New Tax Credits for 401(a) plans w/pick ups

[Guest lwhittle]

Does anyone know if the new tax credits will apply for mandatory contributions to a governmental plan with 414 "pick-up" provisions?

[Carol V. Calhoun]

It would appear that the answer is no. I.R.C. § 25B, as added by Section 638 of EGTRRA, gives the tax credit only for qualified retirement savings contributions. Qualified retirement savings contributions are defined as follows:

(d) QUALIFIED RETIREMENT SAVINGS CONTRIBUTIONS- For purposes of this section--

(1) IN GENERAL- The term `qualified retirement savings contributions' means, with respect to any taxable year, the sum of--

(A) the amount of the qualified retirement contributions (as defined in section 219(e)) made by the eligible individual,

(B) the amount of--

(i) any elective deferrals (as defined in section 402(g)(3)) of such individual, and

(ii) any elective deferral of compensation by such individual under an eligible deferred compensation plan (as defined in section 457(B)) of an eligible employer described in section 457(e)(1)(A), and

© the amount of voluntary employee contributions by such individual to any qualified retirement plan (as defined in section 4974©).

This language would not appear to include picked up contributions.