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Employee

BenefitPlans

Note:

Explanation No. 6

Limitations onContributions andBenefits

The technical principles in this publication may bechanged by future regulations or guidelines.

Publication 7001 (Rev. 6-2012) Catalog Number 48250U Department of the Treasury Internal Revenue Service www.irs.gov

The purpose of Form 8384, Worksheet Number 6, is to assistin determining if a plan meets the major requirements of 415. However, there may be 415 issues not mentioned inthe worksheet that could affect the plans qualification.Generally, a Yes answer to a question on the worksheetindicates a favorable conclusion while a No answer signalsa problem concerning plan qualification. This rule may be

altered by specific instructions for a given question. Pleaseexplain any No answer in the Comments section of theworksheet.

In order for a plan to qualify, it must preclude the possibilitythat the 415 limitations will be exceeded; that is, the planmust preclude the possibility that annual additions (under adefined contribution plan) or distributions (under a definedbenefit plan) will exceed the limitations. Also, a definedbenefit plan (other than a plan that is not subject to therequirements of 411, such as a governmental or nonelect-ing church plan) must preclude the possibility that an accrualwill exceed the 415 limitations. However, no specific planlanguage is prescribed to comply with 415. For example, if

Plan X, which is a money purchase plan, has (1) a contribu-tion formula of 100 percent of compensation actually paid ormade available, as defined in 1.415(c)-2 of the regulations,or $40,000 (as adjusted under 415(d)), whichever is less;(2) does not allow employee contributions; (3) allocatesemployer contributions every year; and (4) uses all forfeituresto reduce employer contributions, then no other provisionsare necessary with respect to 415 as long as Plan X is theonly plan maintained, or that has ever been maintained, bythe employer.

A plan will not fail to meet the definitely determinable benefitor definite predetermined allocation formula requirementmerely because it incorporates the limitations of 415 by

reference. However, if a limitation of 415 may be applied inmore than one

Plans submitted during the Cycle B submission period mustsatisfy the applicable changes in plan qualificationrequirements listed in Section IV of Notice 2011-97,2011-52 I.R.B. 923 (the 2011 Cumulative List).

CYCLE B Submission Period 02/01/2012 01/31/2013

This publication contains copies of:Form 8384, Worksheet 6Form 6044, Deficiency Checksheet 6

These forms are included as examples onlyand should not be completed and returnedto the Internal Revenue Service.
http://www.irs.gov/

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manner, the plan must specify the manner in whichthe limitation is to be applied instead of incorporatingthe limitation by reference, unless a statutory orregulatory default rule exists. If a default rule exists,in order to deviate from the default rule the planmust specify the manner in which the limitation is tobe applied, as well as generally incorporating thelimitations of 415 by reference. Also see the latestrevision of the EP Determinations Quality AssuranceBulletin (QAB FY-2010 No.2) regarding Codesections that may be incorporated by reference.

This explanation reflects changes to the limitationsof 415 made by the Economic Growth and TaxRelief Reconciliation Act of 2001 (EGTRRA), thePension Funding Equity Act of 2004 (PFEA '04), thePension Protection Act of 2006 (PPA '06), theWorker, Retiree, and Employer Recovery Act of2008 (WRERA) and the final regulations under415. The final regulations under 415 generally

apply for limitation years beginning on or after July1, 2007, that is, for calendar year limitation years,the 2008 limitation year. A special grandfather rulediscussed later in this explanation applies to definedbenefit plans.

The sections cited at the end of each lineexplanation are to the Internal Revenue Code andthe Income Tax Regulations, unless otherwisespecified.

The technical principles in this publication may bechanged by future regulations or guidelines

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I. GENERAL DEFINITIONS

Line a. If the plan does not define the limitationyear, it is deemed to use the calendar year and thisquestion should be answered N/A. A different 12-month period may be designated in the plan or anamendment to the plan. Any change to the limitation

year may only be made through an amendment tothe plan and only to a 12-month period commencingwithin the current limitation year. This will create ashort limitation year which must be separately testedfor 415 purposes. If the plan is a definedcontribution plan, and the limitation year is changed,the dollar limitation with respect to the shortlimitation year is determined by multiplying (A) theapplicable dollar limitation for the calendar year inwhich the short limitation year ends by (B) a fraction,the numerator of which is the number of months(including fractional months) in the short limitationyear, and the denominator of which is twelve (see

Explanation No. 6 line II.b). In general, thecompensation limitation would be determined byconsidering only the compensation paid or madeavailable during the short limitation year. If a definedcontribution plan is terminated, this also creates ashort limitation year requiring the same adjustmentsof the limitations. A defined benefit plan does nothave to make any special adjustments to the dollarlimitation for a short limitation year with regard to theaccrual of benefits.

If the employer (or the controlled group, ifapplicable) maintains multiple defined contributionplans with different limitation years, each plan mustsatisfy the limitations in effect for that plan for thatplan's limitation year taking into account theparticipant's annual additions under the plan as wellas the participant's annual additions under all theother plans required to be aggregated with the planthat would be counted under the plan for thelimitation year if they had been credited under theplan. If the employer (or the controlled group, ifapplicable) maintains multiple defined benefit planswith different limitation years, each plan must satisfythe limitations in effect for that plan for that plan'slimitation year taking into account the participant'sannual benefit under all the plans required to be

aggregated. See II.e. and III.k., below.1.415(j)-1

Line b. Section 415 (c)(3) compensation is requiredfor purposes of applying the limitations of 415. Thefollowing items are includable in compensation forpurposes of 415: (a) wages, salaries, fees forprofessional services and other amounts received(whether or not in cash) for personal services

actually rendered in the course of employment with anemployer maintaining the plan to the extent includiblein gross income (including but not limited to commis-sions paid salesmen, compensation for service on thebasis of a percentage of profits, commissions oninsurance premiums, tips, bonuses, fringe benefits,and reimbursements or expense allowances under anonaccountable plan (as described in Regs. 1.62-2(c); (b) earned income (with respect to employeeswithin the meaning of 401(c)(1)); (c) amountsdescribed in 104(a)(3), 105(a) and 105(h) but onlyto the extent they are includible in the employeesgross income; (d) amounts paid or reimbursed by theemployer for moving expenses incurred by theemployee to the extent that such amounts are notdeductible under 217; (e) the value of a nonstatutoryoption (i.e., an option not described in 1.421-1(b))granted to an employee by the employer to the extentthe value is includible in the employees gross income;(f) the amount includible in the employees gross

income upon making the election in 83(b); (g)amounts includible in gross income under 409A or457(f)(1)(A) or because of constructive receipt, and(h) differential wage payments as defined in section3401(h)(2) for years beginning after December 31,2008.

For purposes of (a) and (b) above in this Line b.,compensation includes foreign earned income (asdefined in 911(b)), whether or not excludable fromgross income under 911. Compensation under (a)and (b) above is also to be determined without regardto the exclusions from gross income in 872, 893,894, 931 and 933. A plan may provide that

compensation that is excludable from gross incomeunder the aforementioned sections and that is noteffectively connected with a trade or business in theU.S. will not be treated as compensation with respectto nonresident aliens who do not participate in theplan, provided the rule applies uniformly. (This is arule of administrative convenience that is relevant inthe determination of who is a key employee forpurposes of the top-heavy rules of 416 and who is ahighly compensated employee within the meaning of 414(q)).

The following items are excludable from compensationfor purposes of 415: (a) contributions (other thanelective contributions described in 402(e)(3),408(k)(6), 408(p)(2)(A)(i), or 457(b)) made by theemployer to a plan of deferred compensation(including a simplified employee pension described in 408(k) or a simple retirement account described in 408(p), and whether or not qualified) to the extent thatthe contributions are not includible in the gross incomeof the employee for the taxable year in which

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contributed; (b) distributions from a plan of deferredcompensation (whether or not qualified), except, aplan may provide that distributions from an unfundednonqualified plan are included for 415 when thedistributions are includible in income; (c) amountsrealized from the exercise of a nonstatutory option,or when restricted stock (or property) held by anemployee either becomes freely transferable or is nolonger subject to a substantial risk of forfeiture; (d)amounts realized from the sale, exchange or otherdisposition of stock acquired under a statutory stockoption (as defined in 1.421-1(b)); (e) otheramounts which receive special tax benefits, such aspremiums for group term life insurance (to the extentthe premiums are not includible and are not salaryreduction amounts under 125); and (f) other itemsof remuneration similar to (a) through (e).

Compensation, for 415 purposes, includes anyamount which is contributed or deferred by the

employer at the election of the employee and whichis not includible in the gross income of the employeeby reason of 125(a), 132(f)(4), 402(e)(3),402(h)(1)(B), 402(k) or 457(b). A plan may providethat amounts under 125 include any amountsexcludable under 106 that are not available to aparticipant in cash in lieu of group health coveragebecause the participant is unable to certify that he orshe has other health coverage (deemed 125compensation). An amount will be treated as anamount under 125 only if the employer does notrequest or collect information regarding theparticipants other health coverage as part of theenrollment process for the health plan.

