Plan 17

Plan 17


We are searching data for your request:

Forums and discussions:
Manuals and reference books:
Data from registers:
Wait the end of the search in all databases.
Upon completion, a link will appear to access the found materials.

In 1913 General Ferdinand Foch and General Joseph Joffre devised a strategic plan for the invasion of Germany. Plan 17 proposed French Army advances into Lorraine and Ardennes.

On the outbreak of the First World War, the French Army carried out Plan 17. After initial success at both Lorraine and Ardennes, strong German resistance and the success of the Schlieffen Plan, resulted in orders being given by General Joseph Joffre on 24th August to retreat back to France.


Social Security

There were many non-standard economic theories and schemes abroad in the land during the Great Depression. Many of these schemes involved old-age pensions, since this was a area of acute need and a population for which there was a good deal of sympathy. By far the most influential of these alternative pension schemes was the Old Age Revolving Pension Plan, or Townsend Plan, for short.

The basic idea of the Townsend Plan was that the government would provide a pension of $200 per month to every citizen age 60 and older. The pensions would be funded by a 2% national sales tax (more precisely, a "transactions tax"). The Plan provided that a 2% tax would be levied "on the gross value of each business, commercial, and/or financial transaction," to be paid by the seller.

  • the person had to be retired
  • "their past life is free from habitual criminality"
  • the money had to be spent within the U.S. by the pensioner within 30 days of receipt.

Thus, there were no contributions required from the beneficiaries. One did not have to work and pay taxes for a number of years to built up credit under the Plan. In fact, a person who never worked a day in their life would be entitled to a full "retirement" pension under the Townsend Plan. There was no means-test--millionaires and paupers all collected benefits. And the payment was a "flat payment," i.e., everybody got the same amount, regardless of any current or past taxes they may have paid. The final two features were that the person had to be completely retired to collect benefits--there was an absolute "retirement test." And the beneficiary had to spent the entire pension payment each month as it was received--it would be illegal to save even a penny from the benefit. (This last feature was an essential key to the Plan--as we will see.)

The Townsend Plan proved enormously popular. Within two years of the publication of the Plan as a Letter to the Editor in a Long Beach, California newspaper, there were over 7,000 "Townsend Clubs" with over 2.2 million members actively working to make the Townsend Plan the nation's old-age pension system. At one point in 1936 Townsend was able to deliver petitions to Congress containing 10 million signatures in support of the Townsend Plan. Public opinion surveys in 1935 found that 56% of Americans favored adoption of the Townsend Plan.

The Townsend Plan, despite it popularity, had three fundamental flaws that made it an unworkable idea.

THE PROBLEMS WITH THE TOWNSEND PLAN

1. Tax Rate - According to the Townsend Plan, a 2% "transactions tax" would be sufficient to fund the pension scheme. This surprisingly low tax rate was one of the main appeals of the Plan, since it appeared to offer very generous benefits for a very low cost.

The transaction tax would work much like the Value Added Tax (VAT) used today in European countries. At every economic transaction, with some exceptions, a 2% tax on the value of the transaction would be imposed. The reason for this was that the basic idea behind the plan was the supposed stimulative effect on the economy from the spending produced by the requirement that the full amount of the pension must be spent in the month received. From this spending, the Plan assumed, a great deal of new economic activity would be produced, and with each economic transaction a small tax could be levied, and because there would be so many new transactions, the tax could be small and yet generate a large amount of revenue. This was all dependent on Townsend's understanding of the economics of the circulation of money (see the discussion of point 3 below).

The Plan called for a monthly pension of $200 per month to be paid to every American age 60 or older. In 1935 there were approximately 12 million Americans age 60 or older. Virtually all of them would be eligible for the Plan under its very liberal eligibility requirements. Thus, the Plan implicitly promised to raise $2.4 billion in revenue each month from this 2% tax (which would total almost $29 billion annually). To put this in some perspective, the total income of all of the people of the United States in 1933 was only $46 billion. A Plan that would pay $29 billion of that amount to the 9% of the population that was over 60, would thus shift about two-thirds the wealth in the economy from workers to retirees.

By way of comparison, the Social Security Act as passed in 1935 promised benefits ranging from $10 to $85 per month. To support this level of benefits, required a tax rate of 2% (half paid by the worker and half by the employer) on the first $3,000 of wage income.

So, the Townsend Plan would require the raising of about $29 billion per year in new taxes. This would be an amount of new taxes that would be more than double the total combined tax revenue of all federal, state and local taxes then being collected! On its face, it seems impossible to generate this much revenue from a 2% tax. Not to mention the political problem of doubling all existing taxes and adding this new tax burden to existing taxes. And of course, this tax burden would grow year to year as the percentage of the population age 60 and older grew, as it was projected to do. So it would start at double the existing taxes and go up from there.

