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IRS Clarifies Application of Section 415 to Governmental DROP Features (PDF)
Prudential [Guidance Overview] June 3, 2015
"[IRS Memorandum TEGE-07-1114-002 9, dated December 8, 2014,] provides guidance to IRS employees when reviewing governmental defined benefit plans with deferred retirement option plan (DROP) features. The memorandum concludes that when a governmental plan credits the defined benefit amounts to a DROP, the defined benefit amounts are not subject to the defined contribution annual additions limit under Internal Revenue Code section 415. The memorandum further provides that additional contributions to the DROP are not considered annual additions if certain requirements are satisfied."
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