The plan may adopt a safe harbor definition of 415 compensation by using either simplifiedcompensation, 3401(a) wages, or incomereported under 6041, 6051 and 6052.

The safe harbor definition under simplifiedcompensation includes only those items specifiedas includable under (a), (b), and (h) of the firstparagraph of this Line b and excludes all those itemslisted as excludable. See above.

The safe harbor definition under 3401(a) wages

includes wages within the meaning of 3401(a) (forpurposes of income tax withholding at the source),plus amounts that would be included in wages butfor an election under 125(a), 132(f)(4), 402(e)(3),402(h)(1)(B), 402(k), or 457(b).

The safe harbor definition under Informationrequired to be reported under 6041, 6051 and6052. includes 3401(a) wages plus all otherpayments of compensation to an employee by his

employer (in the course of the employer's trade orbusiness) for which the employer is required to furnishthe employee a written statement under 6041(d), 6051(a)(3), and 6052. This safe harbordefinition of compensation may be modified to excludeamounts paid or reimbursed by the employer formoving expenses incurred by an employee, but only tothe extent that, at the time of the payment, it isreasonable to believe that these amounts aredeductible by the employee under 217.

The plan may also use its 415 definition ofcompensation to determine its benefit formula orcontribution rate. Regardless of what definition ofcompensation the plan uses for other purposes, toanswer this question Yes the definition ofcompensation used to apply the 415 limitationsmust preclude the possibility that these limitations willbe exceeded. Therefore, if the plan does not use a

safe harbor definition of compensation describedabove in applying the 415 limitations but insteaduses a definition of compensation that may includeone of the exclusions stated in the regulatorydefinition, the plan fails to meet this requirement. Onthe other hand, a plan does not fail to meet thisrequirement merely because it fails to include in itsdefinition of compensation some of the itemsmentioned above.

Except as provided below, in determiningcompensation for the limitation year, the plan must usecompensation actually paid or made available (or, if

earlier, includible in gross income) in such year. Theplan may provide that compensation also includesamounts earned but not paid in a year because of thetiming of pay periods if the amounts are paid in the firstfew weeks of the next year, the amounts are includeduniformly and consistently for similarly situatedemployees, and amounts are not included in morethan one limitation year.

As a general rule, post-severance compensation paidin a limitation year may not be treated as 415compensation unless it is paid (or treated as paid)prior to the employees severance from employment.

However, 1.415(c)-2(e)(3)(i) and (ii) of theregulations, effective July 1, 2007, requires certainpost-severance compensation to be included as 415compensation while other post-severancecompensation may optionally be included if the plan soprovides. Post-severance compensation must beincluded if (a) the compensation is paid by the later of(1) 2 months after severance from employment, or(2) the end of the limitation year that includes the dateof severance from employment; and (b) absent a

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severance from employment, the compensationwould have been paid to the employee while theemployee continued in employment with theemployer as regular compensation for servicesrendered during the employees regular workinghours or as compensation for services outside theemployees regular working hours (such as overtimeor shift differential), commissions, bonuses or othersimilar compensation. A plan may optionally providethat compensation for purposes of 415 alsoincludes post-severance compensation that is paidby the later of (1) 2 months after an employee'sseverance from employment or (2) the end of thelimitation year that includes the date of theemployee's severance from employment if (a) thepayment is for unused accrued bona fide sick,vacation or other leave that the employee wouldhave been able to use if employment had continued;or (b) the payment is received by the employeepursuant to a nonqualified unfunded deferred

compensation plan and would have been paid at thesame time if employment had continued, but only tothe extent includible in gross income.

Any payments not described above are notconsidered compensation if paid after severancefrom employment (even if they are paid by the laterof 2 months following severance fromemployment or the end of the limitation year thatincludes the date of severance) except for salarycontinuation payments to a participant who ispermanently and totally disabled within the meaningof 22(e)(3), provided the participant was not

highly compensated immediately before becomingdisabled or salary continuation applies to allparticipants who are permanently and totallydisabled for a fixed or determinable period.

Back pay is treated as compensation for thelimitation year to which the back pay relates to theextent the back pay represents wages and othercompensation that would be includible incompensation for purposes of 415.

For limitation years beginning on or after July 1,2007, a plan's definition of compensation for a yearthat is used for purposes of 415 may not reflect

compensation for a year greater than the limit under 401(a)(17) that applies to that year.

If an employee is employed by two or moremembers of a controlled group of corporations,compensation for such employee includescompensation from all the employers in thecontrolled group whether or not they maintain theplan. This also applies to compensation from two ormore members of commonly controlled trades or

businesses and affiliated service groups.

In the case of an annuity contract described in 403(b) the term participants compensation forpurposes of 415 means includible compensationdetermined under 403(b). If a 403(b) annuitycontract is aggregated with a qualified plan maintained

by an employer that is controlled by a participant onwhose behalf the contract was purchased, the totalcompensation from both employers is taken intoaccount in applying the limitations of Part II of thisexplanation to the plan and contract on an aggregatebasis.

415(c)(3)1.415(c)-2

II. LIMITATIONS ON CONTRIBUTIONS

Line a.Annual additions include (a) employercontributions, (b) employee contributions, and (c)forfeitures credited to a participants account for anylimitation year. Elective contributions and employeeand matching contributions subject to the requirementsof 401(m) are annual additions regardless of whetherthey result in excess aggregate contributions, even ifsuch excesses are corrected through distribution orrecharacterization. Catch-up contributions under414(v), on the other hand, are not annual additions.Excess deferrals that are distributed in accordancewith Regs. 1.402(g)-1(e)(2) or (3) also are not annualadditions. Amounts allocated to an individual medicalaccount, as defined in 415(l)(2), which is part of apension or annuity plan maintained by the employer,

and amounts attributable to post-retirement medicalbenefits allocated to the account of a key employee,as defined in 419A(d)(3), under a welfare benefitfund, as defined in 419(e), maintained by theemployer are treated as annual additions to a definedcontribution plan. However, the percentage ofcompensation limitation described in line II.b. does notapply to such amounts. Annual additions under a 403(b) annuity contract also are treated as annualadditions to a defined contribution plan.

Repayment by an employee of a cash-out orpreviously withdrawn mandatory contributions which

result in the restoration of amounts that were forfeitedbecause of these distributions are not annualadditions. Similarly, transfers of employer or employeecontributions from another qualified plan, repaymentsof loans, or rollovers accepted by the plan are notannual additions. Also, payments made to restorelosses to a plan resulting from actions by a fiduciaryfor which there is a reasonable risk of liability underTitle I of ERISA or under other federal or state law arenot annual additions if similarly situated plan

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participants are treated similarly with respect topayments. The regulations describe other amountswhich are not annual additions and some amountswhich are considered annual additions for limitationyears other than the limitation year in which actuallycredited to the participants account. Theseregulations should be consulted to determinewhether the plan correctly treats such amounts asannual additions. Generally, amounts are credited toa participants account if they are allocated to theaccount under the terms of the plan as of any datewithin the limitation year unless such allocation isdependent upon participation in the plan as of anytime after such allocation date.

415(c);415(l);419A(d)(2) and (3);419(e);1.415(c)-1

Line b.A defined contribution plan must precludethe possibility that annual additions credited to anyparticipants account in a limitation year will exceedthe limitations of 415. For limitation yearsbeginning after December 31, 2001, the limitation isthe lesser of $40,000 or 100% of compensation. The$40,000 figure will be adjusted annually by theSecretary for increases in the cost of living, withreferences to quarters and base periods, indepen-dently of the defined benefit dollar limit. Anyadjustments will be in $1000 increments. A defined

contribution plan may provide for an automaticincrease in the dollar limitation to reflect cost-of-living increases, but is not required to do so. A newplan may use the dollar limitation in effect for its firstlimitation year and adjust the limit from that point.For limitation years beginning on or after July 1,2007, a plan's definition of compensation for a yearthat is used for purposes of 415 may not reflectcompensation for a year greater than the limit under 401(a)(17) that applies to that year.

Alternative limits apply to annual additions under a 403(b) annuity contract for a participant who is anemployee of a church or a convention or association

of churches. These alternative limits permitminimum annual additions of up to $10,000 for alimitation year, not to exceed $40,000 for alllimitation years, regardless of the general limits. Aseparate rule permits a $3,000 minimum annualaddition for church employees who are foreignmissionaries and whose adjusted gross incomedoes not exceed $17,000. The regulations shouldbe consulted regarding the interaction of these twominimums.

If you are reviewing a defined benefit plan thatprovides for employee contributions (whethermandatory or voluntary), such employeecontributions are treated as a separate definedcontribution plan for 415 purposes. Therefore suchemployee contributions must comply with thislimitation requirement.

