§ 414. Definitions and special rules

(ii) In the case of an applicable employer plan described in section 401(k)(11) or 408(p), except as provided in clause (iii), the applicable dollar amount is $2,500 (the adjusted dollar amount, in the case of an eligible participant who would attain age 60 but would not attain age 64 before the close of the taxable year).

(iii) In the case of an applicable employer plan—

(I) which is maintained by an eligible employer described in section 408(p)(2)(E)(i)(I), or

(II) to which an election under section 408(p)(2)(E)(i)(II) applies for the year (including a plan described in section 401(k)(11) which is maintained by an eligible employer described in section 408(p)(2)(E)(i)(II) and to which such election applies by reason of subparagraphs (B)(i)(I) and (E) of section 401(k)(11)),

(C) Cost-of-living adjustment

(i) Certain large employers In the case of a year beginning after December 31, 2006, the Secretary shall adjust annually the $5,000 amount in subparagraph (B)(i) and the $2,500 amount in subparagraph (B)(ii) for increases in the cost-of-living at the same time and in the same manner as adjustments under section 415(d); except that the base period taken into account shall be the calendar quarter beginning July 1, 2005, and any increase under this subparagraph which is not a multiple of $500 shall be rounded to the next lower multiple of $500. In the case of a year beginning after December 31, 2025, the Secretary shall adjust annually the adjusted dollar amounts applicable under clauses (i) and (ii) of subparagraph (E) for increases in the cost-of-living at the same time and in the same manner as adjustments under the preceding sentence; except that the base period taken into account shall be the calendar quarter beginning July 1, 2024.

(ii) Other employers In the case of a year beginning after December 31, 2024, the Secretary shall adjust annually the dollar amount described in subparagraph (B)(iii) in the manner provided under clause (i) of this subparagraph, except that the base period taken into account shall be the calendar quarter beginning July 1, 2023.

(D) Aggregation of plans For purposes of this paragraph, plans described in clauses (i), (ii), and (iv) of paragraph (6)(A) that are maintained by the same employer (as determined under subsection (b), (c), (m) or (o)) shall be treated as a single plan, and plans described in clause (iii) of paragraph (6)(A) that are maintained by the same employer shall be treated as a single plan.

(E) Adjusted dollar amount For purposes of subparagraph (B), the adjusted dollar amount is—

(i) in the case of clause (i) of subparagraph (B), the greater of—

(I) $10,000, or

(II) an amount equal to 150 percent of the dollar amount which would be in effect under such clause for 2024 for eligible participants not described in the parenthetical in such clause, or

(ii) in the case of clause (ii) of subparagraph (B), the greater of—

(I) $5,000, or

(II) an amount equal to equal to 33 So in original. 150 percent of the dollar amount which would be in effect under such clause for 2025 for eligible participants not described in the parenthetical in such clause.

(3) Treatment of contributions In the case of any contribution to a plan under paragraph (1)—

(A) such contribution shall not, with respect to the year in which the contribution is made—

(i) be subject to any otherwise applicable limitation contained in sections 401(a)(30), 402(h), 403(b), 408, 415(c), and 457(b)(2) (determined without regard to section 457(b)(3)), or

(ii) be taken into account in applying such limitations to other contributions or benefits under such plan or any other such plan, and

(B) except as provided in paragraph (4), such plan shall not be treated as failing to meet the requirements of section 401(a)(4), 401(k)(3), 401(k)(11), 403(b)(12), 408(k), 410(b), or 416 by reason of the making of (or the right to make) such contribution.

(4) Application of nondiscrimination rules

(A) In general An applicable employer plan shall be treated as failing to meet the nondiscrimination requirements under section 401(a)(4) with respect to benefits, rights, and features unless the plan allows all eligible participants to make the same election with respect to the additional elective deferrals under this subsection.

(B) Aggregation For purposes of subparagraph (A), all plans maintained by employers who are treated as a single employer under subsection (b), (c), (m), or (o) of section 414 shall be treated as 1 plan, except that a plan described in clause (i) of section 410(b)(6)(C) shall not be treated as a plan of the employer until the expiration of the transition period with respect to such plan (as determined under clause (ii) of such section).

(5) Eligible participant For purposes of this subsection, the term “eligible participant” means a participant in a plan—

(A) who would attain age 50 by the end of the taxable year,

(B) with respect to whom no other elective deferrals may (without regard to this subsection) be made to the plan for the plan (or other applicable) year by reason of the application of any limitation or other restriction described in paragraph (3) or comparable limitation or restriction contained in the terms of the plan.

(6) Other definitions and rules For purposes of this subsection—

(A) Applicable employer plan The term “applicable employer plan” means—

(i) an employees’ trust described in section 401(a) which is exempt from tax under section 501(a),

(ii) a plan under which amounts are contributed by an individual’s employer for an annuity contract described in section 403(b),

(iii) an eligible deferred compensation plan under section 457 of an eligible employer described in section 457(e)(1)(A), and

(iv) an arrangement meeting the requirements of section 408(k) or (p).

(B) Elective deferral The term “elective deferral” has the meaning given such term by subsection (u)(2)(C).

(C) Exception for section 457 plans This subsection shall not apply to a participant for any year for which a higher limitation applies to the participant under section 457(b)(3).

(7) Certain deferrals must be Roth contributions

(A) In general Except as provided in subparagraph (C), in the case of an eligible participant whose wages (as defined in section 3121(a)) for the preceding calendar year from the employer sponsoring the plan exceed $145,000, paragraph (1) shall apply only if any additional elective deferrals are designated Roth contributions (as defined in section 402A(c)(1)) made pursuant to an employee election.

(B) Roth option In the case of an applicable employer plan with respect to which subparagraph (A) applies to any participant for a plan year, paragraph (1) shall not apply to the plan unless the plan provides that any eligible participant may make the participant’s additional elective deferrals as designated Roth contributions.

(C) Exception Subparagraph (A) shall not apply in the case of an applicable employer plan described in paragraph (6)(A)(iv).

(D) Election to change deferrals The Secretary may provide by regulations that an eligible participant may elect to change the participant’s election to make additional elective deferrals if the participant’s compensation is determined to exceed the limitation under subparagraph (A) after the election is made.

(E) Cost of living adjustment In the case of a year beginning after December 31, 2024, the Secretary shall adjust annually the $145,000 amount in subparagraph (A) for increases in the cost-of-living at the same time and in the same manner as adjustments under 415(d); except that the base period taken into account shall be the calendar quarter beginning July 1, 2023, and any increase under this subparagraph which is not a multiple of $5,000 shall be rounded to the next lower multiple of $5,000.

(w) Special rules for certain withdrawals from eligible automatic contribution arrangements

(1) In general If an eligible automatic contribution arrangement allows an employee to elect to make permissible withdrawals—

In the case of any distribution to an employee by reason of an election under this paragraph, employer matching contributions shall be forfeited or subject to such other treatment as the Secretary may prescribe.

(A) the amount of any such withdrawal shall be includible in the gross income of the employee for the taxable year of the employee in which the distribution is made,

(B) no tax shall be imposed under section 72(t) with respect to the distribution, and

(C) the arrangement shall not be treated as violating any restriction on distributions under this title solely by reason of allowing the withdrawal.

(2) Permissible withdrawal For purposes of this subsection—

(A) In general The term “permissible withdrawal” means any withdrawal from an eligible automatic contribution arrangement meeting the requirements of this paragraph which—

(i) is made pursuant to an election by an employee, and

(ii) consists of elective contributions described in paragraph (3)(B) (and earnings attributable thereto).

(B) Time for making election Subparagraph (A) shall not apply to an election by an employee unless the election is made no later than the date which is 90 days after the date of the first elective contribution with respect to the employee under the arrangement.

