IRS RELEASES GUIDANCE ON COMBINED DEFINED BENEFIT/DEFINED CONTRIBUTION LIMITATION REPEAL

[11198] August 19, 1999 TO: PENSION COMMITTEE No. 53-99 RE: IRS RELEASES GUIDANCE ON COMBINED DEFINED BENEFIT/DEFINED CONTRIBUTION LIMITATION REPEAL ______________________________________________________________________________ The Internal Revenue Service recently released Notice 99-4, which provides guidance on the repeal of section 415(e)’s combined limitation on defined benefit and defined contribution plans and on the amendment to the section 415(c)(3) definition of compensation. The Small Business Job Protection Act of 1996 (“SBJPA”) repealed section 415(e) effective for plan years beginning on or after January 1, 2000. The SBJPA also amended the definition of compensation to include elective deferrals under section 402(g) and elective contributions to a cafeteria or section 457 plan effective for plan years beginning on or after January 1, 1998. Notice 99-4 provides guidance in a question and answer format and covers the following issues: effective dates, effect on plan benefits when a plan is not amended to reflect the repeal of section 415(e), interaction of the repeal with the nondiscrimination rules, whether benefits can be increased to employees who are receiving benefits, the extent to which a plan can limit automatic benefit increases resulting from the repeal of section 415(e), interaction of the repeal with plan qualification requirements and how the repeal is treated under section 412 and section 403(b) regulations. Notice 99-4 modifies Notice 83-10, 1983-1 C.B. 536. A copy of Notice 99-4 is attached. Kathryn A. Ricard Assistant Counsel Attachment