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Dave Baker

415(e) -- repeal gonna stick?

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What's everybody think about the possibility that 415(e) isn't going to go away after all, despite its scheduled repeal? (1999, or is it 2000?)

I'm supposing that with the budget surplus we won't see anybody step forward and try to get in the way of the effective date of the repeal.

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I've discussed this issue with many practitioners, ASPA Gov't Affairs committee reps, insurance company lobbyists, Sen. Graham's office, etc. and everyone agrees that there is no action in the works to "unrepeal" 415(e). So unless something comes out of left field at the last minute, it looks like the 415(e) limitations will no longer apply for plan years beginning after 12/31/99.

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SBJPA '96 added the repeal of 415(e) effective with the year 2000 plan year. If you read the committee notes to the repeal, one key factor in their decision to repeal 415(e) was the excess distribution and accumulation excise tax under 4980A. A year later, TRA '97 repealed the 4980A excise taxes in entirety.

My concern (as many others probably have) is having the main reason for repealing 415(e) itself repealed would lead one to believe that this issue will be revisited. Obviously, as an actuary dealing in the small plan market, the repeal would be great for many current and future clients. However, I can't think that this issue won't be looked at in the near future.

I asked Jim Holland about this point at the 1998 EA meeting in passing and he said that at this point they are proceeding as if the repeal will stick (they only interpret the laws, not write them). Has anyone heard anything further on this or seen how the repeal will actually be implemented?

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