragraph shall not apply to any plan unless each employer maintaining the plan elects before the close of the 1st plan year beginning after December 31, 1989, to have this subsection (other than paragraph (2)(G)).

Amended 2001

2001 Pub. L. 107-16 Pub. L. 107–16, § 611(a)(5)(C), struck out “applied without regard to paragraph (2)(F)” before period at end.

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(ii) Revocation of election An election under clause (i) may be revoked not later than the last day of the third plan year beginning after the date of the enactment of this clause. The revocation shall apply to all plan years to which the election applied and to all subsequent plan years. Any amount paid by a plan in a taxable year ending after the revocation shall be includible in income in such taxable year under the rules of this chapter in effect for such taxable year, except that, for purposes of applying the limitations imposed by this section, any portion of such amount which is attributable to any taxable year during which the election was in effect shall be treated as received in such taxable year.

(11) Special limitation rule for governmental and multiemployer plans In the case of a governmental plan (as defined in section 414(d)) or a multiemployer plan (as defined in section 414(f)), subparagraph (B) of paragraph (1) shall not apply. Subparagraph (B) of paragraph (1) shall not apply to a plan maintained by an organization described in section 3121(w)(3)(A) except with respect to highly compensated benefits. For purposes of this paragraph, the term “highly compensated benefits” means any benefits accrued for an employee in any year on or after the first year in which such employee is a highly compensated employee (as defined in section 414(q)) of the organization described in section 3121(w)(3)(A). For purposes of applying paragraph (1)(B) to highly compensated benefits, all benefits of the employee otherwise taken into account (without regard to this paragraph) shall be taken into account.

Amended 1996, 2001, 2006

2006 Pub. L. 109-280 Pub. L. 109–280, § 867(a), inserted at end “Subparagraph (B) of paragraph (1) shall not apply to a plan maintained by an organization described in section 3121(w)(3)(A) except with respect to highly compensated benefits. For purposes of this paragraph, the term ‘highly compensated benefits’ means any benefits accrued for an employee in any year on or after the first year in which such employee is a highly compensated employee (as defined in section 414(q)) of the organization described in section 3121(w)(3)(A). For purposes of applying paragraph (1)(B) to highly compensated benefits, all benefits of the employee otherwise taken into account (without regard to this paragraph) shall be taken into account.”
2001 Pub. L. 107-16 Pub. L. 107–16, § 654(a)(1), amended heading and text of par. (11) generally. Prior to amendment, text read as follows: “In the case of a governmental plan (as defined in section 414(d)), subparagraph (B) of paragraph (1) shall not apply.”
1996 Pub. L. 104-188 Pub. L. 104–188, § 1444(a), added par. (11).

(12) Special rule for certain employees of rural electric cooperatives

Amended 2022

2022 Pub. L. 117-328 Pub. L. 117–328 added par. (12).

(A) In general Subparagraph (B) of paragraph (1) shall not apply to a participant in an eligible rural electric cooperative plan, except in the case of a participant who was a highly compensated employee (as defined in section 414(q)) of an employer maintaining such plan for the earlier of—

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(i) the plan year in which the participant terminated employment with such employer, or

(ii) the plan year in which distributions commence under the plan with respect to the participant, or

for any of the 5 plan years immediately preceding such earlier plan year.

(B) Eligible rural electric cooperative plan For purposes of this paragraph—

(i) In general The term “eligible rural electric cooperative plan” means a plan maintained by more than 1 employer, with respect to which at least 85 percent of the employers maintaining the plan are rural cooperatives described in clause (i) or (ii) of section 401(k)(7)(B) or are a national association of such a rural cooperative.

Textual readingALL OF= an eligible rural electric cooperative plan

“a plan maintained by more than 1 employer”

“at least 85 percent of the employers maintaining the plan are rural cooperatives described in clause (i) or (ii) of section 401(k)(7)(B) or are a national association of such a rural cooperative”

(ii) Election An employer maintaining an eligible rural cooperative plan may elect not to have subparagraph (A) apply to its employees.

(C) Regulations The Secretary shall prescribe such regulations and other guidance as are necessary to limit the application of subparagraph (A) such that it does not result in increased benefits for highly compensated employees.

§ 1.415(c)-1 Limitations for defined contribution plans.§ 1.415(c)-2 Compensation.

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(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—

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(A) $40,000, or

Amended 1982, 1986, 1994, 2001

2001 Pub. L. 107-16 Pub. L. 107–16, § 611(b)(1), substituted “$40,000” for “$30,000”.
1994 Pub. L. 103-465 Pub. L. 103–465, § 732(b)(2), struck out “(or, if greater, ¼ of the dollar limitation in effect under subsection (b)(1)(A))” after “$30,000”.
1986 Pub. L. 99-514 Pub. L. 99–514, § 1106(a), amended subpar. (A) generally, inserting “(or, if greater, ¼ of the dollar limitation in effect under subsection (b)(1)(A))”.
1982 Pub. L. 97-248 Pub. L. 97–248, § 235(a)(2), substituted “$30,000” for “$25,000”.

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(B) 100 percent of the participant’s compensation.

