8 that had arisen, which prevented many of those plans from achieving their full potential as a source for retirement income. Citrus Valley Estates, Inc. v. Commissioner, 99 T.C. at 399. In conjunction with its effort to expand the number of employees participating in employer-financed plans, Congress also placed limits on the amounts of pension contributions and benefits available under those plans. [I]t is not in the public interest to make the substantial favored tax treatment associated with qualified retirement plans available without any specific limitation as to the size of the contributions or the amount of benefits that can be provided under such plans. The fact that present law does not provide such specific limitations has made it possible for extremely large contributions and benefits to be made under qualified plans for some highly paid individuals. While there is, of course, no objection to large retirement benefits in themselves, your committee believes it is not appropriate to finance extremely large benefits in part at public expense through the use of the special tax treatment. * * * * * * * * * * Moreover, to prevent abuse, the full [section 415(b)(1)] maximum benefit may be paid only to individuals who have 10 years or more service. Where an individual has served for less than 10 years, the maximum permissible benefit is reduced proportionately. [H. Rept. 93-807, at 35-36 (1974), 1974-3 C.B. (Supp.) 236, 270-271.] Section 415(a) precludes qualified plans from providing for payment of annual benefits in excess of an amount determined under subsection (b). Section 415(b)(1) establishes an annual benefit limitation as the lesser of a dollar amount ($75,000, as adjusted under section 415(b)(2), for the years at issue) or 100Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011