Reg. §1.410(b)-8(b)

This regulation, published in 1991, purports to have us consider HCEs together with those who are HCEs by attribution considered as a single HCE for purposes of 410(b). The regulation refers to §414(q)(6). §414(q)(6) at that time was removed from the Code in 1995. The regulation was not updated.

We have a plan with and HCE and his two children, who are also employees, but do not benefit. For 410(b) purposes must we consider them as one HCE or can we consider 1/3 HCEs as benefiting?

Please cite any references.

Thank you.

Pretty sure family aggregation (or as us old timers called it family aggravation) that you are describing was eliminated a long time ago. I think it was SBJPA of 1996 that repealed it but that being over 25 years ago I may have the citation wrong.

The agency rule mentioned—26 C.F.R. § 1.410(b)-8—was published on September 19, 1991. https://www.govinfo.gov/content/pkg/FR-1991-09-19/pdf/FR-1991-09-19.pdf

Even if an agency’s rule was a permissible interpretation or implementation of the statute when the agency made the rule, one cannot rely on a rule to the extent that the statute to be applied differs from the statute the agency considered when it made the rule.

The 1996 Act substantially revised Internal Revenue Code of 1986 § 414(q).

Portions of many rules under Internal Revenue Code sections 401 to 419A no longer reflect current law. More than a few rule texts are a quarter-century, half-century, or more out-of-date.

On March 14, 2019, the Treasury department removed from the Code of Federal Regulations 296 obsolete rules. But these removals were about rules for which a whole rule (not some portion of a rule’s text) lacked “any current or future applicability under the Internal Revenue Code[.]” https://www.govinfo.gov/content/pkg/FR-2019-03-14/pdf/2019-03474.pdf

Thank you. That's what I thought, but there was precious little to confirm. I just wanted to be sure I wasn't missing anything. Belt and Suspenders (for us old timers).