Amended 2001

2001 Pub. L. 107-16 Pub. L. 107–16, § 632(a)(1), substituted “100 percent” for “25 percent”.

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(2) Annual addition For purposes of paragraph (1), the term “annual addition” means the sum of any year of—

Amended 1981, 1984, 1986, 1992, 2001

2001 Pub. L. 107-16 Pub. L. 107–16, § 641(e)(10), substituted “408(d)(3), and 457(e)(16)” for “and 408(d)(3)” in concluding provisions.
1992 Pub. L. 102-318 Pub. L. 102–318 substituted “402(c)” for “402(a)(5)”.
1986 Pub. L. 99-514 Pub. L. 99–514, § 1108(g)(5), substituted “which are excludable from gross income under section 408(k)(6)” for “allowable as a deduction under section 219(a), and without regard to deductible employee contributions within the meaning of section 72(o)(5)” in last sentence.
1986 Pub. L. 99-514 Pub. L. 99–514, § 1106(e)(2), inserted at end “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.”
1984 Pub. L. 98-369 Pub. L. 98–369, § 491(d)(31), substituted “and 408(d)(3)” for “405(d)(3), 408(d)(3), and 409(b)(3)(C)”.
1981 Pub. L. 97-34 Pub. L. 97–34, § 311(g)(4)(B), included in provision following subpar. (C) references to sections 403(b)(8) and 405(d)(3) and inserted “without regard to employee contributions to a simplified employee pension allowable as a deduction under section 219(a), and without regard to deductible employee contributions within the meaning of section 72(o)(5)”.

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(A) employer contributions,

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(B) the employee contributions, and

Amended 1986

1986 Pub. L. 99-514 Pub. L. 99–514, § 1106(e)(1), amended subpar. (B) generally. Prior to amendment, subpar. (B) read as follows: “the lesser of—
“(i) the amount of the employee contributions in excess of 6 percent of his compensation, or
“(ii) one-half of the employee contributions, and”.

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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), 408(d)(3), and 457(e)(16)) 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)—

Amended 1982

1982 Pub. L. 97-248 Pub. L. 97–248, § 253(a), designated existing provisions as subpars. (A) and (B) and added subpar. (C).

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(A) In general The term “participant’s compensation” means the compensation of the participant from the employer for the year.

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(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”.

Amended 1984, 1986, 1996

1996 Pub. L. 104-188 Pub. L. 104–188, § 1446(a), inserted at end “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).”
1986 Pub. L. 99-514 Pub. L. 99–514, § 1875(c)(11), substituted “any defined contribution plan” for “a profit-sharing or stock bonus plan”.
1984 Pub. L. 98-369 Pub. L. 98–369, § 713(k), inserted in introductory text “in a profit-sharing or stock bonus plan”, and substituted in last sentence “if contributions made with respect to amounts treated as compensation under this subparagraph” for “if contributions made with respect to such participant”.

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(i) who is permanently and totally disabled (as defined in section 22(e)(3)),

Amended 1983, 1986

1986 Pub. L. 99-514 Pub. L. 99–514, § 1847(b)(4), substituted “section 22(e)(3)” for “section 37(e)(3)”.
1983 Pub. L. 98-21 Pub. L. 98–21 substituted “section 37(e)(3)” for “section 105(d)(4)”.

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(ii) who is not a highly compensated employee (within the meaning of section 414(q)), and

Amended 1986

1986 Pub. L. 99-514 Pub. L. 99–514, § 1114(b)(12), substituted “a highly compensated employee (within the meaning of section 414(q))” for “an officer, owner, or highly compensated”.

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(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,

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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—

Amended 1996

1996 Pub. L. 104-188 Pub. L. 104–188, § 1434(a), added subpar. (D).

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(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, 132(f)(4), or 457.

Amended 2000

2000 Pub. L. 106-554 Pub. L. 106–554 substituted “section 125, 132(f)(4), or” for “section 125 or”.

(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).

Amended 2001

2001 Pub. L. 107-16 Pub. L. 107–16, § 632(a)(3)(D), added subpar. (E).

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[(4) Repealed. Pub. L. 107–16, title VI, § 632(a)(3)(E), June 7, 2001, 115 Stat. 114]

Amended 1976, 1982, 1986, 2001

2001 Pub. L. 107-16 Pub. L. 107–16, § 632(a)(3)(E), struck out par. (4), which related to special election for section 403(b) contracts purchased by educational organizations, hospitals, home health service agencies, certain churches, and other organizations.
1986 Pub. L. 99-514 Pub. L. 99–514, § 1106(b)(4), inserted “a health and welfare service agency,” after “a home health service agency,”.
1982 Pub. L. 97-248 Pub. L. 97–248, § 251(c)(1), substituted “, home health service agencies, and certain churches, etc.” for “and home health service agencies” in heading, in subpar. (A) inserted “(as determined for purposes of section 403(b)(2))” after “by taking into account his service for the employer”, substituted “a home health service agency, or a church, convention or association of churches, or an organization described in section 414(e)(3)(B)(ii)” for “or a home health service agency” in subpars. (A), (B) and (C), respectively, and, in subpar. (D), added cl. (iv).
1976 Pub. L. 94-455 Pub. L. 94–455, §§ 1901(b)(8)(D), 1906(b)(13)(A), substituted “educational organizations” for “educational institutions” in the heading and “educational organization” for “educational institution” in subpars. (A), (B), and (C), struck out “or his delegate” after “Secretary” in subpar. (D)(i), and substituted “For purposes of this paragraph the term ‘educational organization’ means an educational organization described in section 170(b)(1)(A)(ii)” for “For purposes of this paragraph the term ‘educational institution’ means an educational institution as defined in section 151(e)(4)” in subpar. (D)(ii).

