WASHINGTON - As credit unions battle the Internal RevenueService on 457 plans, IRS' proposed section 415 could hurt thosewho work beyond age 65 and small owners, the American Society ofPension Professionals & Actuaries recently testified. ASPPAPresident Jim Jaffe spoke at a recent IRS hearing on the waysdefined benefit and defined contribution retirement plans areregulated under Section 415 of the Internal Revenue Code. He warnedthat an IRS proposal to link existing compensation limits underCode Section 401 to the Code Section 415 requirements woulddirectly conflict with existing authority and could substantiallyreduce permissible benefits for those who either chose to workbeyond age 65 or defer payment of accrued benefits beyond thisdeadline. Rosen was also critical of a proposed change in CodeSection 415 regarding limits on compensation that takes intoaccount a participant's highest three years of compensation. "Whiledecades of existing law has used a "high three" standard withoutregard to plan participation, the proposed change would limit theaverage to only active participation in the relevant plan," Jaffesaid. "The proposed change could be disadvantageous to those whosepeak incomes were recorded prior to their participation in a plan."Jaffe also suggested that the IRS show added flexibility indetermining the effective of the regulations, given that theproposed regulations changes existing guidance that has been inplace for almost three decades. The ASPPA is a nationalorganization of over 5,500 retirement plan professionals, provideconsulting and administrative services for qualified retirementplans covering millions of American workers.

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