415(c)(1);415(d)(1);415(d)(3);415(d)(4);1.415(c)-1

Line c. The regulations under 415 that were ineffect for limitation years beginning before July 1, 2007(the 1981 regulations) set forth permitted correctionmethods for excess annual additions that arose undercertain circumstances. See II.c. of the version of thisexplanation, rev. 3-2006, for an explanation of the

correction methods. The correction methods underthe 1981 regulations have been deleted in the finalregulations, effective for limitation years beginning onor after July 1, 2007. Therefore, correction for excessannual additions are generally permitted under theEmployee Plans Compliance Resolution System(EPCRS) under Rev. Proc. 2008-50, 2008-35 I.R.B.464. If the plan contains the correction methods of the1981 regulations, the plan must limit the application ofthe methods to limitation years beginning before July1, 2007.

Preamble to Final 415 Regulations;Rev. Proc. 2008-50

Line d.A defined contribution plan may provide forcontributions on behalf of a participant who hasbecome permanently and totally disabled (as definedin 22(e)(3)) even though the participant has noactual compensation. In such cases, the disabledparticipant is deemed to have compensation eachyear equal to the rate of compensation paidimmediately before the participant becamepermanently and totally disabled, if greater than thedisabled participant's actual compensation for theyear.

A plan may either provide for the continuation ofcontributions on behalf of all permanently and totallydisabled participants (as defined in 22(e)(3)) for afixed or determinable period or provide for thecontinuation of contributions only for those employeeswho were nonhighly compensated when they becamedisabled.

Contributions made with respect to the imputedcompensation of a disabled participant must be

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nonforfeitable when made.

Note that this imputed compensation rule fordisabled participants is separate from the salarycontinuation rule for disabled participants describedin line b above.

415(c)(3)(C);1.415(c)-2(g)(4)

Line e. The sum of the annual additions credited toa participants account in any limitation year for all ofthe qualified defined contribution plans of theemployer or a predecessor employer (which, for thispurpose, include plans qualified under 401(a),annuity plans described in 403(a), and simplifiedemployee pensions described in 408(k)),regardless of whether a plan is terminated, may notexceed the limitations of 415(c). See line III.g. for

the definition of predecessor employer.A qualified defined contribution plan maintained byany member of a controlled group of corporationsor commonly controlled trades or businesses (asdefined in 414(b) and (c) as modified by 415(h)) or any member of an affiliated servicegroup (as defined in 414(m)), is consideredmaintained by all of the members for this purpose.

There are two exceptions to the foregoing planaggregation rules that pertain to multiemployerplans, as defined in 414(f). First, multiemployerplans are not aggregated with other multiemployerplans for purposes of 415. Second, if the employermaintains a multiemployer plan and that plan soprovides, only the benefits (i.e., annual additions)under the multiemployer plan that are provided bythe employer are treated as benefits (annualadditions) provided under the employers plans thatare not multiemployer plans.

A qualified defined benefit plan maintained by theemployer to which employee contributions are madeis considered a separate defined contribution planfor this purpose to the extent such employeecontributions constitute annual additions in the

limitation year. Also, employer contributionsallocated to (1) an individual medical benefit accountmaintained under a pension or annuity plan or (2)the account of a key employee under a welfarebenefit trust described in 419(e) to provide post-retirement medical benefits are treated as annualadditions to a defined contribution plan.

The provisions of the plans must preclude thepossibility that the total annual additions allocated toany participant in all such plans will exceed these

limitations in any limitation year whether or not the 415 limitations are incorporated by reference. Notethat if the plans cannot have common participants, thisrequirement is satisfied.

A money purchase plan may provide for theautomatic freezing or reduction of contributions to

insure the limitations of 415 are met withoutviolating the requirement that benefits be definitelydeterminable if the plan provision precludesemployer discretion.

A profit-sharing or stock bonus plan may also containa provision for the automatic freezing or reduction ofcontributions without violating the definitepredetermined allocation formula requirement if theplan provision precludes employer discretion. Forexample, if two defined contribution plans of oneemployer would otherwise provide for aggregatecontributions exceeding the limitations of 415(c),the plan provisions must specify, without involving

employer discretion, which plan will reducecontributions and allocations to prevent an excessannual addition and how the reduction will occur.

A 403(b) annuity contract is considered a planmaintained by the employee and must be aggregatedwhen the employee is in control of the employer.Effective for limitation years beginning afterDecember 31, 2001, the special election for 403(b)annuity contracts purchased by educationalorganizations, hospitals, home health serviceagencies and certain churches is eliminated.

Also see line III.g. for additional special rules that mayalso apply to defined contribution plans.

415(f)(1)415(k)(4)1.401(a)-1(b)(1)(ii) and (iii); 1.415(a)-1(d); 1.415(c)-1;1.415(f)-1

Ill. LIMITATIONS ON BENEFITS - General Rule

(Note: This explanation, including this Part III, reflectsthe requirements of the final regulations under 415

that are effective for limitation years beginning on orafter July 1, 2007. A defined benefit plan isconsidered to satisfy the limitations of 415(b) withrespect to benefits accrued or payable under the planas of the end of the last limitation year beginningbefore July 1, 2007 under plan provisions (including aplan's limitation year) that were adopted and in effectbefore April 5, 2007. This grandfather rule is availableonly if the plan provisions adopted and in effect on

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April 5, 2007 satisfied the requirements of 415 andrelated published guidance in effect before the finalregulations. See the revision of this explanation, rev.3-2006, for an explanation of the prior guidance. Aplan is not ineligible for the grandfather rule becausethe plan has not yet been amended for the changesto 415(b) made by PFEA '04 and PPA '06 orbecause the plan considered compensation inexcess of the 401(a)(17) limit in applying thecompensation limit described in line III.a. forlimitation years before the final regulation effectivedate. See line III.b. For a participant withgrandfathered benefits, additional benefits cannotaccrue after the effective date (limitation yearsbeginning on or after July 1, 2007) of the finalregulations unless and until the sum of suchadditional benefits and the participant'sgrandfathered benefits satisfies the requirements ofthe final regulations.

Section 415(b)(2)(E)(v) of the Code was amendedby 103(b)(2)(B)(i) of the WRERA, providing thatthe mortality table used for adjusting limitations (formadjustments or age adjustments) on defined benefitplans shall be the applicable mortality table withinthe meaning of 417(e)(3)(B) of the Code, which isbased on mortality table under 430((h)(3)(A).

Line a. The maximum annual benefit to which anyparticipant may be entitled during the limitation yearmay not exceed the lesser of $160,000 (effective forthe first limitation year ending after December 31,2001) or 100 percent of the participants averagecompensation for the three consecutive calendaryears of employment (or lesser period if theemployee does not have three consecutive years)which produce the greatest aggregatecompensation. The percentage of compensationlimit does not apply, however, to a governmentalplan as defined in 414(d), a multiemployer plan asdefined in 414(f), a collectively bargained plan thatis described in 415(b)(7), or to a participant in aplan maintained by a church described in 3121(w)(3)(A) who has never been a 414(q) highlycompensated employee of the church.

A different 12-month period may be used if uniformlyand consistently applied in a manner specified in theplan. For a participant who has had a severancefrom employment and is then rehired, the years forwhich the participant performed no service andreceived no compensation are ignored, and theyears immediately preceding and following thisbreak period are treated as consecutive.

The annual benefit is a benefit payable annually as astraight life annuity. The benefits attributable toemployee contributions and rollover contributions arenot taken into account for purposes of this limitation.Social security supplements and benefits transferredfrom another defined benefit plan, other than anelective transfer of a participant's distributablebenefits, are taken into account.

The dollar limitation and the compensation limitationwill be adjusted annually by the Commissioner toreflect the increase in the cost-of-living. The increasedlimits apply to any limitation year ending with or withinthe calendar year for which the increase is effective,but a participant's benefits may not reflect theadjustment prior to January 1 of that calendar year.

A plan may provide for automatic increases in thedollar and compensation limitations by incorporatingby reference the annual adjustments under 415(d).However, if a plan incorporates the adjustments by

reference, the annual adjustment to the dollarlimitation will not apply to a participant after aseverance from employment, unless the plan sospecifies. Likewise, the annual adjustment to thecompensation limitation, which applies only after aparticipant's severance from employment, will notapply unless the plan so specifies. Instead ofautomatically incorporating the cost-of-livingadjustments by reference, a plan may be amendedfrom time to time to take into account these increases.The regulations provide two safe harbors that allowdistributions that are increased pursuant to planamendments to be treated as continuing to satisfy the

limitations of 415(b). These safe harbor provisions ofthe regulations should be consulted when reviewingsuch a plan amendment. Finally, if a distribution optionthat is not subject to 417(e)(3), such as a QJSA,includes an automatic benefit increase feature whichwill never cause a distribution to exceed the limitationsat the annuity starting date as increased by thesubsequent annual adjustments, the increased benefitwill continue to satisfy 415(b). If a plan contains aprovision for cost-of-living increases other than one ofthose described above, the cost-of-living adjustmentsmust be taken into account under the multiple annuitystarting date rule explained below for purposes ofsatisfying the limitations of 415(b).