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[(5) Repealed. Pub. L. 97–248, title II, § 238(d)(5), Sept. 3, 1982, 96 Stat. 513]

Amended 1976, 1982

1982 Pub. L. 97-248 Pub. L. 97–248, § 238(d)(5), struck out par. (5) relating to application with section 404(e)(4).
1976 Pub. L. 94-455 Pub. L. 94–455, § 1502(a)(1), added par. (5).

(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—

Amended 1976, 1981, 1984, 1986, 1989, 1997

1997 Pub. L. 105-34 Pub. L. 105–34, § 1530(c)(3), inserted concluding provisions “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.”
1989 Pub. L. 101-239 Pub. L. 101–239 substituted “Special rule for employee stock ownership plans” for “Special limitation for employee stock ownership plan” in heading and amended text generally, substituting introductory provisions and subpars. (A) and (B) for former subpars. (A) to (C).
1986 Pub. L. 99-514 Pub. L. 99–514, § 1174(d)(2)(B), substituted “highly compensated employees (within the meaning of section 414(q))” for “the group of employees consisting of officers, shareholders owning more than 10 percent of the employer’s stock (determined under subparagraph (B)(iv)), or employees described in subparagraph (B)(iii)”.
1984 Pub. L. 98-369 Pub. L. 98–369, § 713(d)(4)(B)(i)–(iii), substituted “paragraph (9)” for “paragraph (10)” of section 404(a), section “404(a)(9)(A)” for “404(a)(10)(A)”, and section “404(a)(9)(B)” for “404(a)(10)(B)”.
1981 Pub. L. 97-34 Pub. L. 97–34, § 333(b)(1), added subpar. (C).
1976 Pub. L. 94-455 Pub. L. 94–455, § 803(f)(1), added par. (6).

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(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

Amended 1980, 1986, 1988

1988 Pub. L. 100-647 Pub. L. 100–647, § 1011(d)(7), substituted “paragraph (1)(A)” for “paragraph (c)(1)(A) (as adjusted for such year pursuant to subsection (d)(1))” and for “paragraph (c)(1)(A) (as so adjusted)”.
1986 Pub. L. 99-514 Pub. L. 99–514, § 1174(d)(1), substituted “highly compensated employees (within the meaning of section 414(q))” for “the group of employees consisting of officers, shareholders owning more than 10 percent of the employer’s stock (determined under subparagraph (B)(iv)), or employees described in subparagraph (B)(iii)”.
1980 Pub. L. 96-605 Pub. L. 96–605 inserted “, or purchased with cash contributed,” after “securities contributed”.

(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.

Amended 1978, 1980, 1984, 1986

1986 Pub. L. 99-514 Pub. L. 99–514, § 1174(d)(2)(A), struck out cls. (iii) and (iv) which read as follows:
“(iii) an employee described in this clause is any participant whose compensation for a year exceeds an amount equal to twice the amount described in paragraph (1)(A) for such year (as adjusted for such year pursuant to subsection (d)(1)), determined without regard to subparagraph (A) of this paragraph, and
“(iv) an individual shall be considered to own more than 10 percent of the employer’s stock if, without regard to stock held under the employee stock ownership plan, he owns (after application of section 1563(e)) more than 10 percent of the total combined voting power of all classes of stock entitled to vote or more than 10 percent of the total value of shares of all classes of stock.”
1984 Pub. L. 98-369 Pub. L. 98–369, § 491(e)(6), substituted “section 409” for “section 409A”.
1980 Pub. L. 96-222 Pub. L. 96–222, § 101(a)(7)(L)(i)(VII), (iv)(I), substituted “a tax credit employee stock ownership plan” for “an ESOP” and struck out “leveraged” before “employee”.
1978 Pub. L. 95-600 Pub. L. 95–600, § 141(f)(7), substituted “leveraged employee stock ownership plan (within the meaning of section 4975(e)(7)) or an ESOP” for “a plan which meets the requirements of section 4975(e)(7) or section 301(d) of the Tax Reduction Act of 1975”.
1978 Pub. L. 95-600 Pub. L. 95–600, § 141(f)(7), substituted “has the meaning given to such term by section 409A” for “means, in the case of an employee stock ownership plan within the meaning of section 4975(e)(7), qualifying employer securities within the meaning of section 4975(e)(8), but only if they are described in section 301(d)(9)(A) of the Tax Reduction Act of 1975, or, in the case of an employee stock ownership plan described in section 301(d)(2) of the Tax Reduction Act of 1975, employer securities within the meaning of section 301(d)(9)(A) of such Act”.

