Internal Revenue Bulletin: 2006-35
August 28, 2006
Government pick-up plans; employer contributions; income tax; prospective application. This ruling describes the actions required for a state or its political subdivisions, etc., to “pick-up” or treat certain contributions as employer contributions to a plan qualified under section 401(a) of the Code. If certain criteria are met, this ruling will be applied prospectively. Rev. Ruls. 81-35, 81-36, and 87-10 amplified and modified.
Final regulations under section 410 of the Code implement a statutory directive of the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) to amend section 1.410(b)-6(g) of the regulations. The final regulations permit, in certain circumstances, employees of a tax-exempt organization described in section 501(c)(3) to be excluded for the purpose of testing whether a section 401(k) plan (or a section 401(m) plan that is provided under the same general arrangement as the section 401(k) plan of the employer) meets the requirements for minimum coverage specified in section 410(b). The regulations affect tax-exempt employers described in section 501(c)(3), retirement plans sponsored by these employers, and participants in these plans.
Weighted average interest rate update; 30-year Treasury securities. The weighted average interest rate for August 2006 and the resulting permissible range of interest rates used to calculate current liability and to determine the required contribution are set forth.
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