The plan provisions must preclude the possibility thatan annual benefit in excess of this limitation will beaccrued or become payable at any time. It is notenough that no participant has actually accrued abenefit in excess of this limitation. In addition, if aparticipant has distributions commencing at differenttimes (i.e., multiple annuity starting dates), thelimitations must be satisfied as of each annuity starting

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date, actuarially adjusting for past and futuredistributions.

415(b)(1), 415(b)(3), and 415(d)(1)

1.415(a)-1(d)(3)(v), 1.415(b)-1(b), 1.415(b)-1(c)(5),1.415(d)-1

Line b. For limitation years beginning on or afterJuly 1, 2007, compensation for any 12-month periodtaken into account in determining averagecompensation for the high three years may notinclude compensation in excess of the limitationunder 401(a)(17) for the calendar year in which the12-month period begins. A participant's high 3 yearsshall be the period of consecutive calendar years(not more than 3) during which the participant hadthe greatest aggregate compensation from theemployer.

Under the grandfather rule described in the note

preceding the explanation for line III.a., a plan thatpreviously considered compensation in excess ofthe 401(a)(17) limit in applying the compensationlimitation of line III.a. preserves the benefitpreviously accrued for a participant.

401(a)(17) 1.415(b)-1(a)(5)(i) 1.415(c)-2(f)

Line c. If a defined benefit plan provides aretirement benefit in any form other than a straightlife annuity, the plan benefit must be adjusted to anactuarially equivalent straight life annuity beginningat the same age. If the form of benefit is a straight

life annuity or a qualified joint and survivor annuity,no adjustments are necessary. Examples of benefitsthat are not in the form of a straight life annuity arean annuity with a post-retirement death benefit or alump sum.

In making these adjustments the following valuesare not taken into account: (1) the value of aqualified joint and survivor annuity to the extentsuch value exceeds the sum of (A) the value of astraight life annuity beginning on the same date and(B) the value of any post-retirement death benefitspayable even if the annuity was not in the qualified

joint and survivor form; (2) the value of ancillary

benefits not directly related to retirement benefits(such as preretirement disability and deathbenefits, and post- retirement medical benefits);and (3) the value of benefits which include anautomatic benefit increase feature, provided thebenefit form is not subject to the requirements of 417(e)(3), such as a QJSA, and the amountpayable in any limitation year is limited to thelimitations of 415 in effect at the annuity startingdate as subsequently increased by the annual cost-

of-living adjustments under the Code. Social Securitysupplements are directly related to retirement benefitsand should be taken into account.

The assumptions that are required to be used inadjusting the benefit depend on whether the benefitform is subject to the present value requirements of

417(e)(3) and when the payment commences.Benefits subject to 417(e)(3) include all forms exceptany annual benefit that (i) is nondecreasing for the lifeof the participant or, in the case of a QPSA, the life ofthe participants spouse; or (ii) decreases during thelife of the participant merely because of (a) the deathof the survivor annuitant (but only if the reduction is toa level not below 50% of the annual benefit payablebefore the death of the survivor annuitant) or (b) thecessation or reduction of Social Security supplementsor qualified disability benefits (as defined in 411(a)(9)).

Where the adjustment is based on the interest ratespecified in the plan, the rate specified in the planincludes the rate used to derive factors specified in theplan. Of course, different interest rate assumptionsmay be specified to determine the actuarial equiva-lence of different forms of benefit under the plan, andin such cases, the rate specified in the plan means therate applicable to that particular benefit form.

(i) For limitation years beginning on or after July 1,2007, the actuarially equivalent straight life annuity forpurposes of applying the limit in Ill.a. to benefits thatare not subject to 417(e)(3) is equal to the greater ofthe annual amount of the straight life annuity (if any)

payable to the participant under the plan commencingat the same annuity starting date as the other benefitform, and the annual amount of the straight life annuitycommencing at the same annuity starting date that hasthe same actuarial present value as the form of benefitpayable computed using a 5 percent interest rateassumption and the applicable mortality table under 417(e)(3) (that is, the table in Rev. Rul. 2001-62).

(ii) For limitation years beginning before July 1, 2007,the actuarially equivalent straight life annuity forpurposes of applying the limit in Ill.a. to benefits thatare not subject to 417(e)(3) is equal to the annual

amount of the straight life annuity commencing at thesame annuity starting date that has the same actuarialpresent value as the participants form of benefitcomputed using whichever of the following producesthe greater annual amount: (1) the interest rate andmortality table or other tabular factor specified in theplan for adjusting benefits in the same form as theparticipants benefit; and (2) a 5 percent interest rateassumption and the applicable mortality table.

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Line d.(i) For plan benefits subject to 417(e)(3), if theannuity starting date is in a plan year beginning after2005, the actuarially equivalent straight life annuityequals the annual amount of the straight life annuitycommencing at the same annuity starting date thathas the same actuarial present value as the form ofbenefit payable, using whichever of the followingproduces the greatest annual amount: (1) theinterest rate and the mortality table or other tabularfactor specified in the plan for adjusting benefits inthe same form; (2) a 5.5 percent interest rateassumption and the applicable mortality table; and(3)the applicable interest rate under 417(e)(3) andthe applicable mortality table, divided by 1.05.(ii) For plan benefits subject to 417(e)(3), if theannuity starting date is in a plan year beginning in

2004 or 2005, the actuarially equivalent straight lifeannuity equals the annual amount of the straight lifeannuity commencing at the same annuity startingdate that has the same actuarial present value asthe form of benefit payable, using whichever of thefollowing produces the greater annual amount: (1)the interest rate and mortality table or other tabularfactor specified in the plan for adjusting benefits inthe same form; and (2) 5.5 percent interest and theapplicable mortality table.

(iii) For plan benefits subject to 417(e)(3), if theannuity starting date is on or after the first day of the

first plan year beginning in 2004 and beforeDecember 31, 2004, the plan may apply thetransition rule described in 101(d)(3) of PFEA 04in lieu of the rule described in the precedingparagraph to determine the amount of theparticipants benefit. The transition rule is explainedin Notice 2004-78. Section 103(a) of WRERAchanged the deadline to adopt PFEA04amendments from the end of the 2008 plan year tothe end of the 2009 plan year.

415(b)(2)(B), 415(b)(2)(E) and 417(e)(3)1.415(b)-1(a), (b) and (c), 1.417(e)-1(d)

Rev. Proc. 2008-62, 2008-2 C.B. 935,Rev. Rul. 2001-62, 2001-2 C.B. 632Notice 2004-78, 2004-2 C.B. 879Final Regulations under 430 (h) (3), 73 FR 44632

Line e. If a defined benefit plan provides aretirement benefit which begins before age 62, thedollar limitation determined under line Ill.a. must beadjusted (that is, reduced for early commencement).How the dollar limitation is adjusted for early

commencement depends on whether the annuitystarting date is in a limitation year beginning beforeJuly 1, 2007 or in a limitation year beginning on orafter that date. If the annuity starting date is in alimitation year beginning on or after July 1, 2007, theadjustment that is required further depends on whetherthe plan offers an immediately commencing straightlife annuity at both the age of benefit commencementand age 62.

The adjustments described below for pre-62 benefitcommencement take into account mortality indetermining actuarial equivalence. However, to theextent the plan does not forfeit benefits upon theparticipants death before the annuity starting date, theplan does not have to take into account the mortalitydecrement for the probability of death between theannuity starting date and age 62 in determiningactuarial equivalence for purposes of the ageadjustments. If the plan does not charge participants

for providing a qualified preretirement survivor annuity,the plan is treated as not forfeiting benefits on death.

(i) If the annuity starting date is before age 62 andoccurs in a limitation year beginning before July 1,2007, the adjusted dollar limitation is the annualamount of a benefit payable in the form of a straightlife annuity commencing at the participants annuitystarting date that is the actuarial equivalent of thedollar limitation determined under line III.a. Forpurposes of this adjustment, actuarial equivalence iscomputed using whichever of the following producesthe smaller annual amount: (1) the interest rate and

mortality table or other tabular factor specified in theplan for determining actuarial equivalence for earlyretirement purposes; or (2) a 5 percent interest rateassumption and the applicable mortality table.