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) Special rules relating to church plans

Amended 1976, 1984, 2001, 2002

2002 Pub. L. 107-147 Pub. L. 107–147 amended heading and text of par. (7) generally, substituting provisions relating to special rules relating to church plans for provisions relating to certain contributions by church plans not treated as exceeding limit and adding provisions relating to foreign missionaries and definitions of “church” and “convention or association of churches”.
2001 Pub. L. 107-16 Pub. L. 107–16, § 632(a)(3)(F), amended par. (7) generally, redesignating cls. (i) and (ii) of subpar. (B) as subpars. (A) and (B), respectively, reenacting subpar. (C) without change, striking out former subpar. (A), which directed that any contribution or addition with respect to any participant, when expressed as an annual addition, which was allocable to the application of section 403(b)(2)(D) to such participant for such year, would be treated as not exceeding the limitations of par. (1), and striking out former subpar. (B), cl. (iii), which prohibited making of election under this subpar. for any year if an election had been made under former par. (4)(A) for such year.
1984 Pub. L. 98-369 Pub. L. 98–369, § 713(d)(7)(A), redesignated par. (8) as (7), and struck out former par. (7) relating to certain level premium annuity contracts under plans benefiting owner-employees.
1976 Pub. L. 94-455 Pub. L. 94–455, § 1511(a), added par. (7).

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(A) Alternative contribution limitation

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(i) 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.

(ii) $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.

(B) Number of years of service for duly ordained, commissioned, or licensed ministers or lay employees For purposes of this paragraph—

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(i) all years of service by—

(I) a duly ordained, commissioned, or licensed minister of a church, or

(II) a lay person,

as an employee of a church, a convention or association of churches, including an organization described in section 414(e)(3)(B)(ii), shall be considered as years of service for 1 employer, and

(ii) all amounts contributed for annuity contracts by each such church (or convention or association of churches) or such organization during such years for such minister or lay person shall be considered to have been contributed by 1 employer.

(C) Foreign missionaries In the case of any individual described in subparagraph (B) performing services outside the United States, contributions and other additions for an annuity contract or retirement income account described in section 403(b) with respect to such employee, when expressed as an annual addition to such employee’s account, shall not be treated as exceeding the limitation of paragraph (1) if such annual addition is not in excess of $3,000. This subparagraph shall not apply with respect to any taxable year to any individual whose adjusted gross income for such taxable year (determined separately and without regard to community property laws) exceeds $17,000.

“In the case of any individual described in subparagraph (B) performing services outside the United States, contributions and other additions for an annuity contract or retirement income account described in section 403(b) with respect to such employee, when expressed as an annual addition to such employee’s account,” Opening words

Textual readingALL OF= not treated as exceeding limitation

“any individual described in subparagraph (B)”

“performing services outside the United States”

“such annual addition is not in excess of $3,000”

NOT“whose adjusted gross income for such taxable year (determined separately and without regard to community property laws) exceeds $17,000”

Amended 2004, 2005

2005 Pub. L. 109-135 Pub. L. 109–135, § 407(b), substituted “$3,000. This subparagraph shall not apply with respect to any taxable year to any individual whose adjusted gross income for such taxable year (determined separately and without regard to community property laws) exceeds $17,000” for “the greater of $3,000 or the employee’s includible compensation determined under section 403(b)(3)”.
2004 Pub. L. 108-311 Pub. L. 108–311, § 408(a)(17), substituted “subparagraph (B)” for “subparagraph (D)”.

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(D) Annual addition For purposes of this paragraph, the term “annual addition” has the meaning given such term by paragraph (2).

(E) Church, convention or association of churches For purposes of this paragraph, the terms “church” and “convention or association of churches” have the same meaning as when used in section 414(e).

(8) Special rule for difficulty of care payments excluded from gross income

Amended 1982, 1984, 2019

2019 Pub. L. 116-94 Pub. L. 116–94 added par. (8).
1984 Pub. L. 98-369 Pub. L. 98–369, § 713(d)(7)(A), redesignated par. (8) as (7), and struck out former par. (7) relating to certain level premium annuity contracts under plans benefiting owner-employees.
1982 Pub. L. 97-248 Pub. L. 97–248, § 251(c)(2), added par. (8).

(A) In general For purposes of paragraph (1)(B), in the case of an individual who for a taxable year excludes from gross income under section 131 a qualified foster care payment which is a difficulty of care payment, the participant’s compensation, or earned income, as the case may be, shall be increased by the amount so excluded.

(B) Contributions allocable to difficulty of care payments treated as after-tax Any contribution by the participant which is allowable due to such increase—

(i) shall be treated for purposes of this title as investment in the contract, and

(ii) shall not cause a plan (and any arrangement which is part of such plan) to be treated as failing to meet any requirements of this chapter solely by reason of allowing any such contributions.

(d) Cost-of-living adjustments

§ 1.415(d)-1 Cost-of-living adjustments.

Amended 1994

1994 Pub. L. 103-465 Pub. L. 103–465, § 732(b)(1), amended subsec. (d) generally, substituting present provisions for provisions authorizing annual cost-of-living adjustments, outlining base periods, and providing for a freeze on adjustment to defined contribution and benefit limits.

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(1) In general The Secretary shall adjust annually—

Amended 1976, 1982

1982 Pub. L. 97-248 Pub. L. 97–248, § 235(b)(1), substituted “benefit amounts” for “primary insurance amounts” in provision following subpar. (C).
1982 Pub. L. 97-248 Pub. L. 97–248, § 235(b)(3), substituted “$90,000” for “$75,000” in subpar. (A), and in subpar. (B) substituted “$30,000” for “$25,000”.
1976 Pub. L. 94-455 Pub. L. 94–455, § 1906(b)(13)(A), struck out “or his delegate” after “Secretary”.