So if we look at the amount of revenue the Townsend Plan would require, it seems implausible to believe that a 2% transactions tax would be sufficient to generate that much revenue. How much revenue, then, was it likely to generate?

It is difficult to calculate the revenue from Townsend's scheme since it involved a transactions tax rather than a straight tax on incomes--and the number of transactions depends both on how many such transactions there are in the economy and on how much the Plan actually stimulates new economic activity (see point 3 below). It was unclear what the real volume of "transactions" subject to the tax would be. The Townsend Plan asserted there was $1,200 billion in annual transactions, but no independent economists could validate this figure, and Townsend himself would repudiate it in a most embarrassing way.

The most revealing moment came on this question when the Congress held hearings on a bill (H.R.3077) to adopt the Townsend Plan. This was in the context of the House hearings on the Administration's Social Security bill. Pressure from the Townsend Plan's many supporters forced the Ways & Means Committee to take testimony on H.R. 3077 in the middle of its hearings on Social Security. At the hearings, Townsend was grilled relentlessly over the revenue assumptions in the Plan. Plan sponsors eventually admitted they had no real idea what the value of transactions were in the economy and that the $1,200 billion figure was made-up. After two days of very embarrassing proceedings, Townsend left with support for his Plan eroding rapidly. He subsequently requested that the Committee reopen it proceedings so he could present a new witness, an economist who could address all the Committee's concerns. At the reopened hearing Dr. Robert R. Doane appeared with Townsend and, to Townsend's disappointment, he told the Committee that a 2% transactions tax could, at its theoretical maximum with no transactions excluded, yield at most between $4 and $9.6 billion annually. This was only about a third (at the top-end) of what Townsend needed. So the real tax rate would have to be somewhere between 6% and 14% in order to pay pensions of $200 per month to everyone over age 60--under the figures of the Townsend Plan's own expert witness. Tax rates of this magnitude did not make the Plan seem like such a bargain after all. [1]


2. Pension Economics - One of the most breath-taking aspects of the Townsend Plan, and the heart of its appeal to senior citizens, was the extraordinary level of benefits it promised. The Townsend Plan promised a retirement pension of $200 a month to every American age 60 or older. Why this is so stunning is that the average monthly wage in 1935 was only about $100 a month. So Townsend was promising retirees a pension that was twice what workers were earning who were still at work. It may well have been the most generous retirement pension promise of all time.

The Social Security program has traditionally been able to support a replacement rate of about 40% for an average worker. This means that, for an average worker, Social Security pays a benefit that is about 40% of the wage they were making while working. This is a more realistic level for a viable pension. The idea that a retirement pension could be 200% of a worker's pre-retirement income, is very unrealistic.

3. Macroeconomic Theory - Dr. Townsend was not an economist. He had a kind of home-spun theory of economics, to be sure. But we can easily see that Townsend had one very large unstated economic assumption underlying his Plan, an assumption that was almost certainly not true.

The essence of the Townsend Plan was that by requiring the retirees to spend their entire pension each month the Plan would force a dramatic increase in spending, which would so stimulate the economy that the Depression would lift and the Plan itself would in some sense be "free" since the increased level of economic activity would mean that everybody would have more money under the Plan than they had before the Plan took effect--despite having to pay a new tax.

Townsend's idea took off from a well-known principle in economics--the "multiplier effect" of money. It is a truism in economics that when John Q. Public spends, say $200 to buy a new gizmo, the amount of economic impact this produces is not just $200. The seller of the gizmo will in turn take this $200 and use it to buy groceries, or other gizmos, and this will further stimulate economic activity. So an expenditure of $200 has more than $200 worth of impact on the economy. This much is standard economics. Economists are not in agreement on how large this multiplier effect is, or precisely how to measure it, but its existence is well-known.

So the key dynamic of Townsend's Plan was to rely on this multiplier effect to produce a large increase in economic activity. This is the "revolving" part in the Plan's official name, "The Old-Age Revolving Pension Plan." The idea then was that the forced spending under the Plan would trigger the multipiler effect, increasing economic activity, and at every economic transaction, a 2% tax would be levied. In this fashion, Townsend believed, the necessary funds could be raised to pay for the Plan's benefits, and everybody would be richer than before the Plan took effect.

