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Pick-Up Contributions and IRC Sec. 401A0(17)


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Plan contains the following provision:

"Solely for purposes of determining the amount of an employee's Pick-Up Contribution, Earnings shall be determined without regard to the limit on Earnings imposed by Code Section 401(a)(l7)."

Is that acceptable? If so, any cite.

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Is the plan a defined-benefit pension plan?

Or is the plan an individual-account (defined-contribution) retirement plan?

That distinction might matter for how a § 401(a)(17) limit applies regarding an accrual or a contribution.

If the plan is a defined-benefit plan, what is the promised benefit?

Which State's law applies?




Peter Gulia PC

Fiduciary Guidance Counsel

Philadelphia, Pennsylvania



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So say I make $400k. Plan has mandatory contribution of 4% of pay, so mine is $16,000, not $11,600. By the pan provision, they are capping at $290,000 for 415(b) or (c), and their argument may be, "Hey, IRS, what difference does it make. We are using the $295,000 for Code rules, and this guy (or gal) could have got $16,000 if we had raised his/her contribution rate to 5.517%." Clearly in terms of "plain meaning" of "taking into account," they've done that, but if the provision has a DL, I could see them running with it.

Luke Bailey

Senior Counsel

Clark Hill PLC

214-651-4572 (O) | LBailey@clarkhill.com

2600 Dallas Parkway Suite 600

Frisco, TX 75034

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