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Guest Article

Text of Email from ASPPA Management Council re IRS' New Position on PPA Combined Plan Deduction Limits

Reprinted by Permission

2:18 p.m., September 14, 2007

ASPPA Members:

Treasury officials informed Congress yesterday that they will enforce the new PPA combined plan deduction limits under Internal Revenue Code §404(a)(7) in accordance with the language in the proposed PPA technical corrections legislation (H.R. 3361/S. 1974). Thus, Q&A 9 of Notice 2007-28 will not be enforced and, in a defined benefit/defined contribution plan combination situation, if the DC contribution was not greater than 6%, Code §404(a)(7) does not apply to the defined benefit plan.

This is effective for the 2006 plan year and has two primary IMMEDIATE effects:

  • Employers who contributed in excess of 25% of compensation to their defined benefit plan (and in excess of Unfunded Current Liability) in 2006 based on an interpretation in conflict with Q&A 9 of Notice 2007-28 need not pay an excise tax; and
  • Employers who move fast for 2006 (who were previously limited by Notice 2007-28), have until tomorrow to increase their 2006 deductible contribution.
  • Link to Sept. 13 Treasury Letter

ASPPA was instrumental in securing inclusion of this solution in the PPA technical corrections legislation. We also addressed this issue with the Treasury and IRS in a May 14, 2007 comment letter (

Chris Stroud, MSPA, ASPPA President
Sal Tripodi, APM, ASPPA President-Elect
Brian Graff, APM, ASPPA Executive Director/CEO

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