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Full Funding & Govt. DB plans


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I know govt. plans aren't subject to IRC 412, but are they subject to Full Funding limits?? This is my first govt. plan and it's funding method is PUC, and the full funding limit is $80,000 and the Normal Cost is $130,000. Thanks.

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No, they are not. Governmental entities obviously are not concerned about the deductibility of contributions, as they are tax-exempt. And IRC section 4972(d)(1)(B) exempts governmental plans from the excise tax on nondeductible contributions.

The only thing you need to watch out for is whether applicable state or local law imposes funding rules on the plan. However, such laws are much more likely to impose minimums (e.g., the New York State & Local Retirement Systems had some trouble with PUC for that reason some time back) than to impose maximums.

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The opinions of my postings are my own and do not necessarily represent my law firm's position, strategies, or opinions. The contents of my postings are offered for informational purposes only and should not be construed as legal advice. A visit to this board or an exchange of information through this board does not create an attorney-client relationship. You should consult directly with an attorney for individual advice regarding your particular situation. I am not your lawyer under any circumstances.

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