Treasury Finalizes Section 415 Regulations, and Compensation Issues Emerge

Earlier this year, the Internal Revenue Service (IRS) issued final regulations regarding the limitations imposed under section 415 of the Internal Revenue Code (Code). The final regulations provide plan sponsors and practitioners with one comprehensive set of rules under Code section 415. Such rules were previously described under regulations dating back to 1981 and a plethora of subsequent IRS notices and other guidance. Plan sponsors must make certain decisions and implement required changes and clarifications with regard to the compensation considered for purposes of Code section 415.

The regulations are generally applicable to limitation years beginning on or after July 1, 2007.

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