[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: 26CFR1.415-1] [Page 781-784] TITLE 26--INTERNAL REVENUE CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY (CONTINUED) PART 1_INCOME TAXES--Table of Contents Sec. 1.415-1 General rules with respect to limitations on benefits and contributions under qualified plans. (a) Trusts. Under sections 415 and 401(a)(16), a trust which forms part of a pension, profit-sharing or stock bonus plan will not be qualified under section 401(a) if any one of the following conditions exists: (1) The annual benefits under a defined benefit plan with respect to any participant for any limitation year exceed the limitations of section 415(b) and Sec. 1.415-3. (2) The contributions and other additions credited under a defined contribution plan with respect to any participant for any limitation year exceed the limitations of section 415(c) and Sec. 1.415-6. (3) Where an individual has at any time participated in a defined benefit plan and also has at any time participated in a defined contribution plan maintained by the same employer, the trust has been disqualifed under section 415(g) and Sec. 1.415-9. (b) Certain annuities and accounts--(1) In general. Except as provided in paragraph (c) of this section, an annuity, account, etc., listed in section 415(a)(2) will not be considered to be described in the otherwise applicable section unless-- (i) It satisfies the requirements of Sec. 1.415-3 (relating to limitations on benefits), Sec. 1.415-6 (relating to limitations on contributions and other additions) or Sec. 1.415-7 (relating to limitations where an individual has at any time participated in a defined contribution plan and also has at any time participated in a defined benefit plan maintained by the same employer), whichever is applicable, and (ii) It has not been disqualifed under Sec. 1.415-9 (relating to disqualification of plans and trusts). (2) Special rule for section 403(b) annuity contracts. (i) With respect to an annuity contract described in section 403(b), the provisions of subparagraph (1) of this paragraph apply only to that portion of the contract which exceeds [[Page 782]] the limitations of Sec. 1.415-3, Sec. 1.415-6 and Sec. 1.415-7, whichever is applicable. (ii) In addition, where the amount of the contribution under the section 403(b) annuity contract exceeds the applicable limitation, the exclusion allowance described in section 403(b)(2)(A) is reduced in the manner described in Sec. 1.415-6(e)(1)(ii). (3) Cross references to additional rules for section 403(b) annuity contracts. For additional rules relating to section 403(b) annuity contracts, see-- (i) Section 1.415-1(f)(2) (relating to the plan year for such annuity contracts), (ii) Section 1.415-2(b)(7) (relating to the limitation year for such annuity contracts), (iii) Section 1.415-6(e) (relating to the applicability of the alternative limitations described in section 415(c)(4) to such annuity contracts), (iv) Sections 1.415-7(c)(2) and 1.415-7(h) (relating to rules for such annuity contracts for purposes of computing the defined contribution plan fraction), (v) Section 1.415-8(d) (relating to rules for such annuity contracts for purposes of combining plans), and (vi) Section 1.415-9(c) (relating to rules for such annuity contracts for purposes of determining the amount of a disqualified contribution to the annuity contract). (c) Certain accounts, annuities and bonds established for non- employed spouse. Paragraph (b) of this section is not applicable to an account, annuity or bond as described in section 408(a), 408(b) or 409, respectively established for the benefit of the spouse of the individual who contributes to it for any year for which a deduction is allowable for the individual under section 220. For a special effective date with respect to this paragraph, see paragraph (f)(3) of this section. (d) Plan provisions--(1) In general. Although no specific plan provision is required under section 415 in order for a plan to establish or maintain its qualification, the plan provisions must preclude the possibility that the limitations imposed by section 415 will be exceeded. For example, a plan may include provisions which automatically freeze or reduce the rate of benefit accrual (in the case of a defined benefit plan) or the annual addition (in the case of a defined contribution plan) to a level necessary to prevent the limitations from being exceeded with respect to any participant. For rules relating to this type of plan provision and the definitely determinable benefit requirement for pension plans, see Sec. 1.401(a)-1(b)(1). (2) Special rule for profit-sharing and stock bonus plans. The use of a plan provision by a profit-sharing or stock bonus plan which automatically freezes or reduces the amount of annual additions to insure that the limitations of section 415 will not be exceeded must comply with the requirement set forth in Sec. 1.401-1(b)(1) (ii) and (iii) that such plans provide a definite predetermined formula for allocating the contributions made to the plan among the participants. Thus, if the operation of this provision involves discretionary action on the part of the employer, the definite predetermined allocation formula requirement will be violated. For example, if two defined contribution plans of one employer otherwise provide for aggregate contributions which may exceed the limits of section 415(c), the plan provisions must specify (without involving employer discretion) which plan will reduce contributions and allocations to prevent an excess annual addition and how the reduction will occur. (e) Rules for plans maintained by more than one employer--(1) Plans described in section 413(b) or section 413(c). This subparagraph provides for participants of a plan described in section 413(c) or section 413(b) (other than a plan described in section 414(f)). For purposes of applying the limitations of section 415 with respect to a participant of an employer maintaining the plan, benefits or contributions attributable to such participant from all of the employers maintaining the plan must be taken into account. Furthermore, in applying the limitations of section 415 with respect to such a participant, the total compensation received by the participant from all of the employers maintaining the plan may be taken into account. (2) Plans described in section 414(f). (i) This subparagraph provides rules for participants of a multiemployer plan [[Page 783]] described in section 414(f). For purposes of applying the limitations of section 415 with respect to a participant of an employer