Jump to content

415 Plan Year as Limitation Year

Recommended Posts

This is the reg my question is in regards to. The quesiton is, does anyone have a template election form that I can "borrow"?   Also, I assume this reg applies to all 403b accounts.  I noticed that the it references only 403b annuity contracts but I presume the reg just pre-tdates 403(b)(7) (allowing custodial accounts).


§1.415(j)-1   Limitation year.

(e) Limitation year for individuals on whose behalf section 403(b) annuity contracts have been purchased. The limitation year of an individual on whose behalf a section 403(b) annuity contract has been purchased by an employer is determined in the following manner.


(1) If the individual is not in control of any employer (within the meaning of §1.415(f)-1(f)(2)(ii)), the limitation year is the calendar year. However, the individual may elect to change the limitation year to another twelve-month period. To do this, the individual must attach a statement to his or her income tax return filed for the taxable year in which the change is made. Any change in the limitation year must comply with the rules set forth in paragraph (d) of this section.

Austin Powers, CPA, QPA, ERPA

Link to comment
Share on other sites

The current § 415 rules do not predate § 403(b)(7) accounts.  Rather, the confusing text results from some legal drafters’ style or usage, often unfortunate, that assumes a reader’s awareness (sometimes with no signal) of all terms that have been specially defined.


For agency rules to implement and interpret IRC § 415, the April 7, 2007 rules replaced the January 7, 1981 rules.  https://www.govinfo.gov/content/pkg/FR-2007-04-05/pdf/E7-5750.pdf  Congress enacted § 403(b)(7) on September 2, 1974, effective as of January 1, 1974.


At least the 2007 revisors might have considered it unnecessary it to state explicitly that § 1.415(j)-1(e)’s reference to “a section 403(b) annuity contract” includes all the individual’s § 403(b) contracts.


Internal Revenue Code § 403(b)(5) states: “If for any taxable year of the employee this subsection applies to 2 or more annuity contracts purchased by the employer, such contracts shall be treated as one contract.”


And § 403(b)(7)(A) begins: “For purposes of this title, amounts paid by an employer described in paragraph (1)(A) to a custodial account which satisfies the requirements of section 401(f)(2) shall be treated as amounts contributed by him [the employer] for an annuity contract[.]”


Likewise, the agency rules include this:  “Section 403(b) and § 1.403(b)-3(a) only apply to amounts held in an annuity contract (as defined in § 1.403(b)-2), including a custodial account that is treated as an annuity contract under paragraph (d) of this section, or a retirement income account that is treated as an annuity contract under § 1.403(b)-9.”  26 C.F.R. § 1.403(b)-8(a).


Some Treasury department lawyers worked on the § 415 rules (published April 7, 2007) and the § 403(b) rules (published July 26, 2007) around the same time.  https://www.govinfo.gov/content/pkg/FR-2007-07-26/pdf/07-3649.pdf


About the statement to be attached to the individual’s tax return, I don’t advise anyone; but a lawyer or certified public account might evaluate this:


               My limitation year for § 403(b) contracts is each year ended with August.


A change must comply with 26 C.F.R. § 1.415(j)-1(d).


Peter Gulia PC

Fiduciary Guidance Counsel

Philadelphia, Pennsylvania



Link to comment
Share on other sites

I definirely knew the statement would be straightforward but even still was hoping to plagiarize something!

Thanks for the clarification!  I think WDIK once said, in response to an accusation that common sense was not employed in the drafting of regulations:

"It's not that no sense was used in drafting regulations; it's that the sense used was not common."

Found it! It was 13 years ago!  It's my all time favorite quote on benefitslink; and for the record, I'm almost certain that I would not have such a thing if it were not for this quote.

"Certainly there was sense involved during the creation of regulations such as this. It is just that those individuals involved in the process are of such elite caliber that the sense used is not common."




Austin Powers, CPA, QPA, ERPA

Link to comment
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now

  • Create New...