(C) Amount of distribution Subparagraph (A) shall not apply to any election by an employee unless the amount of any distribution by reason of the election is equal to the amount of elective contributions made with respect to the first payroll period to which the eligible automatic contribution arrangement applies to the employee and any succeeding payroll period beginning before the effective date of the election (and earnings attributable thereto).

(3) Eligible automatic contribution arrangement For purposes of this subsection, the term “eligible automatic contribution arrangement” means an arrangement under an applicable employer plan—

(A) under which a participant may elect to have the employer make payments as contributions under the plan on behalf of the participant, or to the participant directly in cash,

(B) under which the participant is treated as having elected to have the employer make such contributions in an amount equal to a uniform percentage of compensation provided under the plan until the participant specifically elects not to have such contributions made (or specifically elects to have such contributions made at a different percentage), and

(C) which meets the requirements of paragraph (4).

(4) Notice requirements

(A) In general The administrator of a plan containing an arrangement described in paragraph (3) shall, within a reasonable period before each plan year, give to each employee to whom an arrangement described in paragraph (3) applies for such plan year notice of the employee’s rights and obligations under the arrangement which—

(i) is sufficiently accurate and comprehensive to apprise the employee of such rights and obligations, and

(ii) is written in a manner calculated to be understood by the average employee to whom the arrangement applies.

(B) Time and form of notice A notice shall not be treated as meeting the requirements of subparagraph (A) with respect to an employee unless—

(i) the notice includes an explanation of the employee’s right under the arrangement to elect not to have elective contributions made on the employee’s behalf (or to elect to have such contributions made at a different percentage),

(ii) the employee has a reasonable period of time after receipt of the notice described in clause (i) and before the first elective contribution is made to make such election, and

(iii) the notice explains how contributions made under the arrangement will be invested in the absence of any investment election by the employee.

(5) Applicable employer plan For purposes of this subsection, the term “applicable employer plan” means—

(A) an employees’ trust described in section 401(a) which is exempt from tax under section 501(a),

(B) a plan under which amounts are contributed by an individual’s employer for an annuity contract described in section 403(b),

(C) an eligible deferred compensation plan described in section 457(b) which is maintained by an eligible employer described in section 457(e)(1)(A),

(D) a simplified employee pension the terms of which provide for a salary reduction arrangement described in section 408(k)(6), and

(E) a simple retirement account (as defined in section 408(p)).

(6) Special rule A withdrawal described in paragraph (1) (subject to the limitation of paragraph (2)(C)) shall not be taken into account for purposes of section 401(k)(3) or for purposes of applying the limitation under section 402(g)(1).

(x) Special rules for eligible combined defined benefit plans and qualified cash or deferred arrangements

(1) General rule Except as provided in this subsection, the requirements of this title shall be applied to any defined benefit plan or applicable defined contribution plan which is part of an eligible combined plan in the same manner as if each such plan were not a part of the eligible combined plan. In the case of a termination of the defined benefit plan and the applicable defined contribution plan forming part of an eligible combined plan, the plan administrator shall terminate each such plan separately.

(2) Eligible combined plan For purposes of this subsection—

(A) In general The term “eligible combined plan” means a plan—

For purposes of this subparagraph, the term “small employer” has the meaning given such term by section 4980D(d)(2), except that such section shall be applied by substituting “500” for “50” each place it appears.

(i) which is maintained by an employer which, at the time the plan is established, is a small employer,

(ii) which consists of a defined benefit plan and an applicable defined contribution plan,

(iii) the assets of which are held in a single trust forming part of the plan and are clearly identified and allocated to the defined benefit plan and the applicable defined contribution plan to the extent necessary for the separate application of this title under paragraph (1), and

(iv) with respect to which the benefit, contribution, vesting, and nondiscrimination requirements of subparagraphs (B), (C), (D), (E), and (F) are met.

(B) Benefit requirements

(i) In general The benefit requirements of this subparagraph are met with respect to the defined benefit plan forming part of the eligible combined plan if the accrued benefit of each participant derived from employer contributions, when expressed as an annual retirement benefit, is not less than the applicable percentage of the participant’s final average pay. For purposes of this clause, final average pay shall be determined using the period of consecutive years (not exceeding 5) during which the participant had the greatest aggregate compensation from the employer.

(ii) Applicable percentage For purposes of clause (i), the applicable percentage is the lesser of—

(I) 1 percent multiplied by the number of years of service with the employer, or

(II) 20 percent.

(iii) Special rule for applicable defined benefit plans If the defined benefit plan under clause (i) is an applicable defined benefit plan as defined in section 411(a)(13)(B) which meets the interest credit requirements of section 411(b)(5)(B)(i), the plan shall be treated as meeting the requirements of clause (i) with respect to any plan year if each participant receives a pay credit for the year which is not less than the percentage of compensation determined in accordance with the following table: If the participant’s age as of thebeginning of the year is—The percentage is— 30 or less2 Over 30 but less than 404 40 or over but less than 506 50 or over8.

(iv) Years of service For purposes of this subparagraph, years of service shall be determined under the rules of paragraphs (4), (5), and (6) of section 411(a), except that the plan may not disregard any year of service because of a participant making, or failing to make, any elective deferral with respect to the qualified cash or deferred arrangement to which subparagraph (C) applies.

(C) Contribution requirements

Rules similar to the rules of clauses (ii) and (iii) of section 401(k)(12)(B) shall apply for purposes of this clause.

(i) In general The contribution requirements of this subparagraph with respect to any applicable defined contribution plan forming part of an eligible combined plan are met if—

(I) the qualified cash or deferred arrangement included in such plan constitutes an automatic contribution arrangement, and

(II) the employer is required to make matching contributions on behalf of each employee eligible to participate in the arrangement in an amount equal to 50 percent of the elective contributions of the employee to the extent such elective contributions do not exceed 4 percent of compensation.

(ii) Nonelective contributions An applicable defined contribution plan shall not be treated as failing to meet the requirements of clause (i) because the employer makes nonelective contributions under the plan but such contributions shall not be taken into account in determining whether the requirements of clause (i)(II) are met.

(D) Vesting requirements The vesting requirements of this subparagraph are met if—

For purposes of this subparagraph, the rules of section 411 shall apply to the extent not inconsistent with this subparagraph.

(i) in the case of a defined benefit plan forming part of an eligible combined plan an employee who has completed at least 3 years of service has a nonforfeitable right to 100 percent of the employee’s accrued benefit under the plan derived from employer contributions, and

(ii) in the case of an applicable defined contribution plan forming part of eligible combined plan—

(I) an employee has a nonforfeitable right to any matching contribution made under the qualified cash or deferred arrangement included in such plan by an employer with respect to any elective contribution, including matching contributions in excess of the contributions required under subparagraph (C)(i)(II), and

(II) an employee who has completed at least 3 years of service has a nonforfeitable right to 100 percent of the employee’s accrued benefit derived under the arrangement from nonelective contributions of the employer.

(E) Uniform provision of contributions and benefits In the case of a defined benefit plan or applicable defined contribution plan forming part of an eligible combined plan, the requirements of this subparagraph are met if all contributions and benefits under each such plan, and all rights and features under each such plan, must be provided uniformly to all participants.

(F) Requirements must be met without taking into account social security and similar contributions and benefits or other plans

(i) In general The requirements of this subparagraph are met if the requirements of clauses (ii) and (iii) are met.

(ii) Social security and similar contributions The requirements of this clause are met if—

(I) the requirements of subparagraphs (B) and (C) are met without regard to section 401(l), and

(II) the requirements of sections 401(a)(4) and 410(b) are met with respect to both the applicable defined contribution plan and defined benefit plan forming part of an eligible combined plan without regard to section 401(l).

(iii) Other plans and arrangements The requirements of this clause are met if the applicable defined contribution plan and defined benefit plan forming part of an eligible combined plan meet the requirements of sections 401(a)(4) and 410(b) without being combined with any other plan.