(ii) If the annuity starting date is before age 62 andoccurs in a limitation year beginning on or after July 1,2007, and the plan does not have an immediatelycommencing straight life annuity payable at both age62 and the age of benefit commencement, theadjusted dollar limitation is also the annual amount ofa benefit payable in the form of a straight life annuitycommencing at the participants annuity starting date

that is the actuarial equivalent of the dollar limitationdetermined under line III.a. However, in this case,actuarial equivalence is computed without regard tothe plans actuarial factors, using a 5 percent interestrate assumption and the applicable mortality table andexpressing the participants age based on completedcalendar months as of the annuity starting date.

(iii) If the annuity starting date is before age 62 andoccurs in a limitation year beginning on or after July 1,

10
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2007, and the plan has an immediately commencingstraight life annuity payable at both age 62 and theage of benefit commencement, the adjusted dollarlimitation is the lesser of (1) the adjusted dollarlimitation determined in accordance with thepreceding paragraph; and (2) the product of thedollar limitation under line III.a. multiplied by the ratioof the annual amount of the immediatelycommencing straight life annuity under the plan atthe participants annuity starting date to the annualamount of the immediately commencing straight lifeannuity under the plan at age 62, both determinedwithout applying the limitations of 415.

415(b)(2)(C), 415(b)(2)(E)(i) and (v)1.415(b)-1(d)

Line f. If the plan provides a retirement benefit whichbegins after age 65, the plan mayprovide for thedollar limitation determined under line Ill.a. to be

adjusted (that is, increased for delayedcommencement), although a participants benefitcontinues to be limited to 100% of the participantshigh three-year compensation. How the dollarlimitation is adjusted for delayed commencementdepends on whether the annuity starting date is in alimitation year beginning before July 1, 2007 or in alimitation year beginning on or after that date. If theannuity starting date is in a limitation year beginningon or after July 1, 2007, the adjustment that isrequired further depends on whether the plan offersan immediately commencing straight life annuity atboth the age of benefit commencement and age 65.

The adjustments described below for post-65 benefitcommencement take into account mortality indetermining actuarial equivalence. However, to theextent the plan does not forfeit benefits upon theparticipants death before the annuity starting date,the plan may nottake into account the mortalitydecrement for the probability of death between age65 and the annuity starting date in determiningactuarial equivalence for purposes of the ageadjustments. If the plan does not charge participantsfor providing a qualified preretirement survivorannuity, the plan is treated as not forfeiting benefits

on death.

(i) If the annuity starting date is after age 65 andoccurs in a limitation year beginning before July 1,2007, the adjusted dollar limitation is the annualamount of a benefit payable in the form of a straightlife annuity commencing at the participants annuitystarting date that is the actuarial equivalent of thedollar limitation under line III.a. For purposes of this

adjustment, actuarial equivalence is computed usingwhichever of the following produces the smaller annualamount: (1) the interest rate and the mortality table orother tabular factor specified in the plan fordetermining actuarial equivalence for delayedretirement purposes; or (2) a 5 percent interest rateassumption and the applicable mortality table.

(ii) If the annuity starting date is after age 65 andoccurs in a limitation year beginning on or after July 1,2007, and the plan does not have an immediatelycommencing straight life annuity payable at both age65 and the age of benefit commencement, theadjusted dollar limitation is also the annual amount ofa benefit payable in the form of a straight life annuitycommencing at the participants annuity starting datethat is the actuarial equivalent of the dollar limitationdetermined under line III.a. However, in this case,actuarial equivalence is computed without regard tothe plans actuarial factors, using a 5 percent interest

rate assumption and the applicable mortality table andexpressing the participants age based on completedcalendar months as of the annuity starting date.

(iii) If the annuity starting date is after age 65 andoccurs in a limitation year beginning on or after July 1,2007, and the plan has an immediately commencingstraight life annuity payable at both age 65 and theage of benefit commencement, the adjusted dollarlimitation is the lesser of (1) the adjusted dollarlimitation determined in accordance with the precedingparagraph; and (2) the product of the dollar limitationunder line III.a. multiplied by the ratio of the annual

amount of the adjusted immediately commencingstraight life annuity under the plan at the participantsannuity starting date to the annual amount of theadjusted immediately commencing straight life annuityunder the plan at age 65, both determined withoutapplying the limitations of this article. The adjustedimmediately commencing straight life annuity at theparticipants annuity starting date means the annualamount of such annuity payable to the participant,computed without regard to the participants accrualsafter age 65 but including actuarial adjustments even ifthose actuarial adjustments are used to offsetaccruals; and the adjusted immediately commencing

straight life annuity at age 65 means the annualamount of such annuity that would be payable to ahypothetical participant who is age 65 and has thesame accrued benefit as the participant.

415(b)(2)(D), 415(b)(2)(E)(iii) and (V)1.415(b)-1(e)

Line g. Under 411, if benefits are not paid to aparticipant upon attainment of normal retirement age

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(NRA), the plan must either provide for thesuspension of the participants benefit under 411(a)(3)(B) or actuarially increase the benefit forlate retirement to avoid an impermissible forfeiture ofthe benefit. If the NRA under the plan is less than65, the requirement to actuarially increase thebenefit after NRA could, when coupled with the factthat the 415 dollar limit is not adjusted betweenage 62 and age 65, cause the plan to violate 415.This would occur where the participant works pastNRA and the benefit equals the 415 dollar limit atan age between 62 and 65. Any actuarial increaseafter that age and prior to age 65 would violate 415. Accordingly, if the plans NRA is less than 65,the plan must coordinate the requirements fornonforfeitablity of benefits and actuarial increase fordelayed retirement with the limits of 415. One wayto satisfy these requirements is to suspend theparticipants benefit as permitted under 411(a)(3)(B). However, the prohibition on amending

a plan to place greater restrictions or conditions on 411(d)(6) protected benefits by adding or modifyinga suspension of benefits provision may eliminatesuspension as an option. In this case, the plan mustprovide for the in-service payment of theparticipants benefit if the participant has reachedNRA and the benefit cannot be actuarially increasedwithout violating 415.

411(a)1.411(d)-3(a)(3), 1.411(d)-3(j)(3)Rev. Rul. 2001-51, 2001-2 C.B. 427, Q&A-4

Line h. The annual benefit (without regard to theage at which benefits commence) payable withrespect to a participant is not considered to exceedthe otherwise applicable limitations on benefitsunder 415(b) if (a) the employer-derived retirementbenefits under the plan and all other defined benefitplans of the employer do not in the aggregateexceed $10,000 for the limitation year or any priorlimitation year, and (b) the employer has not at anytime maintained a defined contribution plan in whichthe participant participated. In the case of amultiemployer plan, the $10,000 minimum benefitrule applies regardless of whether the participant

ever participated in another plan of the employer,provided that no such other plan was maintained asa result of collective bargaining with the sameemployee representative as the multiemployer plan.For purposes of the special exception for totalbenefits not in excess of $10,000, mandatoryemployee contributions to a defined benefit plan, anindividual medical benefits account under 401(h),and a postretirement medical benefits account under

419A(d)(1) are not considered separate definedcontribution plans. Also, no upward adjustment needbe made to the value of the retirement benefit payableunder the plan if the benefit payable is not in the formof a straight life annuity.

415(b)(4)

1.415(b)-1(f)

Line i. The percentage of compensation limitationdescribed in line Ill.a. and the $10,000 minimumbenefit limitation in line Ill.g. must be reduced for aparticipant who begins to receive retirement benefitsunder the plan when the participant has less than tenyears of service. The reduction is accomplished bymultiplying the otherwise applicable limitation by thefollowing fraction: Years of service with the employerincluding the current limitation year (but not less than

one), divided by 10.For this purpose, a year of service may bedetermined on any reasonable and consistentbasis.

415(b)(5)(B)1.415(b)-1(g)(2)

Line j. The dollar limitation of III.a. is reduced forparticipants with less than 10 years of participation inthe plan. Specifically, the dollar limitation is multipliedby a fraction, the numerator of which is the number ofyears (computed to fractional parts of a year, but not

less than one) of participation in the defined benefitplan of the employer, and the denominator of which is10.

For purposes of determining a participants years ofparticipation, the participant shall be credited with ayear of participation (computed to fractional parts of ayear) for each accrual computation period for which:(1) the participant is credited with at least the servicerequired to accrue a benefit, and (2) the participant isincluded as a plan participant under the eligibilityprovisions of the plan for at least one day of theaccrual computation period. If these two conditions aremet, the portion of a year of participation credited tothe participant shall equal the amount of benefitaccrual service credited to the participant for suchaccrual computation period. For example, if under theterms of a plan, a participant receives 1/10 of a year ofbenefit accrual service for an accrual computationperiod for each 200 hours of service, and theparticipant is credited with 1,000 hours of service forthe period, the participant is credited with 1/2 a year of

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13

participation.

For purposes of determining years of participation, aparticipant who is permanently and totally disabledwithin the meaning of 415(c)(3)(C)(i) for an accrualcomputation period is credited with a year ofparticipation for that period.

