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Institute Comments on Proposed Regulation of Catch-Up Provisions
Washington, DC, January 31, 2002 - The Institute submitted a letter to Treasury and IRS officials on the proposed regulations issued under the catch-up provisions of the "Economic Growth and Tax Relief Reconciliation Act of 2001."
The letter makes a number of recommendations that would mitigate the administrative burdens imposed by the proposed regulations. Specifically, the letter urges that Treasury and the IRS:
- provide an option to plans that impose limits on a payroll-period basis to use an irrevocable payroll approach to determine catch-up contributions;
- provide transition relief for the 2002 plan year from the excise tax imposed under Code section 4979;
- clarify that plan language giving discretion to plan administrators to set contribution limits qualifies as limits “contained in the terms of the plan”;
- clarify the interplay between catch-up contributions and matching contributions made to SIMPLE plans; and
- modify the universal availability requirement as articulated in the proposed regulations.