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(A) the $160,000 amount in subsection (b)(1)(A),

Amended 2001

2001 Pub. L. 107-16 Pub. L. 107–16, § 611(a)(4)(A), substituted “$160,000” for “$90,000”.

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(B) in the case of a participant who is separated from service, the amount taken into account under subsection (b)(1)(B), and

Amended 1986

1986 Pub. L. 99-514 Pub. L. 99–514, § 1106(g)(1), redesignated subpar. (C) as (B) and struck out former subpar. (B), which related to the $30,000 amount in subsection (c)(1)(A).

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Amended 1986, 2001

2001 Pub. L. 107-16 Pub. L. 107–16, § 611(b)(2)(A), substituted “$40,000” for “$30,000”.
1986 Pub. L. 99-514 Pub. L. 99–514, § 1106(g)(1), redesignated subpar. (C) as (B) and struck out former subpar. (B), which related to the $30,000 amount in subsection (c)(1)(A).

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for increases in the cost-of-living in accordance with regulations prescribed by the Secretary.

(2) Method The regulations prescribed under paragraph (1) shall provide for—

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(A) an adjustment with respect to any calendar year based on the increase in the applicable index for the calendar quarter ending September 30 of the preceding calendar year over such index for the base period, and

Amended 1982, 1984, 1986

1986 Pub. L. 99-514 Pub. L. 99–514, § 1106(g)(2)(A), substituted “subparagraph (A)” for “subparagraphs (A) and (B)”.
1984 Pub. L. 98-369 Pub. L. 98–369, § 15(b), substituted “1986” for “1984”.
1982 Pub. L. 97-248 Pub. L. 97–248, § 235(b)(2)(B), substituted “1984” for “1974”.

(B) adjustment procedures which are similar to the procedures used to adjust benefit amounts under section 215(i)(2)(A) of the Social Security Act.

Amended 1986

1986 Pub. L. 99-514 Pub. L. 99–514, § 1106(g)(2)(B), substituted “subparagraph (B)” for “subparagraph (C)”.

(3) Base period For purposes of paragraph (2)—

Amended 1982, 1984, 1986

1986 Pub. L. 99-514 Pub. L. 99–514, § 1106(g)(3), substituted “subparagraph (A)” for “subparagraph (A) or (B)”.
1984 Pub. L. 98-369 Pub. L. 98–369, § 15(a), substituted “January 1, 1988” for “January 1, 1986”.
1982 Pub. L. 97-248 Pub. L. 97–248, § 235(b)(2)(A), added par. (3).

(A) $160,000 amount The base period taken into account for purposes of paragraph (1)(A) is the calendar quarter beginning July 1, 2001.

Amended 2001

2001 Pub. L. 107-16 Pub. L. 107–16, § 611(a)(4)(B), in heading substituted “$160,000” for “$90,000” and in text substituted “July 1, 2001” for “October 1, 1986”.

(B) Separations after December 31, 1994 The base period taken into account for purposes of paragraph (1)(B) with respect to individuals separating from service with the employer after December 31, 1994, is the calendar quarter beginning July 1 of the calendar year preceding the calendar year in which such separation occurs.

(C) Separations before January 1, 1995 The base period taken into account for purposes of paragraph (1)(B) with respect to individuals separating from service with the employer before January 1, 1995, is the calendar quarter beginning October 1 of the calendar year preceding the calendar year in which such separation occurs.

(D) $40,000 amount The base period taken into account for purposes of paragraph (1)(C) is the calendar quarter beginning July 1, 2001.

Amended 2001

2001 Pub. L. 107-16 Pub. L. 107–16, § 611(b)(2)(B), in heading substituted “$40,000” for “$30,000” and in text substituted “July 1, 2001” for “October 1, 1993”.

(4) Rounding

Amended 2001

2001 Pub. L. 107-16 Pub. L. 107–16, § 611(h), reenacted heading without change and amended text of par. (4) generally. Prior to amendment, text read as follows: “Any increase under subparagraph (A) or (C) of paragraph (1) which is not a multiple of $5,000 shall be rounded to the next lowest multiple of $5,000.”

(A) $160,000 amount Any increase under subparagraph (A) of paragraph (1) which is not a multiple of $5,000 shall be rounded to the next lowest multiple of $5,000. This subparagraph shall also apply for purposes of any provision of this title that provides for adjustments in accordance with the method contained in this subsection, except to the extent provided in such provision.

Amended 2004

2004 Pub. L. 108-311 Pub. L. 108–311, § 404(b)(2), inserted at end “This subparagraph shall also apply for purposes of any provision of this title that provides for adjustments in accordance with the method contained in this subsection, except to the extent provided in such provision.”

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(B) $40,000 amount Any increase under subparagraph (C) of paragraph (1) which is not a multiple of $1,000 shall be rounded to the next lowest multiple of $1,000.

