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 100
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