(3) Nondiscrimination requirements for qualified cash or deferred arrangement

(A) In general A qualified cash or deferred arrangement which is included in an applicable defined contribution plan forming part of an eligible combined plan shall be treated as meeting the requirements of section 401(k)(3)(A)(ii) if the requirements of paragraph (2)(C) are met with respect to such arrangement.

(B) Matching contributions In applying section 401(m)(11) to any matching contribution with respect to a contribution to which paragraph (2)(C) applies, the contribution requirement of paragraph (2)(C) and the notice requirements of paragraph (5)(B) shall be substituted for the requirements otherwise applicable under clauses (i) and (ii) of section 401(m)(11)(A).

(4) Satisfaction of top-heavy rules A defined benefit plan and applicable defined contribution plan forming part of an eligible combined plan for any plan year shall be treated as meeting the requirements of section 416 for the plan year.

(5) Automatic contribution arrangement For purposes of this subsection—

(A) In general A qualified cash or deferred arrangement shall be treated as an automatic contribution arrangement if the arrangement—

(i) provides that each employee eligible to participate in the arrangement is treated as having elected to have the employer make elective contributions in an amount equal to 4 percent of the employee’s compensation unless the employee specifically elects not to have such contributions made or to have such contributions made at a different rate, and

(ii) meets the notice requirements under subparagraph (B).

(B) Notice requirements

The requirements of clauses (i) and (ii) of section 401(k)(12)(D) shall be met with respect to the notices described in clauses (ii) and (iii) of this subparagraph.

(i) In general The requirements of this subparagraph are met if the requirements of clauses (ii) and (iii) are met.

(ii) Reasonable period to make election The requirements of this clause are met if each employee to whom subparagraph (A)(i) applies—

(I) receives a notice explaining the employee’s right under the arrangement to elect not to have elective contributions made on the employee’s behalf or to have the contributions made at a different rate, and

(II) has a reasonable period of time after receipt of such notice and before the first elective contribution is made to make such election.

(iii) Annual notice of rights and obligations The requirements of this clause are met if each employee eligible to participate in the arrangement is, within a reasonable period before any year, given notice of the employee’s rights and obligations under the arrangement.

(6) Coordination with other requirements

(A) Treatment of separate plans Section 414(k) shall not apply to an eligible combined plan.

(B) Reporting An eligible combined plan shall be treated as a single plan for purposes of sections 6058 and 6059.

(7) Applicable defined contribution plan For purposes of this subsection—

(A) In general The term “applicable defined contribution plan” means a defined contribution plan which includes a qualified cash or deferred arrangement.

(B) Qualified cash or deferred arrangement The term “qualified cash or deferred arrangement” has the meaning given such term by section 401(k)(2).

(y) Cooperative and small employer charity pension plans

(1) In general For purposes of this title, except as provided in this subsection, a CSEC plan is a defined benefit plan (other than a multiemployer plan)—

(A) to which section 104 of the Pension Protection Act of 2006 applies, without regard to—

(i) section 104(a)(2) of such Act;

(ii) the amendments to such section 104 by section 202(b) of the Preservation of Access to Care for Medicare Beneficiaries and Pension Relief Act of 2010; and

(iii) paragraph (3)(B);

(B) that, as of June 25, 2010, was maintained by more than one employer and all of the employers were organizations described in section 501(c)(3);

(C) that, as of June 25, 2010, was maintained by an employer—

(i) described in section 501(c)(3),

(ii) chartered under part B of subtitle II of title 36, United States Code,

(iii) with employees in at least 40 States, and

(iv) whose primary exempt purpose is to provide services with respect to children; or

(D) that, as of January 1, 2000, was maintained by an employer—

(i) described in section 501(c)(3),

(ii) who has been in existence since at least 1938,

(iii) who conducts medical research directly or indirectly through grant making, and

(iv) whose primary exempt purpose is to provide services with respect to mothers and children.

(2) Aggregation All employers that are treated as a single employer under subsection (b) or (c) shall be treated as a single employer for purposes of determining if a plan was maintained by more than one employer under subparagraphs (B) and (C) of paragraph (1).

(3) Election

(A) In general If a plan falls within the definition of a CSEC plan under this subsection (without regard to this paragraph), such plan shall be a CSEC plan unless the plan sponsor elects not later than the close of the first plan year of the plan beginning after December 31, 2013, not to be treated as a CSEC plan. An election under the preceding sentence shall take effect for such plan year and, once made, may be revoked only with the consent of the Secretary.

(B) Special rule If a plan described in subparagraph (A) is treated as a CSEC plan, section 104 of the Pension Protection Act of 2006, as amended by the Preservation of Access to Care for Medicare Beneficiaries and Pension Relief Act of 2010, shall cease to apply to such plan as of the first date as of which such plan is treated as a CSEC plan.

(z) Certain plan transfers and mergers

(1) In general Under rules prescribed by the Secretary, except as provided in paragraph (2), no amount shall be includible in gross income by reason of—

(A) a transfer of all or a portion of the accrued benefit of a participant or beneficiary, whether or not vested, from a church plan that is a plan described in section 401(a) or an annuity contract described in section 403(b) to an annuity contract described in section 403(b), if such plan and annuity contract are both maintained by the same church or convention or association of churches,

(B) a transfer of all or a portion of the accrued benefit of a participant or beneficiary, whether or not vested, from an annuity contract described in section 403(b) to a church plan that is a plan described in section 401(a), if such plan and annuity contract are both maintained by the same church or convention or association of churches, or

(C) a merger of a church plan that is a plan described in section 401(a), or an annuity contract described in section 403(b), with an annuity contract described in section 403(b), if such plan and annuity contract are both maintained by the same church or convention or association of churches.

(2) Limitation Paragraph (1) shall not apply to a transfer or merger unless the participant’s or beneficiary’s total accrued benefit immediately after the transfer or merger is equal to or greater than the participant’s or beneficiary’s total accrued benefit immediately before the transfer or merger, and such total accrued benefit is nonforfeitable after the transfer or merger.

(3) Qualification A plan or annuity contract shall not fail to be considered to be described in section 401(a) or 403(b) merely because such plan or annuity contract engages in a transfer or merger described in this subsection.

(4) Definitions For purposes of this subsection—

(A) Church or convention or association of churches The term “church or convention or association of churches” includes an organization described in subparagraph (A) or (B)(ii) of subsection (e)(3).

(B) Annuity contract The term “annuity contract” includes a custodial account described in section 403(b)(7) and a retirement income account described in section 403(b)(9).

(C) Accrued benefit The term “accrued benefit” means—

(i) in the case of a defined benefit plan, the employee’s accrued benefit determined under the plan, and

(ii) in the case of a plan other than a defined benefit plan, the balance of the employee’s account under the plan.

(aa) Special rules applicable to benefit overpayments

(1) In general A plan shall not fail to be treated as described in clause (i), (ii), (iii), or (iv) of section 219(g)(5)(A) (and shall not fail to be treated as satisfying the requirements of section 401(a) or 403) merely because—

(A) the plan fails to obtain payment from any participant, beneficiary, employer, plan sponsor, fiduciary, or other party on account of any inadvertent benefit overpayment made by the plan, or

(B) the plan sponsor amends the plan to increase past, or decrease future, benefit payments to affected participants and beneficiaries in order to adjust for prior inadvertent benefit overpayments.

(2) Reduction in future benefit payments and recovery from responsible party Paragraph (1) shall not fail to apply to a plan merely because, after discovering a benefit overpayment, such plan—

(A) reduces future benefit payments to the correct amount provided for under the terms of the plan, or

(B) seeks recovery from the person or persons responsible for such overpayment.

