415 Limits with regard to non-deductible IRA contributions

[Guest fiddler]

If a 50% or more company owner is in a 401(k) Plan and also makes non-deductible IRA contributions, are the non-deductible IRA contributions included in his IRC 415 annual limit? That is, do they count towards his maximum $42,000 limit for 2005? This question was posed to me by a client who said he read this but I can't find anything on it.

[Belgarath]

No.

[Lori Friedman]

The items covered by the annual additions limit are described in I.R.C. Sec. 415©(2): employer contributions, employee contributions (but not over-50 catch up amounts), and reallocated forfeitures.

[Guest fiddler]

Thanks for your responses. They confirm what my opinion was. This client is fairly saavy so I also did some more exhaustive research on it. I believe the client was referring to Reg. 1.415-7(i), which is a pre-TRA '86 regulation, that included IRAs in the definition of a defined contribution plan. That regulation also specified that majority owners' IRA contributions did count towards their 415 limits. In further researching this however, I found that IRC section 415(k) repealed that regulation but that the regulation has never been changed.