Are IRAs included in Section 415 calculations?

Article Abstract:

It is uncertain whether the IRA contributions of the self-employed or of key owners of the plan sponsor are included in the limitations to contributions to qualified plans in IRC 415. Section 415(k)(1)(D) was originally part of ERISA and this law first added IRAs and Section 415 testing to the IRC. Thus, this IRC section came before the 'uniform' rules of the Economic Recovery Tax Act of 1981 (ERTA). When ERTA broadened IRA coverage, the IRC sections on combined limits testing were probably missed and IRC 415(k)(1)(D) should be repealed because it is dated.

Individual retirement accounts

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IRS finalizes separate line of business rules

Article Abstract:

IRC Section 414(r), created by the Tax Reform Act of 1986, allows employers to divide their businesses into separate lines and to apply minimum coverage, minimum participation and nondiscrimination rules separately to the employees within each line. Retirement plans must conform to these rules to qualify for tax-favored treatment. Section 414(r) has thus eased the requirement that all employees within a single control group must be taken into account when evaluating compliance with the nondiscriminatory requirement.

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IRS provides additional guidance on operational compliance and correcting qualification defects

Article Abstract:

The IRS has issued Revenue Procedure 94-62 to clarify procedures for complying with enforcement programs for tax-qualified retirement plans. The new procedure corrects a gap in the IRC, which said nothing about compliance with plan documents. Under the new directive, operating a plan contrary to its written terms is not necessarily a qualification violation. However, some defects must be corrected such as those concerning minimum distribution requirements.

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