There were probably lots of detailed problems in Townsend's notions of how the economy works--including the question of whether the multipiler effect is large enough to produce the kind of revenues Townsend's Plan required. But it is is easy to see a very large problem that does not depend on the details of how to calculate the multiplier effect. There was an assumption implicit in Townsend's vision--an assumption that was almost certainly false.

In order for this dynamic to work, Townsend had to assume that the money being spent by the Plan's retirees was not already being spent in the economy. In other words, merely shifting $200 in spending from a worker to a retiree would have precisely zero effect on economic activity. It would only have an effect if the worker was not himself/herself spending that money in their own current consumption. In order for Townsend's Plan to really stimulate the economy in the way he imagined, he had to assume that all the spending produced by the Plan would be new spending. In macroeconomic terms, he had to assume that the money taken in by the tax would come from savings, rather than from someone else's current consumption. And it would have to be non-productive savings--not money saved in a bank, for example, which might be lent-out for new investment. So, if Jill J. Worker saves $200 every month by sticking it under her mattress, then taking this $200 from Jill and giving it to Robert R. Retiree, and requiring Robert to spend it, would indeed stimulate the economy through new spending. But if Jill is already spending her $200 every month on clothes and food and her own gizmos, then merely taking money from Jill and giving it to Robert would have no effect whatever on the overall level of economic activity. So Townsend had to assume, in effect, that there was $2.4 billion a month being shoved under mattresses all over the country. Of course, this was not the case. Most people during the Depression were spending whatever money they could get their hands on just to try and maintain some semblance of their pre-Depression standard of living. [2]

Not only that, but since the Townsend Plan's tax was a tax on transactions and not on assets, it only applied to money already in circulation in the economy. So it could not reach any of that money hidden under the nation's mattresses which it had to reach in order for the Plan to work. Townsend was dimly aware of this problem and so he proposed that the start-up payments under the Plan would be out of a federal subsidy for the first month of the Plan's operation. Townsend was banking on the idea of having the federal government pay the first month's payment of $2.4 billion out of existing tax revenue and expecting this to "prime the pump" thereby stimulating the mattress-savers to retrieve their stashes and toss them into circulation. After that, he assured everyone, the Plan would become self-supporting.

Again, the point is that a Townsend scheme could only work to the extent that there was a large volume of money not currently in circulation, and that this money could be disgorged by the sudden provision of a a retirement pension to 12 million retirees. If these two assumptions were not true, then Townsend's Plan could not work.

Despite it dubious chances of success, the Townsend Plan was without question the single most-popular scheme for old-age pensions in America during the 1930s. Literally millions of senior citizens fervently believed the Townsend Plan was their economic salvation. There is even some evidence that President Roosevelt introduced his Social Security proposals when he did in order to stave off pressure from the Townsend Plan and related alternative pension schemes. FDR's Secretary of Labor quotes the President as saying: "The Congress can't stand the pressure of the Townsend Plan unless we are studying social security, a solid plan which will give some assurance to old people of systematic assistance upon retirement." [3]

The fact that a scheme with such unlikely prospects could be so influential in the making of public policy, suggests the depth of the unmet social need that the Social Security Act of 1935 was attempting to address. And it was only with the passage of the Social Security Act that schemes like those of the good Dr. Francis E. Townsend would finally pass into history.

[1] The most thorough study of the Townsend Plan can be found in, "The Townsend Movement: A Political Study," by Abraham Holtzman Bookman Associates. 1963.

The full text of the House hearings on the Townsend Plan are available as part the Legislative History section of this web site.

[2] There was a wide-spread and accepted view of the economy during the Depression which held that the problem in the economy was a depressed level of aggregate demand. This was probably correct, as far as it goes. But the low level of aggregate demand was not due to people saving too much money from current incomes. It was rather that current incomes, in the aggregate, were too low and hence there was too little money in the economy. Whatever the proper economic cure for this condition might be, it should be obvious that merely moving current incomes from one cohort in the economy to another would not have any effect on current incomes or aggregate demand. Again, it would only have an effect if one assumes that most all of that income is not being currently consumed.

[3] Quoted in "The Roosevelt I Knew," by Frances Perkins. Harper & Row, 1964 edition, pg. 294.


Schlieffen Plan

Our editors will review what you’ve submitted and determine whether to revise the article.

Schlieffen Plan, battle plan first proposed in 1905 by Alfred, Graf (count) von Schlieffen, chief of the German general staff, that was designed to allow Germany to wage a successful two-front war. The plan was heavily modified by Schlieffen’s successor, Helmuth von Moltke, prior to and during its implementation in World War I. Moltke’s changes, which included a reduction in the size of the attacking army, were blamed for Germany’s failure to win a quick victory.