The plan must be established before the end of theaccrual computation period in order to credit aparticipant with any part of a year of participation forthat period.

415(b)(5)(B)

1.415(b)-1(g)(1)

Line k.All the qualified defined benefit plans evermaintained by the employer or a predecessoremployer (whether or not such plans are terminated)are treated as one defined benefit plan for purposesof the limitations under 415(b). For this purpose, aqualified defined benefit plan maintained by anymember of a controlled group of corporations orcommonly controlled trades or businesses (asdefined in 414(b) and (c) as modified by 415(h)), or any member of an affiliated service group(as defined in 414(m)), is considered maintainedby all the members. If the employer maintains aplan that provides a benefit which the participantaccrued while performing services for a formeremployer, the former employer is a predecessor

employer with respect to the participant in the plan.A former entity that antedates the employer is also a

predecessor employer with respect to a participant if,under the facts and circumstances, the employerconstitutes a continuation of all or a portion of thetrade or business of the former entity.

There are three exceptions to the foregoing planaggregation rules that pertain to multiemployer plans,

as defined in 414(f). First, multiemployer plans arenot aggregated with other multiemployer plans forpurposes of 415. Second, if the employer maintainsa multiemployer plan and that plan so provides, onlythe benefits under the multiemployer plan that areprovided by the employer are treated as benefitsprovided under the employers plans that are notmultiemployer plans. Third, a multiemployer plan isdisregarded for purposes of applying the percentage ofcompensation limitation under lines III.a. and III.h. to aplan which is not a multiemployer plan.

The final regulations contain rules for determining the

benefit to be taken into account in the case of plantermination or transfer of benefits to another plan,where a plan ceases to be affiliated and aggregatedwith the employers plan under line III.j. because of thebreak-up of the 414(b), (c) or (m) group, and withrespect to the situation where the employer maintainsa plan under which a participant accrued a benefitwhile performing services for a predecessor employer.

Plan termination If the plan terminates with sufficientassets for the payment of all benefit liabilities and aparticipant has not yet commenced benefits, thebenefits taken into account for 415 purposes are thebenefits provided pursuant to the annuities purchased

to provide the participants benefits at each possibleannuity starting date. If

there are insufficient assets for the payment of allbenefit liabilities, the benefits taken into account arethe benefits that are actually provided to theparticipant.

Benefits transferred to another plan - If a participantsbenefits are transferred to another defined benefitplan of the employer and the transfer is not a transferof distributable benefits pursuant to 1.411(d)-4,Q&A-3(c), of the regulations, the transferred benefitsare not treated as being provided under the transferor

plan (but are taken into account as benefits providedunder the transferee plan). If a participants benefitsare transferred to another defined benefit plan that isnot maintained by the employer and the transfer isnot a transfer of distributable benefits, the transferredbenefits are treated by the employers plan as if suchbenefits were provided under annuities purchased toprovide benefits under a plan of the employer thatterminated immediately prior to the transfer with

sufficient assets to pay all benefit liabilities. In thecase of a transfer of distributable benefits, the amounttransferred is treated as a benefit paid from thetransferor plan.

Cessation of affiliation because of break-up of the 414(b), (c) or (m) group The formerly affiliatedplan continues to be treated as a plan of theemployer, but it is treated as if it had terminatedimmediately prior to the cessation of affiliation (e.g.,the sale of a member of the group outside the group

or the transfer of plan sponsorship outside the group)with sufficient assets to pay participants benefitliabilities under the plan and had purchased annuitiesto provide benefits.

Plan maintained by successor employer - If theemployer maintains a defined benefit plan thatprovides benefits accrued by a participant whileperforming services for a predecessor employer, the

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participants benefits under any plan maintained bythe predecessor employer are treated as providedunder a plan maintained by the employer. However,for this purpose, the plan of the predecessoremployer is treated as if it had terminatedimmediately prior to the event giving rise to thepredecessor employer relationship (such as transferof benefits or plan sponsorship) with sufficient assetsto pay participants benefit liabilities under the plan,and had purchased annuities to provide benefits; theemployer and the predecessor employer shall betreated as if they were a single employer immediatelyprior to such event and as unrelated employersimmediately after the event; and if the event givingrise to the predecessor relationship is a benefittransfer, the transferred benefits shall be excluded indetermining the benefits provide under the plan of thepredecessor employer.

The provisions in the plans must preclude thepossibility that the total annual benefit payable toany participant under all defined benefit plansmaintained by the employer or a predecessoremployer will exceed these limitations whether or notthe 415 limitations are incorporated by reference.The use of a plan provision which automaticallyfreezes or reduces the rate of benefit accrual toinsure that these limitations are not exceeded willnot violate the requirement that benefits must bedefinitely determinable if the plan provisionprecludes employer discretion. Note that if the planscannot have common participants, this requirementis satisfied.

415(f)(1)(A)

1.415(a)-1(d)(1)

1.415(f)-1

1.401(a)-1(b)(1)(iii)

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Form 8384 (Rev. 6-2012) (Page 1) Department of Treasury Internal Revenue Servic

Employee Benefit Plan

Limitation on Contribution and Benefits

(Worksheet Number 6 Determination of Qualification)

The technical principles in this worksheet may be

changed by future regulations or guidelines

INSTRUCTIONS -All items must be completed unless the contrary is specificallyprovided. A "Yes" answer indicates a favorable conclusion is warranted while a "No"answer indicates a problem exists. Please use the space on the worksheet to explainany "No" answer. Numbers in brackets refer to EDS paragraph numbers. SeePublication 7001, Explanation Number 6, for guidance in completing this form.

Name of Plan

I. General Definitions Plan Reference Yes No N

a. If the plan defines the limitation year that will be used for purposes of IRC 415, does the definition meet the requirements of the regulations?[0601]

b. Does the plan's definition of compensation satisfy the requirements ofIRC 415(c)(3) and the regulations? [0602]

II.

Limitations On ContributionsDefined Contribution Plans and CertainDefined Benefit Plans

Note: If the plan is a defined benefit plan, complete this Part II only if theplan provides for employee contributions or employer contributions to anindividual medical benefit account.

Plan Reference Yes No N

a. If the plan includes a definition of annual additions, does the definitionsatisfy the requirements of the Code and regulations? [0603]

b. Are annual additions on behalf of any participant during the limitationyear limited to the lesser of (i) 100% of the participant's compensation or(ii) $40,000 adjusted for cost-of-living increases pursuant to 415(d))?[0604]

c. If the plan provides a mechanism by which excess annual additions due

to (i) a reasonable estimation of a participant's annual compensation, or(ii) a reasonable error in determining the amount of elective deferralsunder 402(g)(3), or (iii) an allocation of forfeitures are reduced, does themechanism conform to one of the methods described in the 1981regulations and does the plan limit the application of the mechanism tolimitation years beginning before July 1, 2007? [0605]

d. If the plan provides for contributions on behalf of participants who havebecome permanently and totally disabled, as defined in 22(e)(3), doesthe plan provide for the continuation of contributions on behalf of all suchdisabled participants for a fixed or determinable period or only for non-highly compensated employees who become disabled, and arecontributions nonforfeitable when made? [0606]

e. If the employer maintains another qualified defined contribution plan (or adefined benefit plan to which employee contributions are made or underwhich employer contributions are made to an individual medical benefitaccount, or a welfare benefit fund under which employer contributions aremade to an account of a key employee to provide post-retirement medicalbenefits), do the provisions of the plan or plans preclude the possibilitythat the limitations of this Part II will be exceeded when all such plans aretreated as one plan? [0607]

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Ill. Limitations on BenefitsDefined Benefit Plans Plan Reference Yes No N

a. Is the annual benefit to which any participant is entitled, during thelimitation year, limited to the lesser of (i) 100% of the participant'saverage compensation for the high three years of service, or (ii) $160,000(or such larger amount as adjusted for cost-of-living increases pursuant to 415(d))? [0608]

b. Does the plan limit the compensation for a year that is used indetermining the high three-year average compensation to the amount ineffect for that year under 401(a)(17)? [0609]

c. If the plan provides for a retirement benefit which is payable in a formother than a straight life annuity, and the form of benefit is not subject to 417(e)(3), is the benefit, for purposes of applying the limitation in Ill.a.,adjusted to an actuarially equivalent straight life annuity that equals:

(i) for limitation years beginning on or after July 1, 2007, the greater of theannual amount of the straight life annuity (if any) payable under the planat the same annuity starting date, and the annual amount of a straight lifeannuity commencing at the same annuity starting date that has the sameactuarial present value as the participants form of benefit computedusing an interest rate of 5 percent and the applicable mortality table under

