FROM THE OFFICE OF PUBLIC AFFAIRS
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May 25, 2005
JS-2471
Treasury and IRS Propose Regulations on Retirement Plans
Proposed Rules Allow Members of the National Guard and Reserve
to
Contribute to Retirement Plans While on Active Duty
WASHINGTON, DC -- The Treasury Department and IRS today issued proposed regulations relating to the section 415 limits on benefits and contributions under qualified retirement plans. These regulations consolidate past guidance on changes in the law over the past 25 years and provide additional guidance that answers many outstanding questions for plan sponsors and administrators. The regulations will, among other things, address the application of the defined benefit limits when an employee receives multiple benefit streams beginning at different ages and the treatment of compensation paid after an individual terminates employment.
Significantly, the proposed regulations will specifically provide that National Guard and Reserve members are permitted to continue to contribute to their employer's retirement plan while on active duty. "We believe it is important that members of the National Guard and Reserve not lose the opportunity to save for retirement while they are serving our country," said Eric Solomon, Treasury's Acting Deputy Assistant Secretary for Tax Policy.
The rules relating to post termination compensation and the associated clarifications on the ability to contribute to retirement plans for members of the National Guard and Reserve will also apply to section 403(b) tax deferred annuities and Section 457 eligible deferred compensation plans. Plan administrators may rely on today's proposed regulations immediately to allow service members to contribute to qualified retirement plans.
The proposed regulations will formally go into effect in years beginning in 2007. A public hearing on the proposal is scheduled for August 17, 2005.
REPORTS