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Final Regulations: Nondiscrimination Requirements for Certain Defined Contribution Retirement Plans

Federal Register, June 29, 2001, Page 34535


Internal Revenue Service


Final Regulations


This document contains final regulations that permit certain defined contribution retirement plans to demonstrate compliance with the nondiscrimination requirements based on plan benefits rather than contributions. Under the final regulations, a defined contribution plan can test on a benefits basis if it provides broadly available allocation rates, age-based allocations, or passes a gateway requiring allocation rates for nonhighly compensated employees to be at least 5% of pay or at least one-third of the highest allocation rate for highly compensated employees. The regulations also permit qualified defined contribution and defined benefit plans that are tested together as a single, aggregated plan (and that are not primarily defined benefit or broadly available separate plans) to test on a benefits basis after passing a similar gateway, under which the allocation rate for nonhighly compensated employees need not exceed 7\1/2\% of pay. These final regulations affect employers that maintain qualified retirement plans and qualified retirement plan participants.


Effective Date: These regulations are effective June 29, 2001. Applicability Date: These regulations apply for plan years beginning on or after January 1, 2002.

Further Information

John T. Ricotta, 202-622-6060 or Linda S.F. Marshall, 202-622-6090