Plan Amendments for Code Section 415 Regulations

In April, 2007 the IRS issued final Code Section 415 regulations.  The new regulations clarify the definition of "compensation" for plan allocation purposes.  Compensation paid to a participant (by the later of 2 1/2 months after severance from employment or by the end of the limitation year that includes the date of such severance from employment) must now be included for 415 purposes.  The IRS stated that true "Severance" pay does not qualify as 415 pay and is not included for contribution allocation purposes.

All Defined Contribution Plans must be amended for these new regulations, which are effective on the first day of the employer's plan year beginning after July 1, 2007.  For sponsors with calendar plan and tax years, an amendment does not have to be executed until sometime in 2009.  However, most employers will want to execute the amendment much sooner.

Clients who use APC Document and Recordkeeping services will receive the amendments by the end of June, 2008.

For more information regarding this amendment, please refer to the following article Sungard Corbel:

http://www.relius.net/News/TechnicalUpdates.aspx?ID=362