Schlieffen was an ardent student of military history, and his strategic plan was inspired by the Battle of Cannae (216 bce ), a pivotal engagement during the Second Punic War. At Cannae the Carthaginian general Hannibal defeated a much larger Roman force with a successful double envelopment, turning the Roman army’s flanks and destroying it. Schlieffen was convinced that a modern enemy force could be defeated in the same way, and the execution of a massive flank attack became the main focus of his plan. He proposed in 1905 that Germany’s advantage over France and Russia—its likely opponents in a continental war—was that the two were separated. Germany, therefore, could eliminate one while the other was kept in check. Once one ally was defeated, Germany would be able to combine its forces to defeat the other through massive troop concentration and rapid deployment.

Schlieffen wished to emulate Hannibal by provoking an Entscheidungsschlacht (“decisive battle”), using a massive force, in a single act, to bring a swift and conclusive victory. He decided that France was the enemy to be defeated first, with Russia held off until the French were annihilated. His plan called for four army groups, called the Bataillon Carré, to mass on the extreme German right. That northernmost force would consist of 5 cavalry divisions, 17 infantry corps, 6 Ersatzkorps (replacement corps), and a number of Landwehr (reserve) and Landsturm (men over the age of 45) brigades. Those forces were to wheel south and east after passing through neutral Belgium, turning into the flanks and rear of the hardened French defenses along the German border. After crossing the Somme west of Paris at Abbeville and Chaulnes, the main body of the Bataillon Carré would turn to engage the defenders of the French capital, with the Ersatzkorps lending support. The central group—consisting of six infantry corps, Landwehr brigades, and a cavalry division—was to attack the French at La Feré and Paris, eventually encircling the capital on the north and east. The third group would concentrate on the most-southern right wing, with eight corps, five reserve corps, and Landwehr brigades, with the help of two mobile cavalry divisions. The last group consisted of three cavalry divisions, three infantry corps, two Ersatzkorps, and a reserve corps on the left wing. That last group was to block any French attempt to counterattack, and it could be detached and transported to the extreme right if necessary. The Upper Rhine to the Swiss border and the Lower Alsace were to be defended by Landwehr brigades.

The manpower ratio was 7:1 from right wing to left.That massive force was to break through at the Metz-Diedenhofen area and sweep all French forces before it, swinging like a door that had its hinge in the Alsace region. Schlieffen worked out a detailed timetable that took into account possible French responses to German actions, with particular attention paid to the lightly defended Franco-German border. With that plan, Schlieffen believed, Gemany could defeat France within six weeks, the campaign concluding with a decisive “super Cannae” in the south.

The uniqueness of the Schlieffen Plan was that it ran counter to prevailing German military wisdom, which was principally derived from Carl von Clausewitz’s seminal work On War (1832) and the strategic thought of the elder Helmuth von Moltke. Schlieffen replaced the Clausewitzian concept of Schwerpunkt (“centre of gravity”) in operational command with the idea of continuous forward movement designed to annihilate the enemy. In pursuing that goal of total annihilation, Schlieffen also broke with Moltke, whose strategy sought to neutralize one’s opponent. Schlieffen thus turned a doctrinal debate (as chronicled by military historian Hans Delbruck) toward the strategies of annihilation (Vernichtungsstrategie) and attrition (Ermattungsstrategie).

Strategist and German corps commander Gen. Friedrich Adolf von Bernhardi was strongly critical of Schlieffen, arguing that the need for manpower and the creation of new units would weaken the regular army. He opposed the concept of Volk in Waffen (“a nation in arms”) but was overruled by Prussian Minister of War Julius Verdy du Vernois, who increased the size of the army with universal conscription. That began a political firestorm within the German Confederation, causing later ministers of war to be more cautious about manpower proposals. For its part, the German navy was against the Schlieffen Plan because the bulk of military resources would be directed toward massive land engagements and not the development of more powerful battleships.

Schlieffen insisted on an immediate attack on France in 1905 as a “preventive war,” arguing that Russia had just been defeated by the Japanese and France was involved in a crisis in Morocco. German Emperor William II and his chancellor, Bernhard von Bülow, believed that Great Britain’s alliance with Japan would lead to an encirclement of Germany and were cautious of such an attack. Rebuffed, Schlieffen responded with belligerence, and he was dismissed. Schlieffen later rewrote his plan, including an offensive against the neutral Dutch and restructuring the ratio of artillery and infantry. At the outbreak of war in 1914, Schlieffen’s plan would be altered by Moltke, but it would never be fully implemented as he envisioned.

