[Code of Federal Regulations]
[Title 26, Volume 5]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR1.401(e)-6]

[Page 283]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 1_INCOME TAXES--Table of Contents
 
Sec. 1.401(e)-6  Special rules for shareholder-employees.

    (a) Limitation of contributions and benefit bases to first $100,000 
of annual compensation in case of plans covering shareholder-employees. 
(1) Under section 401(a)(17), a plan which provides contributions or 
benefits for employees, some or all of whom are shareholder-employees 
within the meaning of section 1379(d), is subject to the same limitation 
on annual compensation as a plan which provides such contributions or 
benefits for employees some or all of whom are self-employed individuals 
within the meaning of section 401(c)(1). Thus, a plan which provides 
contributions or benefits for such shareholder-employees is subject to 
the rules provided by Sec. 1.401(e)-5, unless otherwise specified. See 
also section 1379. In the case of plans maintained by employers that are 
corporations described in section 414(b) and that are described in this 
subparagraph (1), the same rule described in Sec. 1.401(e)-5(a)(2) 
shall apply.
    (2) Subparagraph (1) applies to taxable years of an electing small 
business corporation beginning after December 31, 1975. However, if 
corporate contributions made under a plan on behalf of any shareholder-
employee for corporate taxable years beginning after December 31, 1973, 
exceed the lesser of the amount of contributions specified in section 
1379(b)(1) (A) or (B), as in effect on September 1, 1974, for that 
shareholder-employee, subparagraph (1) applies to such corporate taxable 
years. Thus, for example if an electing small business corporation whose 
taxable year is the calendar year adopted a plan on January 1, 1974, the 
plan would be subject to the provisions of subparagraph (1) of this 
section in 1974, if the corporation made a contribution in excess of 
$2,500 on behalf of any shareholder-employee for such year.
    (b) [Reserved]

[T.D. 7636, 44 FR 47056, Aug. 10, 1979]

[[Page 284]]