June 13, 1989
TO: PENSION MEMBERS NO. 29-89
RE: IRS NOTICE CONCERNING INTEGRATION WITH SOCIAL SECURITY
__________________________________________________________
As we previously advised, the IRS in November 1988 issued
proposed regulations under section 401(a)(5) and 401(l) of the
Code with respect to permitted disparities in contributions or
benefits. (See Institute Memorandum to Pension Members No. 46-
88, dated November 17, 1988.) These regulations provided that,
in order for such disparity to be permitted under a defined
contribution plan, the plan must be an excess plan and must use
the taxable wage base under section 230 of the Social Security
Act as the integration level. In addition, these proposed
regulations stated that the difference between the excess
contribution percentage and the base contribution percentage must
be uniform for all participants and must not exceed the maximum
excess allowance.
Attached is a copy of IRS Notice 89-70, which supplements
the proposed regulations. The provision of the notice that
addresses defined contribution plans states that the integration
level may be set below the taxable wage base under certain
circumstances. If the integration level exceeds the greater of
$10,000 or 1/5 of the taxable wage base, however, the calculation
of the maximum excess allowance must be modified.
We will keep you informed of further developments.
Kathy D. Ireland
Assistant General Counsel
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