417(e)(3) and

(ii) for limitation years beginning before July 1, 2007, the annual amount ofa straight life annuity commencing at the same annuity starting date thathas the same actuarial present value as the participants form of benefitcomputed using whichever of the following produces the greater annualamount: (1) the interest rate and mortality table or other tabular factorspecified in the plan for adjusting benefits in the same form; and (2) a 5percent interest rate assumption and the applicable mortality table?[0610]

d. If the plan provides for a retirement benefit which is payable in a formother than a straight life annuity, and the form of the benefit is subject to 417(e)(3), is the benefit, for purposes of applying the limitation in Ill.a.,adjusted to an actuarially equivalent straight life annuity that equals

(i))if the annuity starting date is in a plan year beginning after December31, 2005, the annual amount of the straight life annuity commencing atthe same annuity starting date that has the same actuarial present valueas the participants form of benefit, using whichever of the followingproduces the greatest annual amount: (1) the interest rate and themortality table or other tabular factor specified in the plan for adjustingbenefits in the same form; (2) a 5.5 percent interest rate assumption andthe applicable mortality table; and (3)the applicable interest rate under 417(e)(3) and the applicable mortality table, divided by 1.05;

(ii) if the annuity starting date is in a plan year beginning in 2004 or 2005,the annual amount of the straight life annuity commencing at the sameannuity starting date that has the same actuarial present value as theparticipants form of benefit payable, using whichever of the followingproduces the greater annual amount: (1) the interest rate and mortality

table or other tabular factor specified in the plan for adjusting benefits inthe same form; and (2) 5.5 percent interest and the applicable mortalitytable; and

(iii) if the annuity starting date is on or after the first day of the first plan yearbeginning in 2004 and before December 31, 2004, and the plan appliesthe transition rule in 101(d)(3) of PFEA 04 in lieu of the rule in (ii), theannual amount of the straight life annuity commencing at the sameannuity starting date that has the same actuarial present value as theparticipants form of benefit, determined in accordance with Notice 2004-78? [0611]

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Ill. Limitations on BenefitsDefined Benefit Plans Continued Plan Reference Yes No N

e. If a plan provides a retirement benefit beginning before age 62, is thebenefit limited to:

(i) if the annuity starting date is in a limitation year beginning before July 1,2007, the annual amount of a benefit payable in the form of a straight life

annuity commencing at the participants annuity starting date that is theactuarial equivalent of the dollar limitation determined under line III.a.,with actuarial equivalence computed using whichever of the followingproduces the smaller annual amount: (1) the interest rate and mortalitytable or other tabular factor specified in the plan for determining actuarialequivalence for early retirement purposes; or (2) a 5 percent interest rateassumption and the applicable mortality table;

(ii) if the annuity starting date is in a limitation year beginning on or afterJuly 1, 2007, and the plan does not have an immediately commencingstraight life annuity payable at both age 62 and the age of benefitcommencement, the annual amount of a benefit payable in the form of astraight life annuity commencing at the participants annuity starting datethat is the actuarial equivalent of the dollar limitation determined underline III.a., with actuarial equivalence computed using a 5 percent interest

rate assumption and the applicable mortality table and expressing theparticipants age based on completed calendar months as of the annuitystarting date; and

(iii) if the annuity starting date is in a limitation year beginning on or afterJuly 1, 2007, and the plan has an immediately commencing straight lifeannuity payable at both age 62 and the age of benefit commencement,the lesser of (1) the adjusted dollar limitation determined in accordancewith (ii); and (2) the product of the dollar limitation under line III.a.multiplied by the ratio of the annual amount of the immediatelycommencing straight life annuity under the plan at the participantsannuity starting date to the annual amount of the immediatelycommencing straight life annuity under the plan at age 62, bothdetermined without applying the limitations of 415? [0612]

f. If the retirement benefit under the plan may begin after age 65, does theplan provide for an increase in the maximum dollar limitation on benefitsthat is limited to:

(i) if the annuity starting date is in a limitation year beginning before July 1,2007, the annual amount of a benefit payable in the form of a straight lifeannuity commencing at the participants annuity starting date that is theactuarial equivalent of the dollar limitation determined under line III.a.,with actuarial equivalence computed using whichever of the followingproduces the smaller annual amount: (1) the interest rate and mortalitytable or other tabular factor specified in the plan for determining actuarialequivalence for delayed retirement purposes; or (2) a 5 percent interestrate assumption and the applicable mortality table;

ii) if the annuity starting date is in a limitation year beginning on or after July

1, 2007, and the plan does not have an immediately commencing straightlife annuity payable at both age 65 and the age of benefitcommencement, the annual amount of a benefit payable in the form of astraight life annuity commencing at the participants annuity starting datethat is the actuarial equivalent of the dollar limitation determined underline III.a., with actuarial equivalence computed using a 5 percent interestrate assumption and the applicable mortality table and expressing theparticipants age based on completed calendar months as of the annuitystarting date; and

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Ill. Limitations on BenefitsDefined Benefit Plans Continued Plan Reference Yes No N

iii) if the annuity starting date is in a limitation year beginning on or after July1, 2007, and the plan has an immediately commencing straight life annuitypayable at both age 65 and the age of benefit commencement, the lesser of(1) the adjusted dollar limitation determined in accordance with (ii); and (2)the product of the dollar limitation under line III.a. multiplied by the ratio of

the annual amount of the immediately commencing straight life annuityunder the plan at the participants annuity starting date to the annualamount of the immediately commencing straight life annuity under the planat age 65, both determined without applying the limitations of 415? [0613]

g. If the plans normal retirement age is less than 65, does the plancoordinate the requirements for actuarial increase for delayed retirementand nonforfeitability of benefits with the limits of 415, for example, byproviding for the in-service distribution of a participants benefit wherepost-NRA actuarial increases would cause the benefit to exceed thoselimits? [0614]

h. If the plan provides a minimum retirement benefit that otherwise exceedsthe limitations on benefits in Ill.a., is such benefit provided only to aparticipant whose retirement benefits under the plan and all other defined

benefit plans of the employer do not, in the aggregate, exceed $10,000for the limitation year? [0615]

i. If a participant has less than 10 years of service at the time the participantbegins to receive retirement benefits under the plan, is the percentage ofcompensation limit in Ill.a.(i), as adjusted as described in III.e. or III.f., ifapplicable, and the minimum benefit limit in Ill.h., if applicable, reduced bymultiplying those limits by a fraction, the numerator of which is thenumber of years of service with the employer as of, and including, thecurrent limitation year, and the denominator of which is 10? [0616]

j. If a participant has less than 10 years of participation at the time theparticipant begins to receive retirement benefits under the plan, is thedollar limit in III.a.(ii), as adjusted as described in III.e. or III.f., ifapplicable, reduced by multiplying the limit by a fraction, the numerator of

which is the number of years of participation with the employer and thedenominator of which is 10? [0617]

k. If the employer (or a predecessor employer) maintains, or at one timemaintained, another qualified defined benefit plan, do the provisions ofthe plan or plans preclude the possibility that the limitations of this Part III.will be exceeded when all such defined benefit plans are treated as oneplan? [0618]

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Form 6044(Rev. 06-2012)

Department of the Treasury-Internal Revenue ServiceEmployee Plan Deficiency Checksheet

Attachment #6Limitations on Contributions and Benefits

Date

For IRS Use Please furnish the amendment(s) requested in the section(s) checked below.

I.a.

0601

Section __________ of the plan must define the term "limitation year." If not, the plan's limitation year is thecalendar year.

Regs. 1.415(j)-1.

I.b.

0602

Section __________ of the plan should be amended to define the term "compensation" in accordance with IRC 415(c)(3) and 1.415(c)-2 of the regulations.

Il.a.

0603Section __________ of the plan should be amended to define annual additions in accordance with the Code andregulations.

IRC 415(c), 415(l), 419A (d)(2) and (3), 419(e), and Regs. 1.415(c)-1

Il.b.

0604

Section __________ of the plan must preclude the possibility that the annual additions to any participant's accountfor a limitation year will exceed the lesser of 100 percent of compensation or $40,000, as adjusted for cost-of-livingincreases pursuant to IRC 415(c)(1), 415(d)(1), 415(d)(3), and 415(d)(4), and Regs. 1.415(c)-1.

ll.c.

0605

Section __________ of the plan may provide for the use of one of the methods set forth in 1.415-6(b)(6) of the1981 regulationsonly with respect to limitation years beginning before July 1, 2007, andonly in situations whereexcess annual additions may result from contributions based on estimated annual compensation, the allocation offorfeitures, or a reasonable error in determining the amount of elective deferrals under 402(g)(3).

Regs. 1.401(a)-2(b), 1.415-6(b)(6) of the 1981 regulations.

Il.d.