[(e) Repealed. Pub. L. 104–188, title I, § 1452(a), Aug. 20, 1996, 110 Stat. 1816]

Amended 1976, 1978, 1980, 1981, 1982, 1984, 1996, 1997

1997 Pub. L. 105-34 Pub. L. 105–34, § 1530(c)(4), added par. (6) and redesignated former par. (6) as (7).
1996 Pub. L. 104-188 Pub. L. 104–188, § 1452(a), struck out subsec. (e) which related to limitation in case of a defined benefit plan and a defined contribution plan for same employee.
1984 Pub. L. 98-369 Pub. L. 98–369, § 713(d)(7)(B), struck out reference to subsec. (c)(8).
1984 Pub. L. 98-369 Pub. L. 98–369, § 713(a)(3), added subpar. (C).
1982 Pub. L. 97-248 Pub. L. 97–248, § 235(c)(1), substituted “1.0” for “1.4”.
1982 Pub. L. 97-248 Pub. L. 97–248, § 235(c)(2)(A), substituted provisions that for purposes of this subsection, the defined benefit plan fraction for any year has a denominator which is the lesser of the product of 1.25 multiplied by the dollar limitation in effect under subsec. (b)(1)(A) for such year, or the product of 1.4 multiplied by the amount which may be taken into account under subsec. (b)(1)(B) with respect to such individual under the plan for such year, for provisions that such benefit plan fraction had a denominator which was the projected annual benefit of the participant under the plan (determined as of the close of the year) if the plan provided the maximum benefit allowable under subsec. (b).
1982 Pub. L. 97-248 Pub. L. 97–248, § 235(c)(2)(B), substituted provision that the defined contribution plan fraction for any year has a denominator which, determined for such year and for each prior year of service with the employer, is the lesser of either the product of 1.25 multiplied by the dollar limitation in effect under subsec. (c)(1)(A) for such year (determined without regard to subsec. (c)(6)), or the product of 1.4 multiplied by the amount which may be taken into account under subsec. (c)(1)(B) (or subsec. (c)(7) or (8), if applicable) with respect to such individual under such plan for such year, for provision that the denominator of such fraction was the sum of the maximum amount of annual additions to the participant’s account which could have been made under subsec. (c) for such year and for each prior year of service with the employer (determined without regard to subsec. (c)(6)).
1982 Pub. L. 97-248 Pub. L. 97–248, § 235(d), added par. (6).
1981 Pub. L. 97-34 Pub. L. 97–34, § 311(g)(4)(C), struck out “, any individual retirement account described in section 408(a), any individual retirement annuity described in section 408(b), and any retirement bond described in section 409,” before “for the benefit”.
1980 Pub. L. 96-222 Pub. L. 96–222, § 101(a)(10)(I), inserted provisions requiring that for purposes of this section, any contribution by an employer to a simplified employee pension for an individual for a taxable year be treated as an employer contribution to a defined contribution plan for such individual for such year.
1978 Pub. L. 95-600 Pub. L. 95–600, § 152(g)(3), inserted “any simplified employee pension,” after “section 408(b),”.
1976 Pub. L. 94-455 Pub. L. 94–455, § 803(f)(2), substituted “with the employer determined without regard to paragraph (6) of such subsection)” for “with the employer”.
1976 Pub. L. 94-455 Pub. L. 94–455, § 803(b)(4), substituted “For purposes of this section” for “For purposes of this subsection”.

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(f) Combining of plans

§ 1.415(f)-1 Aggregating plans.

Amended 2001, 2008

2008 Pub. L. 110-458 Pub. L. 110–458, § 108(g), redesignated par. (3) as par. (2) and struck out former par. (2) which related to annual compensation taken into account for defined benefit plans.
2001 Pub. L. 107-16 Pub. L. 107–16, § 654(b)(1), added par. (3).

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(1) In general For purposes of applying the limitations of subsections (b) and (c)—

Amended 1996

1996 Pub. L. 104-188 Pub. L. 104–188, § 1452(c)(3), in introductory provisions, substituted “subsections (b) and (c)” for “subsections (b), (c), and (e)”.

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(A) all defined benefit plans (whether or not terminated) of an employer are to be treated as one defined benefit plan, and

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(B) all defined contribution plans (whether or not terminated) of an employer are to be treated as one defined contribution plan.

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(2) Exception for multiemployer plans Notwithstanding paragraph (1) and subsection (g), a multiemployer plan (as defined in section 414(f)) shall not be combined or aggregated—

Amended 2008

2008 Pub. L. 110-458 Pub. L. 110–458, § 108(g), redesignated par. (3) as par. (2) and struck out former par. (2) which related to annual compensation taken into account for defined benefit plans.

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(A) with any other plan which is not a multiemployer plan for purposes of applying subsection (b)(1)(B) to such other plan, or

(B) with any other multiemployer plan for purposes of applying the limitations established in this section.

(g) Aggregation of plans Except as provided in subsection (f)(2), the Secretary, in applying the provisions of this section to benefits or contributions under more than one plan maintained by the same employer, and to any trusts, contracts, accounts, or bonds referred to in subsection (a)(2), with respect to which the participant has the control required under section 414(b) or (c), as modified by subsection (h), shall, under regulations prescribed by the Secretary, disqualify one or more trusts, plans, contracts, accounts, or bonds, or any combination thereof until such benefits or contributions do not exceed the limitations contained in this section. In addition to taking into account such other factors as may be necessary to carry out the purposes of subsection (f), the regulations prescribed under this paragraph shall provide that no plan which has been terminated shall be disqualified until all other trusts, plans, contracts, accounts, or bonds have been disqualified.