(3) Employer funding obligations Nothing in this subsection shall relieve an employer of any obligation imposed on it to make contributions to a plan to meet the minimum funding standards under sections 412 and 430 or to prevent or restore an impermissible forfeiture in accordance with section 411.

(4) Observance of benefit limitations Notwithstanding paragraph (1), a plan to which paragraph (1) applies shall observe any limitations imposed on it by section 401(a)(17) or 415. The plan may enforce such limitations using any method approved by the Secretary for recouping benefits previously paid or allocations previously made in excess of such limitations.

(5) Coordination with other qualification requirements The Secretary may issue regulations or other guidance of general applicability specifying how benefit overpayments and their recoupment or non-recoupment from a participant or beneficiary shall be taken into account for purposes of satisfying any requirement applicable to a plan to which paragraph (1) applies.

(bb) Eliminating unnecessary plan requirements related to unenrolled participants

(1) In general Notwithstanding any other provision of this title, with respect to any defined contribution plan, no disclosure, notice, or other plan document (other than the notices and documents described in subparagraphs (A) and (B)) shall be required to be furnished under this title to any unenrolled participant if the unenrolled participant is furnished—

(A) an annual reminder notice of such participant’s eligibility to participate in such plan and any applicable election deadlines under the plan, and

(B) any document requested by such participant that the participant would be entitled to receive notwithstanding this subsection.

(2) Unenrolled participant For purposes of this subsection, the term “unenrolled participant” means an employee who—

For purposes of this subsection, any eligibility to participate in the plan following any period for which such employee was not eligible to participate shall be treated as initial eligibility.

(A) is eligible to participate in a defined contribution plan,

(B) has been furnished—

(i) the summary plan description pursuant to section 104(b) of the Employee Retirement Income Security Act of 1974, and

(ii) any other notices related to eligibility under the plan and required to be furnished under this title, or the Employee Retirement Income Security Act of 1974, in connection with such participant’s initial eligibility to participate in such plan,

(C) is not participating in such plan, and

(D) satisfies such other criteria as the Secretary of the Treasury may determine appropriate, as prescribed in guidance issued in consultation with the Secretary of Labor.

(3) Annual reminder notice For purposes of this subsection, the term “annual reminder notice” means the notice described in section 111(c) of the Employee Retirement Income Security Act of 1974.

(cc) Correcting automatic contribution errors

(1) In general Any plan or arrangement shall not fail to be treated as a plan described in sections 401(a), 403(b), 408, or 457(b), as applicable, solely by reason of a corrected error.

(2) Corrected error defined For purposes of this subsection, the term “corrected error” means a reasonable administrative error—

Such correction may occur before or after the participant has terminated employment and may occur without regard to whether the error is identified by the Secretary.

(A)

(i) made in implementing an automatic enrollment or automatic escalation feature with respect to an eligible employee (or an affirmative election made by an eligible employee covered by such feature), or

(ii) made by failing to afford an eligible employee the opportunity to make an affirmative election because such employee was improperly excluded from the plan],^3 and

(B) that is corrected prospectively by implementing an automatic enrollment or automatic escalation feature with respect to an eligible employee (or an affirmative election made by an eligible employee) determined in accordance with the terms of an eligible automatic contribution arrangement (as defined under subsection (w)(3)), provided that—

(i) such implementation error is corrected not later than—

(I) the date of the first payment of compensation made by the employer to the employee on or after the last day of the 9½ month-period after the end of the plan year during which such error with respect to the employee first occurred, or

(II) if earlier in the case of an employee who notifies the plan sponsor of such error, the date of the first payment of compensation made by the employer to the employee on or after the last day of the month following the month in which such notification was made,

(ii) in the case of an employee who would have been entitled to additional matching contributions had any missed elective deferral been made, the plan sponsor makes a corrective allocation, not later than the deadline specified by the Secretary in regulations or other guidance prescribed under paragraph (3), of matching contributions on behalf of the employee in an amount equal to the additional matching contributions to which the employee would have been so entitled (adjusted to account for earnings had the missed elective deferrals been made).

(iii) such implementation error is of a type which is so corrected for all similarly situated participants in a nondiscriminatory manner,

(iv) notice of such error is given to the employee not later than 45 days after the date on which correct deferrals begin, and

(v) the notice under clause (iv) satisfies such regulations or other guidance as the Secretary prescribes under paragraph (4).

(3) No obligation for employer to restore missed elective deferrals If the requirements of paragraph (2)(B) are satisfied, the employer will not be required to provide eligible employees with the missed amount of elective deferrals resulting from a reasonable administrative error described in paragraph (2)(A)(i) or (ii) through a qualified nonelective contribution, or otherwise.

(4) Regulations and guidance for favorable correction methods The Secretary shall by regulations or other guidance of general applicability prescribe—

(A) the deadline for making a corrective allocation of matching contributions required by paragraph (2)(B)(ii),

(B) the content of the notice required by paragraph (2)(B)(iv),

(C) the manner in which the amount of the corrective allocation under paragraph (2)(B)(ii) is determined,

(D) the manner of adjustment to account for earnings on matching contributions under paragraph (2)(B)(ii), and

(E) such other rules as are necessary to carry out the purposes of the subsection.