maintaining the plan, only the benefits or contributions provided by the employer of such participant shall be taken into account. The benefits provided by an employer under such a plan shall equal the excess of the plan benefit over the plan benefit computed as if the participant had no covered service with that employer. (ii) As an alternative to applying the limitations of section 415 with respect to a participant of an employer maintaining the multiemployer plan in the manner described in subdivision (i) of this subparagaph, the rules described in subparagraph (1) of this paragraph may be used for purposes of applying the section 415 limitations in connection with that participant. (iii) For rules relating to the limitation year for a multiemployer plan, see Sec. 1.415-2(b)(6). See also Sec. 1.415-8(e) for a special rule relating to the aggregation of multiemployer plans. (f) Rules relating to the effective date of section 415--(1) In general. Except as otherwise provided in this paragraph, Sec. Sec. 1.415-1 through 1.415-10 are applicable for plan years beginning after 1975 and for limitation years ending with or within plan years beginning after 1975. However, for all such plan years and limitation years through the plan year beginning before January 7, 1981, a reasonable interpretation of the rules set forth in section 415 of the Code and in Rev. Rul. 75-481, 1975-2 C.B. 188, may be relied upon. (2) Plan year for certain annuity contracts and individual retirement plans. For purposes of section 415 and Sec. Sec. 1.415-1 through 1.415-10-- (i) An annuity contract described in section 403(b) shall be considered to have a plan year coinciding with the taxable year of the individual on whose behalf the contract has been purchased, and (ii) An individual retirement plan (as described in section 7701(a)(37)) shall be considered to have a plan year coinciding with the taxable year of the individual on whose behalf the plan is maintained, unless the individual demonstrates to the satisfaction of the Commissioner that a different 12 month period should be considered to be the plan year. (3) Special effective date for certain accounts, annuities and bonds established for non-employed spouse. Nothwithstanding subparagraph (1) of this paragraph, the provisions of section 415(a)(3) and paragraph (c) of this section are not applicable until taxable years beginning after December 31, 1976. (4) Special rules for certain defined contribution plans with respect to the first limitation year to which section 415 applies. In the case of a defined contribution plan whose plan year does not coincide with the limitation year, the rules of this subparagraph shall be effective with respect to applying the limitations described in section 415(c) and Sec. 1.415-6 for the first limitation year to which section 415 and Sec. Sec. 1.415-1 through 1.415-10 apply. (i) Annual additions (as defined in section 415(c)(2) and Sec. 1.415-6(b)) which are allocated under the plan prior to the first day of the first plan year to which section 415 and Sec. Sec. 1.415-1 through 1.415-10 are effective do not have to be taken into account. (ii) The amount of compensation (as defined in Sec. 1.415-2(d)) taken into account in applying the limitations may include compensation for the entire limitation year. (5) Special effective date for special benefit limitation with respect to certain collectively bargained plans. Notwithstanding subparagraph (1) of this paragraph, section 415(b)(7) is not applicable until limitation years beginning after December 31, 1978. (6) Special effective date for excess contributions to section 403(b) annuity contracts. (i) Notwithstanding subparagraph (1) of this paragraph, the provisions of Sec. 1.415-6(e)(1)(ii) (relating to the manner in which contributions to a section 403(b) annuity contract which exceed the limitations of section 415(c)(1) are treated) are only applicable to taxable years beginning after January 24, 1980. (ii) For all prior taxable years for which the limitations of section 415 are applicable to section 403(b) annuity contracts, any contribution to the account of an individual under a section 403(b) annuity contract for a taxable [[Page 784]] year which exceeds the limitations of section 415(c)(1), instead of being treated in the manner described in Sec. 1.415-6(e)(1)(ii), shall reduce the exclusion allowance under section 403(b)(2) for such taxable year to the extent of the excess. (7) Special effective date for rules relating to change of limitation year. Notwithstanding subparagraph (1) of this paragraph, the provisions of Sec. 1.415-2(b)(4) (relating to the effect of a change of the limitation year) are required to be applied only for changes in limitation years which occur after January 7, 1981. These provisions may also be used for all prior changes in limitation years. However, if the provisions of Sec. 1.415-2(b)(4) are not used for changes in limitation years which occur prior to January 7, 1981, the requirements of Sec. 2.01(4) of Rev. Rul. 75-481, 1975-2 C.B. 188, shall be applicable with respect to such changes. (8) Special effective date for TRASOP's. The limitations of section 415 apply to an Employee Stock Ownership Plan under section 301(d) of the Tax Reduction Act of 1975 (``TRASOP''). The earliest date on which the first plan year of a TRASOP may begin is January 22, 1974. Therefore, notwithstanding subparagraph (1) of this paragraph, the limitations of section 415 are applicable for TRASOP plan years beginning before 1975 and for limitation years ending with or within plan years beginning before 1975. However, the aggregation rules of Sec. 1.415-8 do not apply to a limitation year of a TRASOP ending with or within a plan year beginning before 1975. (9) Transitional rules. For special transitional rules, see-- (i) Section 1.415-4 (relating to a transitional rule for defined benefit plans), (ii) Section 1.415-7(b)(2) (relating to the defined benefit plan fraction applicable to certain participants), (iii) Section 1.415-7(d) (relating to transitional rules for the defined contribution plan fraction), and (iv) Section 1.415-7(g) (relating to a special rule for certain plans in effect on September 2, 1974). (g) Supersession. Section 11.415(c)(4)-1 (relating to special elections for section 403(b) annuity contracts purchased by educational organizations, hospitals and home health service agencies) of the Temporary Income Tax Regulations under the Employee Retirement Income Security Act of 1974 is superseded by this section and Sec. Sec. 1.415- 2 through 1.415-10. [T.D. 7748, 46 FR 1697, Jan. 7, 1981]