§ 1.415(g)-1 Disqualification of plans and trusts.

Amended 1976, 1996, 2001, 2018

2018 Pub. L. 115-141 Pub. L. 115–141 substituted “subsection (f)(2)” for “subsection (f)(3)”.
2001 Pub. L. 107-16 Pub. L. 107–16, § 654(b)(2), substituted “Except as provided in subsection (f)(3), the Secretary” for “The Secretary”.
1996 Pub. L. 104-188 Pub. L. 104–188, § 1452(c)(4), in last sentence, substituted “subsection (f)” for “subsections (e) and (f)”.
1976 Pub. L. 94-455 Pub. L. 94–455, § 1906(b)(13)(A), struck out “or his delegate” after “Secretary”.

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(h) 50 percent control For purposes of applying subsections (b) and (c) of section 414 to this section, the phrase “more than 50 percent” shall be substituted for the phrase “at least 80 percent” each place it appears in section 1563(a)(1).

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(i) Records not available for past periods Where for the period before January 1, 1976, or (if later) the first day of the first plan year of the plan, the records necessary for the application of this section are not available, the Secretary may by regulations prescribe alternate methods for determining the amounts to be taken into account for such period.

Amended 1976

1976 Pub. L. 94-455 Pub. L. 94–455, § 1906(b)(13)(A), struck out “or his delegate” after “Secretary”.

(j) Regulations; definition of year The Secretary shall prescribe such regulations as may be necessary to carry out the purposes of this section, including, but not limited to, regulations defining the term “year” for purposes of any provision of this section.

§ 1.415(j)-1 Limitation year.

Amended 1976

1976 Pub. L. 94-455 Pub. L. 94–455, § 1906(b)(13)(A), struck out “or his delegate” after “Secretary”.

(l) Treatment of certain medical benefits

Amended 1984, 1986

1986 Pub. L. 99-514 Pub. L. 99–514, § 1852(h)(3), substituted “a pension or annuity plan” for “a defined benefit plan” in pars. (1) and (2)(A).
1986 Pub. L. 99-514 Pub. L. 99–514, § 1852(h)(2), as amended by Pub. L. 100–647, § 1018(t)(3)(B), inserted at end of par. (1) “Subparagraph (B) of subsection (c)(1) shall not apply to any amount treated as an annual addition under the preceding sentence.”
1984 Pub. L. 98-369 Pub. L. 98–369, § 528(a), added subsec. (l).

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(1) In general For purposes of this section, contributions allocated to any individual medical benefit account which is part of a pension or annuity plan shall be treated as an annual addition to a defined contribution plan for purposes of subsection (c). Subparagraph (B) of subsection (c)(1) shall not apply to any amount treated as an annual addition under the preceding sentence.

Amended 1988, 2005

2005 Pub. L. 109-135 Pub. L. 109–135, § 412(y), substituted “individual medical benefit account” for “individual medical account”.
1988 Pub. L. 100-647 Pub. L. 100–647, § 1018(t)(3)(B), made technical correction to directory language of Pub. L. 99–514, § 1852(h)(2). See 1986 Amendment note below.

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(2) Individual medical benefit account For purposes of paragraph (1), the term “individual medical benefit account” means any separate account—

“any separate account” Opening words

Textual readingALL OF= an individual medical benefit account

(A) which is established for a participant under a pension or annuity plan, and

(B) from which benefits described in section 401(h) are payable solely to such participant, his spouse, or his dependents.

(m) Treatment of qualified governmental excess benefit arrangements

Amended 1996

1996 Pub. L. 104-188 Pub. L. 104–188, § 1444(b)(1), added subsec. (m).

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(1) Governmental plan not affected In determining whether a governmental plan (as defined in section 414(d)) meets the requirements of this section, benefits provided under a qualified governmental excess benefit arrangement shall not be taken into account. Income accruing to a governmental plan (or to a trust that is maintained solely for the purpose of providing benefits under a qualified governmental excess benefit arrangement) in respect of a qualified governmental excess benefit arrangement shall constitute income derived from the exercise of an essential governmental function upon which such governmental plan (or trust) shall be exempt from tax under section 115.

(2) Taxation of participant For purposes of this chapter—

(A) the taxable year or years for which amounts in respect of a qualified governmental excess benefit arrangement are includible in gross income by a participant, and

(B) the treatment of such amounts when so includible by the participant,

shall be determined as if such qualified governmental excess benefit arrangement were treated as a plan for the deferral of compensation which is maintained by a corporation not exempt from tax under this chapter and which does not meet the requirements for qualification under section 401.

(3) Qualified governmental excess benefit arrangement For purposes of this subsection, the term “qualified governmental excess benefit arrangement” means a portion of a governmental plan if—

“a portion of a governmental plan” Opening words

Textual readingALL OF= a qualified governmental excess benefit arrangement

(A) such portion is maintained solely for the purpose of providing to participants in the plan that part of the participant’s annual benefit otherwise payable under the terms of the plan that exceeds the limitations on benefits imposed by this section,

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(B) under such portion no election is provided at any time to the participant (directly or indirectly) to defer compensation, and

(C) benefits described in subparagraph (A) are not paid from a trust forming a part of such governmental plan unless such trust is maintained solely for the purpose of providing such benefits.