(Added Pub. L. 93–406, title II, § 1015, Sept. 2, 1974, 88 Stat. 925; amended Pub. L. 94–455, title XIX, §§ 1901(a)(64), 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1775, 1834; Pub. L. 95–600, title I, § 152(d), Nov. 6, 1978, 92 Stat. 2799; Pub. L. 96–364, title II, §§ 207, 208(a), title IV, § 407(b), Sept. 26, 1980, 94 Stat. 1288, 1289, 1305; Pub. L. 96–605, title II, § 201(a), Dec. 28, 1980, 94 Stat. 3526; Pub. L. 96–613, § 5(a), Dec. 28, 1980, 94 Stat. 3580; Pub. L. 97–248, title II, §§ 240(c), 246(a), 248(a), Sept. 3, 1982, 96 Stat. 520, 525, 526; Pub. L. 98–369, div. A, title IV, § 491(d)(26), (27), title V, § 526(a)(1), (b)(1), (d)(1), (2), title VII, § 713(i), July 18, 1984, 98 Stat. 850, 874, 875, 960; Pub. L. 98–397, title II, § 204(b), Aug. 23, 1984, 98 Stat. 1445; Pub. L. 99–514, title XI, §§ 1114(a), (b)(11), 1115(a), 1117(c), 1146(a), (b), 1151(e)(1), (i), title XIII, § 1301(j)(4), title XVIII, §§ 1852(f), 1898(c)(2)(A), (4)(A), (6)(A), (7)(A)(ii)–(vii), 1899A(12), Oct. 22, 1986, 100 Stat. 2448, 2451, 2452, 2462, 2491, 2506, 2507, 2657, 2868, 2951, 2953, 2954, 2958; Pub. L. 100–203, title IX, § 9305(c), Dec. 22, 1987, 101 Stat. 1330–352; Pub. L. 100–647, title I, §§ 1011(d)(8), (e)(4), (h)(5), (i)(1)–(4)(A), (j)(1), (2), 1011A(b)(3), 1011B(a)(16), (17), (19), (20), 1018(t)(8)(E)–(G), title II, § 2005(c)(1), (2), title III, §§ 3011(b)(4), (5), 3021(b)(1), (2)(A), title VI, § 6067(a), Nov. 10, 1988, 102 Stat. 3460, 3461, 3465, 3467, 3468, 3473, 3485, 3589, 3611, 3612, 3625, 3631, 3632, 3703; Pub. L. 101–140, title II, §§ 203(a)(6), 204(b)(2), Nov. 8, 1989, 103 Stat. 831, 833; Pub. L. 101–239, title VII, §§ 7811(m)(5), 7813(b), 7841(a)(2), Dec. 19, 1989, 103 Stat. 2412, 2413, 2427; Pub. L. 101–508, title XI, § 11703(b)(1), Nov. 5, 1990, 104 Stat. 1388–517; Pub. L. 102–318, title V, § 521(b)(20)–(22), July 3, 1992, 106 Stat. 311; Pub. L. 104–188, title I, §§ 1421(b)(9)(C), 1431(a), (b)(1), (c)(1)(A), (D), (E), 1434(b), 1454(a), 1461(a), 1462(a), 1704(n)(1), Aug. 20, 1996, 110 Stat. 1798, 1802, 1803, 1807, 1817, 1822, 1824, 1883; Pub. L. 105–34, title XV, § 1522(a), title XVI, § 1601(d)(6)(A), (7), (h)(2)(D)(i), (ii), Aug. 5, 1997, 111 Stat. 1070, 1089, 1090, 1092; Pub. L. 105–206, title VI, § 6018(c), July 22, 1998, 112 Stat. 822; Pub. L. 106–554, § 1(a)(7) [title III, § 314(e)(2)], Dec. 21, 2000, 114 Stat. 2763, 2763A–643; Pub. L. 107–16, title VI, §§ 631(a), 635(a)–(c), June 7, 2001, 115 Stat. 111, 117; Pub. L. 107–147, title IV, § 411(o)(3)–(8), Mar. 9, 2002, 116 Stat. 48, 49; Pub. L. 108–311, title IV, § 408(a)(15), Oct. 4, 2004, 118 Stat. 1192; Pub. L. 109–280, title I, § 114(c), title IX, §§ 902(d)(1), 903(a), 906(a)(1), (b)(1)(C), title XI, § 1106(b), Aug. 17, 2006, 120 Stat. 853, 1036, 1040, 1051, 1052, 1062; Pub. L. 110–28, title VI, § 6611(a)(2), (b)(2), May 25, 2007, 121 Stat. 180, 181; Pub. L. 110–245, title I, §§ 104(b), 105(b)(1), June 17, 2008, 122 Stat. 1626, 1628; Pub. L. 110–289, div. A, title VI, § 1604(b)(4), July 30, 2008, 122 Stat. 2829; Pub. L. 110–458, title I, §§ 101(d)(2)(E), 109(b)(4)–(c)(1), Dec. 23, 2008, 122 Stat. 5099, 5111; Pub. L. 113–97, title II, §§ 201, 203(a), Apr. 7, 2014, 128 Stat. 1121, 1138; Pub. L. 113–235, div. P, § 3(b), Dec. 16, 2014, 128 Stat. 2829; Pub. L. 113–295, div. A, title II, § 221(a)(19)(B)(i), (ii), (55), Dec. 19, 2014, 128 Stat. 4039, 4045; Pub. L. 114–113, div. Q, title III, § 336(a)(1), (d)(1), Dec. 18, 2015, 129 Stat. 3109, 3112; Pub. L. 115–141, div. U, title IV, § 401(a)(87)–(91), Mar. 23, 2018, 132 Stat. 1188; Pub. L. 116–136, div. A, title III, § 3609(b), Mar. 27, 2020, 134 Stat. 413; Pub. L. 117–328, div. T, title I, §§ 109(a)–(c), 117(b), title III, §§ 301(b)(1), 315(a), 320(b), 339(a), 350(a), title VI, § 603(a), Dec. 29, 2022, 136 Stat. 5290, 5300, 5337, 5351, 5355, 5374, 5386, 5391.)

Inflation Adjusted Items for Certain Years

For inflation adjustment of certain items in this section, see Internal Revenue Notices listed in a table under section 401 of this title.

Editorial Notes

References in Text

The Railroad Retirement Act of 1935 or 1937, referred to in subsec. (d), means act Aug. 29, 1935, ch. 812, 49 Stat. 867, known as the Railroad Retirement Act of 1935. The Railroad Retirement Act of 1935 was amended generally by act June 24, 1937, ch. 382, part I, 50 Stat. 307, and was known as the Railroad Retirement Act of 1937. The Railroad Retirement Act of 1937 was amended generally and redesignated the Railroad Retirement Act of 1974 by Pub. L. 93–444, title I, Oct. 16, 1974, 88 Stat. 1305 and is classified generally to subchapter IV (§ 231 et seq.) of chapter 9 of Title 45, Railroads. For complete classification of this Act to the Code, see Tables.

The International Organizations Immunities Act (59 Stat. 669), referred to in subsec. (d), is act Dec. 29, 1945, ch. 652, title I, 59 Stat. 669, which is classified principally to subchapter XVIII (§ 288 et seq.) of chapter 7 of Title 22, Foreign Relations and Intercourse. The Act also amended several other laws including the Internal Revenue Code of 1939. For exemption from taxation of income of international organizations and of the compensation of employees thereof, see sections 892 and 893 of this title. For complete classification of this Act to the Code, see Short Title note set out under section 288 of Title 22 and Tables.

The Employee Retirement Income Security Act of 1974, referred to in subsecs. (f)(3), (5), (6)(B), (F), (l)(1), (2)(E), and (bb)(2)(B), (3), is Pub. L. 93–406, Sept. 2, 1974, 88 Stat. 829, which is classified principally to chapter 18 (§ 1001 et seq.) of Title 29, Labor. Title IV of the Act is classified principally to subchapter III (§ 1301 et seq.) of chapter 18 of Title 29. Sections 3(37)(A)(iii), 104(b), and 111(c) of the Act are classified to sections 1002(37)(A)(iii), 1024(b), and 1031(c), respectively, of Title 29. Section 4403(b) and (c) of the Employee Retirement Income Security Act of 1974 probably means section 4303(b) and (c) of such Act which is classified to section 1453(b) and (c) of Title 29. For complete classification of this Act to the Code, see Short Title note set out under section 1001 of Title 29 and Tables.

The date of the enactment of the Multiemployer Pension Plan Amendments Act of 1980, referred to in subsec. (f)(4), (5), means the date of the enactment of Pub. L. 96–364, which was approved Sept. 26, 1980.

Effective date of the Multiemployer Pension Plan Amendments Act of 1980, referred to in subsec. (f)(5), probably means the date of enactment of the Multiemployer Pension Plan Amendments Act of 1980, which was approved Sept. 26, 1980.

The Pension Protection Act of 2006, referred to in subsecs. (f)(6)(A) and (y)(1)(A), (3)(B), is Pub. L. 109–280, Aug. 17, 2006, 120 Stat. 780. Section 104 of the Act is set out as a note under section 401 of this title. For complete classification of this Act to the Code, see Short Title of 2006 Amendment note set out under section 1001 of Title 29, Labor, and Tables.

Section 403(b)(7)(A)(ii), referred to in subsec. (u)(12)(B)(i), probably means section 403(b)(7)(A)(ii) of this title prior to amendment by Pub. L. 116–94, div. O, title I, § 109(c)(2), Dec. 20, 2019, 133 Stat. 3151.

The Preservation of Access to Care for Medicare Beneficiaries and Pension Relief Act of 2010, referred to in subsec. (y)(1)(A)(ii), (3)(B), is Pub. L. 111–192, June 25, 2010, 124 Stat. 1280. For complete classification of this Act to the Code, see Short Title of 2010 Amendment note set out under section 1001 of Title 29, Labor, and Tables.

Amendments

2022—Subsec. (b). Pub. L. 117–328, § 315(a)(1), designated existing provisions as par. (1), inserted heading, and added par. (2).

Subsec. (m)(6)(B). Pub. L. 117–328, § 315(a)(2)(A), (B), designated existing provisions as cl. (i), inserted heading, and added cls. (ii) and (iii).

Subsec. (m)(6)(B)(i). Pub. L. 117–328, § 315(a)(2)(C), substituted “apply, except that community property laws shall be disregarded for purposes of determining ownership” for “apply”.