0606

Where a defined contribution plan provides for an employer to continue to make contributions on behalf of anemployee who is permanently and totally disabled (as defined in 22(e)(3) of the Code), then the imputedcompensation upon which contributions are made must be no greater than the rate at which the participant waspaid immediately before becoming permanently and totally disabled. A plan may provide for the continuation ofcontributions on behalf of all such disabled participants for a fixed or determinable period or only on behalf of thoseemployees who were nonhighly compensated when they became disabled. Such contributions must benonforfeitable when made. Section __________of the plan should be amended accordingly.

IRC 415(c)(3)(C) and Regs. 1.415(c)-2(g)(4).

Form 6044(Rev. 06-2012) Page 1 Cat. No. 43038M www.irs.gov Department of Treasury-Internal Revenue Service

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Il.e.

0607

Except as provided in this paragraph with respect to multiemployer plans (as defined in 414(f)), section__________ of the plan must provide that all defined contribution plans (including voluntary employee contributionaccounts in a defined benefit plan, mandatory contributions to a defined benefit plan, individual medical benefitaccounts under 401(h), key employee accounts under a welfare benefit plan described in 419, and simplifiedemployee pensions under 408(k)) of the employer or a predecessor employer, whether or not terminated, will betreated as one defined contribution plan for purposes of the limitations under 415(c). Otherwise each of the

defined contribution plans must contain provisions which limit each plan, without involving employer discretion, suchthat the possibility is precluded that the aggregated defined contribution plans may exceed the limitations of 415(c). Where the employer is a member of a controlled group of corporations or commonly controlled trades orbusinesses, or a member of an affiliated service group, within the meaning of 414(b), (c) or (m) and 415(g) and(h), the plan must provide that all such employers are treated as a single employer for purposes of the plan'sapplication of the 415 limitations. Notwithstanding the preceding, multiemployer plans are not aggregated withother multiemployer plans for purposes of 415.

IRC 419, 415(f)(1) and (k)(4); Regs. 1.415(a)-1(d), 1.415(c)-1, 1.415(f)(1), and 1.401(a)-1(b)(1)(iii).

III.a.

0608

Section __________ of the plan must provide that the annual benefit to which any participant may be entitled, in theform of a straight life annuity, shall not exceed the lesser of $160,000 or 100 percent of the participant's high threeyear average compensation (or fewer, if the employee does not have three consecutive years). The percentage ofcompensation limit does not apply, however, if the plan is a governmental plan (as defined in 414(d)), a

multiemployer plan (as defined in 414(f)), or a collectively bargained plan that is described in 415(b)(7), anddoes not apply to a participant in a plan maintained by a church described in 3121(w)(3)(A) who has never been a 414(q) highly compensated employee of the church. If a participant has distributions commencing at differenttimes (i.e., multiple annuity starting dates), the limitations must be satisfied as of each annuity starting date,actuarially adjusting for past and future distributions.

IRC 415(b)(1) and (3), 415(d)(1); Regs. 1.415-(a)-1(d)(3)(v), 1.415(b)-1(b), 1.415(b)-1(c)(5), 1.415(d)-1.

III.b.

0609

Section __________ of the plan must limit the compensation for a year that is used to determine a participants highthree-year average compensation for purposes of 415 to the amount in effect for that year under 401(a)(17).

IRC 401(a)(17); Regs. 1.415(b)-1(a)(5)(i), 1.415(c)-2(f).

III.c.

0610

Section __________ of the plan must provide that, for purposes of applying the limits of 415,a retirement benefitthat is payable in any form other than a straight life annuity and that is not subject to 417(e)(3) must be adjusted toan actuarially equivalent straight life annuity that equals:

(i) for limitation years beginning on or after July 1, 2007, the greater of the annual amount of the straight life annuity(if any) payable under the plan at the same annuity starting date, and the annual amount of a straight life annuitycommencing at the same annuity starting date that has the same actuarial present value as the participants form ofbenefit computed using an interest rate of 5 percent and the applicable mortality table under 417(e)(3).

(ii) for limitation years beginning before July 1, 2007, the annual amount of a straight life annuity commencing at thesame annuity starting date that has the same actuarial present value as the participants form of benefit computedusing whichever of the following produces the greater annual amount: (1) the interest rate and mortality table orother tabular factor specified in the plan for adjusting benefits in the same form; and (2) a 5 percent interest rateassumption and the applicable mortality table.

The applicable mortality table is the mortality table within the meaning of 417(e)(3)(B), which is based on mortalitytable under 430((h)(3)(A),.

IRC 415(b)(2)(B), 415(b)(2)(E) , 417(e)(3), and 430(h)(3); Regs. 1.415(b)-1(a), (b) and (c), 1.417(e)-1(d);Rev. Rul. 98-1, 1998-1 C.B. 249, Rev. Rul. 2001-62, 2001-2 C.B. 632.


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III.d.

0611

Section __________ of the plan must provide that, for purposes of applying the limits of 415,a retirement benefitthat is payable in any form other than a straight life annuity and that is subject to 417(e)(3) must be adjusted to anactuarially equivalent straight life annuity that equals:

(i) if the annuity starting date is in a plan year beginning after 2005, the annual amount of the straight life annuitycommencing at the same annuity starting date that has the same actuarial present value as the participants form of

benefit, using whichever of the following produces the greatest annual amount: (1) the interest rate and themortality table or other tabular factor specified in the plan for adjusting benefits in the same form; (2) a 5.5 percentinterest rate assumption and the applicable mortality table; and (3)the applicable interest rate under 417(e)(3)and the applicable mortality table, divided by 1.05.

(ii) if the annuity starting date is in a plan year beginning in 2004 or 2005, the annual amount of the straight lifeannuity commencing at the same annuity starting date that has the same actuarial present value as the participantsform of benefit payable, using whichever of the following produces the greater annual amount: (1) the interest rateand mortality table or other tabular factor specified in the plan for adjusting benefits in the same form; and (2) 5.5percent interest and the applicable mortality table.

(iii) if the annuity starting date is on or after the first day of the first plan year beginning in 2004 and beforeDecember 31, 2004, and the plan applies the transition rule in 101(d)(3) of PFEA 04 in lieu of the rule in (ii), theannual amount of the straight life annuity commencing at the same annuity starting date that has the same actuarialpresent value as the participants form of benefit, determined in accordance with Notice 2004-78.

The applicable mortality table is the mortality table within the meaning of 417(e)(3)(B), which is based on mortalitytable under 430((h)(3)(A),.

IRC 415(b)(2)(B), 415(b)(2)(E) and 417(e)(3), and 430(h)(3); Regs. 1.415(b)-1(a), (b) and (c), 1.417(e)-1(d);Rev. Rul. 98-1, 1998-1 C.B. 249; Rev. Rul. 2001-62, 2001-2 C.B. 632; Notice 2004-78, 2004-2 C.B. 879.

III.e.

0612

Section __________ of the plan must provide that where a retirement benefit is provided beginning before age 62,the benefit will be limited to:

(i) if the annuity starting date is in a limitation year beginning before July 1, 2007, the annual amount of a benefitpayable in the form of a straight life annuity commencing at the participants annuity starting date that is theactuarial equivalent of the dollar limitation under 415(b)(1)(A) (as adjusted under 415(d)), with actuarialequivalence computed using whichever of the following produces the smaller annual amount: (1) the interest rateand mortality table or other tabular factor specified in the plan for determining actuarial equivalence for earlyretirement purposes; or (2) a 5 percent interest rate assumption and the applicable mortality table.

(ii) if the annuity starting date is in a limitation year beginning on or after July 1, 2007, and the plan does not havean immediately commencing straight life annuity payable at both age 62 and the age of benefit commencement, theannual amount of a benefit payable in the form of a straight life annuity commencing at the participants annuitystarting date that is the actuarial equivalent of the dollar limitation under 415(b)(1)(A) (as adjusted under 415(d)), with actuarial equivalence computed using a 5 percent interest rate assumption and the applicablemortality table and expressing the participants age based on completed calendar months as of the annuity startingdate.

(iii) if the annuity starting date is in a limitation year beginning on or after July 1, 2007, and the plan has animmediately commencing straight life annuity payable at both age 62 and the age of benefit commencement, the

lesser of (1) the adjusted dollar limitation determined in accordance with (ii); and (2) the product of the dollarlimitation under 415(b)(1)(A) (as adjusted under 415(d)) multiplied by the ratio of the annual amount of theimmediately commencing straight life annuity under the plan at the participants annuity starting date to the annualamount of the immediately commencing straight life annuity under the plan at age 62, both determined withoutapplying the limitations of 415.

The applicable mortality table is the mortality table within the meaning of 417(e)(3)(B), which is based onmortality table under 430((h)(3)(A),.

IRC 415(b)(2)(C) and 415(b)(2)(E)(i) and (v); Regs. 1.415(b)-1(d); Rev. Rul. 2001-62, 2001-2 C.B. 632.


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III.f.

0613

If the benefit under the plan commences after age 65, the plan may provide that dollar limitation under 415(b)(1)(A)(as a

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