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(n) Special rules relating to purchase of permissive service credit

Amended 1997

1997 Pub. L. 105-34 Pub. L. 105–34, § 1526(a), added subsec. (n).

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(1) In general If a participant makes 1 or more contributions to a defined benefit governmental plan (within the meaning of section 414(d)) to purchase permissive service credit under such plan, then the requirements of this section shall be treated as met only if—

“If a participant makes 1 or more contributions to a defined benefit governmental plan (within the meaning of section 414(d)) to purchase permissive service credit under such plan, then the requirements of this section” Opening words

Textual readingANY OF= requirements of this section treated as met

(A) the requirements of subsection (b) are met, determined by treating the accrued benefit derived from all such contributions as an annual benefit for purposes of subsection (b), or

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(B) the requirements of subsection (c) are met, determined by treating all such contributions as annual additions for purposes of subsection (c).

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Amended 2006

2006 Pub. L. 109-280 Pub. L. 109–280, § 821(a)(1), substituted “a participant” for “an employee” in introductory provisions.

(2) Application of limit For purposes of—

(A) applying paragraph (1)(A), the plan shall not fail to meet the reduced limit under subsection (b)(2)(C) solely by reason of this subsection, and

(B) applying paragraph (1)(B), the plan shall not fail to meet the percentage limitation under subsection (c)(1)(B) solely by reason of this subsection.

(3) Permissive service credit For purposes of this subsection—

(A) In general The term “permissive service credit” means service credit—

Amended 2006

2006 Pub. L. 109-280 Pub. L. 109–280, § 821(a)(2), inserted concluding provisions.

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(i) recognized by the governmental plan for purposes of calculating a participant’s benefit under the plan,

(ii) which such participant has not received under such governmental plan, and

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(iii) which such participant may receive only by making a voluntary additional contribution, in an amount determined under such governmental plan, which does not exceed the amount necessary to fund the benefit attributable to such service credit.

Such term may include service credit for periods for which there is no performance of service, and, notwithstanding clause (ii), may include service credited in order to provide an increased benefit for service credit which a participant is receiving under the plan.

(B) Limitation on nonqualified service credit A plan shall fail to meet the requirements of this section if—

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(i) more than 5 years of nonqualified service credit are taken into account for purposes of this subsection, or

Amended 2006

2006 Pub. L. 109-280 Pub. L. 109–280, § 821(c)(1), substituted “nonqualified service credit” for “permissive service credit attributable to nonqualified service”.

(ii) any nonqualified service credit is taken into account under this subsection before the employee has at least 5 years of participation under the plan.

Amended 2006

2006 Pub. L. 109-280 Pub. L. 109–280, § 821(c)(1), substituted “nonqualified service credit” for “permissive service credit attributable to nonqualified service”.

(C) Nonqualified service credit For purposes of subparagraph (B), the term “nonqualified service credit” means permissive service credit other than that allowed with respect to—

Amended 2005, 2006

2006 Pub. L. 109-280 Pub. L. 109–280, § 821(c)(2), substituted “service credit” for “service” in heading and “the term ‘nonqualified service credit’ means permissive service credit other than that allowed with respect to” for “the term ‘nonqualified service’ means service for which permissive service credit is allowed other than” in introductory provisions.
2005 Pub. L. 109-135 Pub. L. 109–135, § 412(z), substituted “clause” for “clauses” in concluding provisions.

(i) service (including parental, medical, sabbatical, and similar leave) as an employee of the Government of the United States, any State or political subdivision thereof, or any agency or instrumentality of any of the foregoing (other than military service or service for credit which was obtained as a result of a repayment described in subsection (k)(3)),

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(ii) service (including parental, medical, sabbatical, and similar leave) as an employee (other than as an employee described in clause (i)) of an educational organization described in section 170(b)(1)(A)(ii) which is a public, private, or sectarian school which provides elementary or secondary education (through grade 12), or a comparable level of education, as determined under the applicable law of the jurisdiction in which the service was performed,

Amended 2006

2006 Pub. L. 109-280 Pub. L. 109–280, § 821(c)(3), substituted “or a comparable level of education, as determined under the applicable law of the jurisdiction in which the service was performed” for “as determined under State law”.

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(iii) service as an employee of an association of employees who are described in clause (i), or

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(iv) military service (other than qualified military service under section 414(u)) recognized by such governmental plan.

In the case of service described in clause (i), (ii), or (iii), such service will be nonqualified service if recognition of such service would cause a participant to receive a retirement benefit for the same service under more than one plan.

(D) Special rules for trustee-to-trustee transfers In the case of a trustee-to-trustee transfer to which section 403(b)(13)(A) or 457(e)(17)(A) applies (without regard to whether the transfer is made between plans maintained by the same employer)—

Amended 2006

2006 Pub. L. 109-280 Pub. L. 109–280, § 821(b), added subpar. (D).

(i) the limitations of subparagraph (B) shall not apply in determining whether the transfer is for the purchase of permissive service credit, and

(ii) the distribution rules applicable under this title to the defined benefit governmental plan to which any amounts are so transferred shall apply to such amounts and any benefits attributable to such amounts.