Subsec. (p)(1)(B). Pub. L. 117–328, § 339(a)(2), inserted concluding provisions.

Subsec. (p)(1)(B)(ii). Pub. L. 117–328, § 339(a)(1), inserted “or Tribal” after “State”.

Subsec. (v)(2)(B)(i). Pub. L. 117–328, § 109(a)(1), inserted before period at end “(the adjusted dollar amount, in the case of an eligible participant who would attain age 60 but would not attain age 64 before the close of the taxable year)”.

Subsec. (v)(2)(B)(ii). Pub. L. 117–328, § 117(b)(1)(A), substituted “except as provided in clause (iii), the applicable” for “the applicable”.

Pub. L. 117–328, § 109(a)(2), inserted before period at end “(the adjusted dollar amount, in the case of an eligible participant who would attain age 60 but would not attain age 64 before the close of the taxable year)”.

Subsec. (v)(2)(B)(iii). Pub. L. 117–328, § 117(b)(1)(B), added cl. (iii).

Subsec. (v)(2)(C). Pub. L. 117–328, § 117(b)(2), designated existing provisions as cl. (i), inserted heading, and added cl. (ii).

Pub. L. 117–328, § 109(c), inserted at end “In the case of a year beginning after December 31, 2025, the Secretary shall adjust annually the adjusted dollar amounts applicable under clauses (i) and (ii) of subparagraph (E) for increases in the cost-of-living at the same time and in the same manner as adjustments under the preceding sentence; except that the base period taken into account shall be the calendar quarter beginning July 1, 2024.”

Subsec. (v)(2)(E). Pub. L. 117–328, § 109(b), added subpar. (E).

Subsec. (v)(7). Pub. L. 117–328, § 603(a), added par. (7).

Subsec. (aa). Pub. L. 117–328, § 301(b)(1), added subsec. (aa).

Subsec. (bb). Pub. L. 117–328, § 320(b), added subsec. (bb).

Subsec. (cc). Pub. L. 117–328, § 350(a), added subsec. (cc).

2020—Subsec. (y)(1)(D). Pub. L. 116–136 added subpar. (D).

2018—Subsec. (l)(2)(G). Pub. L. 115–141, § 401(a)(87), substituted “depository institutions” for “banks” in heading.

Subsec. (u)(6). Pub. L. 115–141, § 401(a)(88), substituted “section 457(b)))” for “section 457(b))”.

Subsec. (x)(1). Pub. L. 115–141, § 401(a)(89), substituted “is” for “are”.

Subsec. (y)(1)(C)(i). Pub. L. 115–141, § 401(a)(90), struck out “of such Code” after “section 501(c)(3)”.

Subsec. (y)(2). Pub. L. 115–141, § 401(a)(91), substituted “subparagraphs” for “subparagraph”.

2015—Subsec. (c). Pub. L. 114–113, § 336(a)(1), designated existing provisions as par. (1), inserted heading, substituted “Except as provided in paragraph (2), for purposes” for “For purposes”, and added par. (2).

Subsec. (z). Pub. L. 114–113, § 336(d)(1), added subsec. (z).

2014—Subsec. (n)(3)(C). Pub. L. 113–295, § 221(a)(19)(B)(i), struck out “120,” after “117(d),”.

Subsec. (t)(2). Pub. L. 113–295, § 221(a)(19)(B)(ii), struck out “120,” after “117(d),”.

Subsec. (v)(2)(B)(i), (ii). Pub. L. 113–295, § 221(a)(55), amended cls. (i) and (ii) generally. Prior to amendment, cls. (i) and (ii) listed applicable dollar amounts for taxable years 2002 to 2006 and thereafter for an applicable employer plan other than a plan described in section 401(k)(11) or 408(p) and an applicable employer plan described in section 401(k)(11) or 408(p), respectively.

Subsec. (y). Pub. L. 113–97, § 201, added subsec. (y).

Subsec. (y)(1)(C). Pub. L. 113–235, § 3(b)(1), added subpar. (C).

Subsec. (y)(2). Pub. L. 113–235, § 3(b)(2), substituted “subparagraph (B) and (C) of paragraph (1)” for “paragraph (1)(B)”.

Subsec. (y)(3). Pub. L. 113–97, § 203(a), added par. (3).

2008—Subsec. (l)(2)(B)(i)(I). Pub. L. 110–458, § 101(d)(2)(E), amended subcl. (I) generally. Prior to amendment, subcl. (I) read as follows: “the amount determined under section 431(c)(6)(A)(i) in the case of a multiemployer plan (and the sum of the funding shortfall and target normal cost determined under section 430 in the case of any other plan), over”.

Subsec. (l)(2)(G). Pub. L. 110–289, § 1604(b)(4), which directed substitution of “bridge depository institution” for “bridge bank”, was executed by making the substitution wherever appearing in text, to reflect the probable intent of Congress.

Subsec. (u). Pub. L. 110–245, § 105(b)(1)(B), inserted “and to differential wage payments to members on active duty” after “USERRA” in heading.

Subsec. (u)(9) to (11). Pub. L. 110–245, § 104(b), added par. (9) and redesignated former pars. (9) and (10) as (10) and (11), respectively.

Subsec. (u)(12). Pub. L. 110–245, § 105(b)(1)(A), added par. (12).

Subsec. (w)(3)(B) to (D). Pub. L. 110–458, § 109(b)(4), inserted “and” after comma at end of subpar. (B), redesignated subpar. (D) as (C), and struck out former subpar. (C) which read as follows: “under which, in the absence of an investment election by the participant, contributions described in subparagraph (B) are invested in accordance with regulations prescribed by the Secretary of Labor under section 404(c)(5) of the Employee Retirement Income Security Act of 1974, and”.

Subsec. (w)(5)(D), (E). Pub. L. 110–458, § 109(b)(5), added subpars. (D) and (E).

Subsec. (w)(6). Pub. L. 110–458, § 109(b)(6), inserted “or for purposes of applying the limitation under section 402(g)(1)” before period at end.

Subsec. (x)(1). Pub. L. 110–458, § 109(c)(1), inserted at end “In the case of a termination of the defined benefit plan and the applicable defined contribution plan forming part of an eligible combined plan, the plan administrator shall terminate each such plan separately.”

2007—Subsec. (f)(6)(A)(ii)(I). Pub. L. 110–28, § 6611(a)(2)(A), substituted “for each of the 3 plan years immediately preceding the first plan year for which the election under this paragraph is effective with respect to the plan,” for “for each of the 3 plan years immediately before the date of enactment of the Pension Protection Act of 2006,”.

Subsec. (f)(6)(B). Pub. L. 110–28, § 6611(a)(2)(B), substituted “starting with any plan year beginning on or after January 1, 1999, and ending before January 1, 2008, as designated by the plan in the election made under subparagraph (A)(ii)” for “starting with the first plan year ending after the date of the enactment of the Pension Protection Act of 2006”.

Subsec. (f)(6)(E). Pub. L. 110–28, § 6611(b)(2), substituted “if it is a plan sponsored by an organization which is described in section 501(c)(5) and exempt from tax under section 501(a) and which was established in Chicago, Illinois, on August 12, 1881.” for “if it is a plan—

“(i) that was established in Chicago, Illinois, on August 12, 1881; and

“(ii) sponsored by an organization described in section 501(c)(5) and exempt from tax under section 501(a).”

Subsec. (f)(6)(F). Pub. L. 110–28, § 6611(a)(2)(C), added subpar. (F).

2006—Subsec. (d). Pub. L. 109–280, § 906(a)(1), inserted at end “The term ‘governmental plan’ includes a plan which is established and maintained by an Indian tribal government (as defined in section 7701(a)(40)), a subdivision of an Indian tribal government (determined in accordance with section 7871(d)), or an agency or instrumentality of either, and all of the participants of which are employees of such entity substantially all of whose services as such an employee are in the performance of essential governmental functions but not in the performance of commercial activities (whether or not an essential government function).”

Subsec. (f)(6). Pub. L. 109–280, § 1106(b), added par. (6).

Subsec. (h)(2). Pub. L. 109–280, § 906(b)(1)(C), inserted “or a governmental plan described in the last sentence of section 414(d) (relating to plans of Indian tribal governments),” after “foregoing,”.

Subsec. (l)(2)(B)(i)(I). Pub. L. 109–280, § 114(c), amended subcl. (I) generally. Prior to amendment, subcl. (I) read as follows: “the amount determined under section 412(c)(7)(A)(i) with respect to the plan, over”.

Subsec. (w). Pub. L. 109–280, § 902(d)(1), added subsec. (w).

Subsec. (x). Pub. L. 109–280, § 903(a), added subsec. (x).

2004—Subsec. (q)(7). Pub. L. 108–311 substituted “subsection” for “section”.

2002—Subsec. (v)(2)(D). Pub. L. 107–147, § 411(o)(3), added subpar. (D).

Subsec. (v)(3)(A)(i). Pub. L. 107–147, § 411(o)(4), substituted “sections 401(a)(30), 402(h), 403(b), 408, 415(c), and 457(b)(2) (determined without regard to section 457(b)(3))” for “section 402(g), 402(h), 403(b), 404(a), 404(h), 408(k), 408(p), 415, or 457”.

Subsec. (v)(3)(B). Pub. L. 107–147, § 411(o)(5), substituted “section 401(a)(4), 401(k)(3), 401(k)(11), 403(b)(12), 408(k), 410(b), or 416” for “section 401(a)(4), 401(a)(26), 401(k)(3), 401(k)(11), 401(k)(12), 403(b)(12), 408(k), 408(p), 408B, 410(b), or 416”.

Subsec. (v)(4)(B). Pub. L. 107–147, § 411(o)(6), inserted before period at end “, except that a plan described in clause (i) of section 410(b)(6)(C) shall not be treated as a plan of the employer until the expiration of the transition period with respect to such plan (as determined under clause (ii) of such section)”.

Subsec. (v)(5). Pub. L. 107–147, § 411(o)(7)(A), struck out “, with respect to any plan year,” before “a participant” in introductory provisions.

Subsec. (v)(5)(A). Pub. L. 107–147, § 411(o)(7)(B), amended subpar. (A) generally. Prior to amendment, subpar (A) read as follows: “who has attained the age of 50 before the close of the plan year, and”.

Subsec. (v)(5)(B). Pub. L. 107–147, § 411(o)(7)(C), substituted “plan (or other applicable) year” for “plan year”.

Subsec. (v)(6)(C). Pub. L. 107–147, § 411(o)(8), reenacted heading without change and amended text generally. Prior to amendment, text read as follows: “This subsection shall not apply to an applicable employer plan described in subparagraph (A)(iii) for any year to which section 457(b)(3) applies.”

2001—Subsec. (p)(10). Pub. L. 107–16, § 635(b), substituted “section 409(d), and section 457(d)” for “and section 409(d)”.

Subsec. (p)(11). Pub. L. 107–16, § 635(a), in heading substituted “certain other plans” for “governmental and church plans” and in text inserted “or an eligible deferred compensation plan (within the meaning of section 457(b))” after “subsection (e))”.

Subsec. (p)(12), (13). Pub. L. 107–16, § 635(c), added par. (12) and redesignated former par. (12) as (13).

Subsec. (v). Pub. L. 107–16, § 631(a), added subsec. (v).

2000—Subsec. (s)(2). Pub. L. 106–554 substituted “section 125, 132(f)(4), 402(e)(3)” for “section 125, 402(e)(3)”.

1998—Subsec. (q)(5). Pub. L. 105–206 made technical amendment to Pub. L. 104–188, § 1434(c)(1)(E). See 1996 Amendment note below.

1997—Subsec. (e)(5)(A). Pub. L. 105–34, § 1601(d)(6)(A), amended heading and text of subpar. (A) generally. Prior to amendment, text read as follows: “For purposes of this part—

“(i) In general.—An employee of a church or a convention or association of churches shall include a duly ordained, commissioned, or licensed minister of a church who, in connection with the exercise of his or her ministry—

“(I) is a self-employed individual (within the meaning of section 401(c)(1)(B)), or

“(II) is employed by an organization other than an organization described in section 501(c)(3).

“(ii) Treatment as employer and employee.—

“(I) Self-employed.—A minister described in clause (i)(I) shall be treated as his or her own employer which is an organization described in section 501(c)(3) and which is exempt from tax under section 501(a).

“(II) Others.—A minister described in clause (i)(II) shall be treated as employed by an organization described in section 501(c)(3) and exempt from tax under section 501(a).”

Subsec. (e)(5)(C). Pub. L. 105–34, § 1522(a)(1), substituted “not otherwise participating” for “not eligible to participate”.

Subsec. (e)(5)(E). Pub. L. 105–34, § 1522(a)(2), added subpar. (E).

Subsec. (n)(3)(C). Pub. L. 105–34, § 1601(h)(2)(D)(i), inserted “137,” after “132,”.

Subsec. (q)(7), (9). Pub. L. 105–34, § 1601(d)(7), redesignated par. (7), relating to certain employees not considered highly compensated and excluded employees under pre-ERISA rules for church plans, as (9).

Subsec. (t)(2). Pub. L. 105–34, § 1601(h)(2)(D)(ii), inserted “137,” after “132,”.

1996—Subsecs. (b), (c). Pub. L. 104–188, § 1421(b)(9)(C), inserted “408(p),” after “408(k),”.

Subsec. (e)(5). Pub. L. 104–188, § 1461(a), added par. (5).

Subsec. (m)(4)(B). Pub. L. 104–188, § 1421(b)(9)(C), inserted “408(p),” after “408(k),”.

Subsec. (n)(2)(C). Pub. L. 104–188, § 1454(a), amended subpar. (C) generally. Prior to amendment, subpar. (C) read as follows: “such services are of a type historically performed, in the business field of the recipient, by employees.”

Subsec. (n)(3)(B). Pub. L. 104–188, § 1421(b)(9)(C), inserted “408(p),” after “408(k),”.

Subsec. (q)(1). Pub. L. 104–188, § 1431(a), amended par. (1) generally. Prior to amendment, par. (1) read as follows: “In general.—The term ‘highly compensated employee’ means any employee who, during the year or the preceding year—

“(A) was at any time a 5-percent owner,

“(B) received compensation from the employer in excess of $75,000,

“(C) received compensation from the employer in excess of $50,000 and was in the top-paid group of employees for such year, or

“(D) was at any time an officer and received compensation greater than 50 percent of the amount in effect under section 415(b)(1)(A) for such year.

The Secretary shall adjust the $75,000 and $50,000 amounts under this paragraph at the same time and in the same manner as under section 415(d).”

Subsec. (q)(2), (3). Pub. L. 104–188, § 1431(c)(1)(A), redesignated pars. (3) and (4) as (2) and (3), respectively, and struck out former par. (2) which read as follows: “Special rule for current year.—In the case of the year for which the relevant determination is being made, an employee not described in subparagraph (B), (C), or (D) of paragraph (1) for the preceding year (without regard to this paragraph) shall not be treated as described in subparagraph (B), (C), or (D) of paragraph (1) unless such employee is a member of the group consisting of the 100 employees paid the greatest compensation during the year for which such determination is being made.”

Subsec. (q)(4). Pub. L. 104–188, § 1434(b)(1), amended heading and text of par. (4) generally. Prior to amendment, text read as follows: “For purposes of this subsection—

“(A) In general.—The term ‘compensation’ means compensation within the meaning of section 415(c)(3).

“(B) Certain provisions not taken into account.—The determination under subparagraph (A) shall be made—

“(i) without regard to sections 125, 402(e)(3), and 402(h)(1)(B), and

“(ii) in the case of employer contributions made pursuant to a salary reduction agreement, without regard to section 403(b).”

Pub. L. 104–188, § 1431(c)(1)(A), redesignated par. (7) as (4).

Subsec. (q)(5). Pub. L. 104–188, § 1434(c)(1)(E), as amended by Pub. L. 105–206, § 6018(c), struck out “under paragraph (4) or the number of officers taken into account under paragraph (5)” after “top-paid group” in introductory provisions.

Pub. L. 104–188, § 1431(c)(1)(A), redesignated par. (8) as (5) and struck out former par. (5) which read as follows: “Special rules for treatment of officers.—

“(A) Not more than 50 officers taken into account.—For purposes of paragraph (1)(D), no more than 50 employees (or, if lesser, the greater of 3 employees or 10 percent of the employees) shall be treated as officers.

“(B) At least 1 officer taken into account.—If for any year no officer of the employer is described in paragraph (1)(D), the highest paid officer of the employer for such year shall be treated as described in such paragraph.”

Subsec. (q)(6). Pub. L. 104–188, § 1431(b)(1), (c)(1)(A), redesignated par. (9) as (6) and struck out former par. (6) which related to treatment of families of 5-percent owners or of highly compensated employees.

Subsec. (q)(7). Pub. L. 104–188, § 1462(a), added par. (7) relating to certain employees not considered highly compensated and excluded employees under pre-ERISA rules for church plans.

Pub. L. 104–188, § 1431(c)(1)(A), redesignated par. (10), relating to coordination with other provisions, as (7). Former par. (7) redesignated (4).

Subsec. (q)(8) to (12). Pub. L. 104–188, § 1431(c)(1)(A), redesignated pars. (8) to (11) as (5) to (8), respectively, and struck out par. (12) which related to simplified method for determining highly compensated employees.

Subsec. (r)(2)(A). Pub. L. 104–188, § 1431(c)(1)(D), substituted “subsection (q)(5)” for “subsection (q)(8)”.

Subsec. (s)(2). Pub. L. 104–188, § 1434(b)(2), inserted “not” after “elect” in heading and in text.

Subsec. (u). Pub. L. 104–188, § 1704(n)(1), added subsec. (u).

1992—Subsec. (n)(5)(C)(iii)(I). Pub. L. 102–318, § 521(b)(20), substituted “402(e)(3)” for “402(a)(8)”.

Subsec. (q)(7)(B)(i). Pub. L. 102–318, § 521(b)(21), substituted “402(e)(3)” for “402(a)(8)”.

Subsec. (s)(2). Pub. L. 102–318, § 521(b)(22), substituted “402(e)(3)” for “402(a)(8)”.

1990—Subsec. (n)(2)(B). Pub. L. 101–508 struck out “(6 months in the case of core health benefits)” after “1 year”.

1989—Subsec. (n)(3)(C). Pub. L. 101–239, § 7813(b), amended directory language of Pub. L. 100–647, § 3011(b)(4), see 1988 Amendment note below.

Pub. L. 101–140, § 203(a)(6)(A), struck out “89,” after “79,”.

Subsec. (p)(10). Pub. L. 101–239, § 7811(m)(5), inserted “section” before “403(b)”.

Subsec. (p)(11). Pub. L. 101–239, § 7841(a)(2), added par. (11) and redesignated former par. (11) as (12).

Subsec. (r)(1). Pub. L. 101–140, § 204(b)(2), substituted “sections 129(d)(8) and 410(b)” for “section 410(b)”.

Pub. L. 101–140, § 203(a)(6)(B), substituted “section 410(b)” for “sections 89 and 410(b)”.

Subsec. (t)(2). Pub. L. 101–239, § 7813(b), amended directory language of Pub. L. 100–647, § 3011(b)(5), see 1988 Amendment note below.

Pub. L. 101–140, § 203(a)(6)(C), struck out “89,” after “79,”.

1988—Subsec. (k)(2). Pub. L. 100–647, § 1011A(b)(3), inserted “72(d) (relating to treatment of employee contributions as separate contract),” after “purposes of sections”.

Subsec. (l). Pub. L. 100–647, § 2005(c)(1), (2), substituted “Merger” for “Mergers” in heading, designated existing provision as par. (1), inserted par. (1) heading, and added par. (2).

Subsec. (l)(2)(G). Pub. L. 100–647, § 6067(a), added subpar. (G).

Subsec. (m)(4)(A). Pub. L. 100–647, § 1011(h)(5), substituted “(16), (17), and (26)” for “and (16)”.

Subsec. (m)(4)(C), (D). Pub. L. 100–647, § 1011B(a)(16), struck out subpars. (C) and (D) which read as follows:

“(C) section 105(h), and

“(D) section 125.”

Subsec. (n)(3)(A). Pub. L. 100–647, § 1011(h)(5), substituted “(16), (17), and (26)” for “and (16)”.

Subsec. (n)(3)(C). Pub. L. 100–647, § 3011(b)(4), as amended by Pub. L. 101–239, § 7813(b), struck out “162(i)(2), 162(k),” after “132,” and substituted “505, and 4980B” for “and 505”.

Pub. L. 100–647, § 1011B(a)(19), inserted “162(i)(2), 162(k),” after “132,”.

Subsec. (o). Pub. L. 100–647, § 1011(e)(4), inserted “or any requirement under section 457” after “or (n)(3)”.

Subsec. (p)(4)(B). Pub. L. 100–647, § 1018(t)(8)(E), substituted “means the earlier of” for “means earlier of” and struck out “in” at beginning of cls. (i) and (ii).

Subsec. (p)(9). Pub. L. 100–647, § 1018(t)(8)(G), inserted at end “For purposes of this title, except as provided in regulations, any distribution from an annuity contract under section 403(b) pursuant to a qualified domestic relations order shall be treated in the same manner as a distribution from a plan to which section 401(a)(13) applies.”

Subsec. (p)(10). Pub. L. 100–647, § 1018(t)(8)(F), inserted “, 403(b),” after “section 401”.

Subsec. (q)(1). Pub. L. 100–647, § 1011(i)(1), inserted at end “The Secretary shall adjust the $75,000 and $50,000 amounts under this paragraph at the same time and in the same manner as under section 415(d).”

Subsec. (q)(1)(D). Pub. L. 100–647, § 1011(d)(8), substituted “50” for “150” and “415(b)(1)(A)” for “415(c)(1)(A)”.

Subsec. (q)(6)(C). Pub. L. 100–647, § 1011(i)(2), added subpar. (C).

Subsec. (q)(8). Pub. L. 100–647, § 1011(i)(4)(A), inserted “or the number of officers taken into account under paragraph (5)” after “under paragraph (4)”.

Pub. L. 100–647, § 1011(i)(3)(A)(ii), substituted “Except as provided by the Secretary, the employer” for “The employer” in last sentence.

Subsec. (q)(8)(F). Pub. L. 100–647, § 1011(i)(3)(A)(i), struck out subpar. (F) which read as follows: “employees who are nonresident aliens and who receive no earned income (within the meaning of section 911(d)(2)) from the employer which constitutes income from sources within the United States (within the meaning of section 861(a)(3)).”

Subsec. (q)(11). Pub. L. 100–647, § 1011(i)(3)(B), added par. (11).

Subsec. (q)(12). Pub. L. 100–647, § 3021(b)(1), added par. (12).

Subsec. (r)(3). Pub. L. 100–647, § 3021(b)(2)(A), amended par. (3) generally. Prior to amendment, par. (3) read as follows: “The requirements of subparagraph (C) of paragraph (2) shall not apply to any line of business if the highly compensated employee percentage with respect to such line of business is—