With Germany’s defeat in 1918, the German military blamed the Schlieffen Plan as flawed and the cause of their defeat. The victorious Allies looked upon the Schlieffen Plan as the source of German aggression against neutral countries, and it became the basis of war guilt and reparations. Both the original Schlieffen Plan and Moltke’s rewrite were locked at the Reichsarchiv at Potsdam, and access to the documents was strictly limited. They were destroyed on April 14, 1945, during a British bomber attack, and only studies of the two plans survived. Gerhard Ritter, a prominent German historian, published those studies in 1956 and concluded that the Schlieffen Plan was German doctrine prior to World War I. Further summaries have been discovered over subsequent decades, opening new debates about Schlieffen’s true intentions and the implementation of his plan.


R.C. Sproul reminded us that “The Scriptures are absolutely key in the process by which the Spirit gives—and strengthens—the faith of Christians.”

The beginning of a new year is a time when many Christians evaluate their Scripture reading habits and begin or change a Bible reading plan. For your convenience, we’ve compiled a list of effective Bible reading plans for you to choose from. Whether you are looking to complete the Bible in a year or focus on different books and themes, we hope these plans will be of great help to you, your family, and your church.

5 Day Bible Reading Program

Read through the Bible in a year with readings five days a week.

Duration: One year | Download: PDF

52 Week Bible Reading Plan

Read through the Bible in a year with each day of the week dedicated to a different genre: epistles, the law, history, Psalms, poetry, prophecy, and Gospels.

Duration: One year | Download: PDF

5x5x5 New Testament Bible Reading Plan

Read through the New Testament in a year, reading Monday to Friday. Weekends are set aside for reflection and other reading. Especially beneficial if you’re new to a daily discipline of Bible reading.

Duration: One year | Download: PDF

A Bible Reading Chart

Read through the Bible at your own pace. Use this minimalistic yet beautifully designed chart to track your reading throughout the year.

Duration: Flexible | Download: PDF

Chronological Bible Reading Plan

Read through the Bible in the order the events occurred chronologically.

Duration: One year | Download: PDF

The Discipleship Journal Bible Reading Plan

Four daily readings beginning in Genesis, Psalms, Matthew and Acts.

Duration: One year | Download: PDF

The Discipleship Journal Book-at-a-Time Bible Reading Plan

Two daily readings, one from the Old Testament and one from the New Testament. Complete an entire book in each testament before moving on.

Duration: One year | Download: PDF

ESV Daily Bible Reading Plan

Four daily readings taken from four lists: Psalms and wisdom literature, Pentateuch and history of Israel, Chronicles and prophets, and Gospels and epistles.

Duration: One year | Download: PDF

Every Word in the Bible

Read through the Bible one chapter at a time. Readings alternate between the Old and New Testaments.

Duration: Three years | Download: PDF

Historical Bible Reading Plan

The Old Testament readings are similar to Israel’s Hebrew Bible, and the New Testament readings are an attempt to follow the order in which the books were authored.

Duration: One year | Download: PDF

An In Depth Study of Matthew

A year-long study in the Gospel of Matthew from Tabletalk magazine and R.C. Sproul.

Duration: One year | App: Accessible on YouVersion. Download the app.

Bible In A Year

This plan takes you through the entire Bible with two readings each day: one from the Old Testament and one from the New Testament.

Duration: One year | App: Accessible on YouVersion. Download the app.

Professor Grant Horner’s Bible Reading System

Reading ten chapters a day, in the course of a year you’ll read the Gospels four times, the Pentateuch twice, Paul’s letters four to five times, the Old Testament wisdom literature six times, the Psalms at least twice, Proverbs and Acts a dozen times, and the Old Testament history and prophetic books about one and a half times.

Duration: Ongoing | Download: PDF

Robert Murray M’Cheyne Bible Reading Plan

Read the New Testament and Psalms twice and the Old Testament once.

Duration: One or two years | Download: Website

Straight Through the Bible Reading Plan

Read straight through the Bible from Genesis to Revelation.

Duration: One year | Download: PDF

Tabletalk Bible Reading Plan

Two readings each day, one from the Old Testament and one from the New Testament.

Duration: One year | Download: PDF

The Legacy Reading Plan

This plan does not have set readings for each day. Instead, it has set books for each month and a set number of Proverbs and Psalms for each week. It aims to give you more flexibility while grounding you in specific books of the Bible.

Duration: One year | Download: PDF

Two-Year Bible Reading Plan

Read the Old and New Testaments once and Psalms and Proverbs four times.

Duration: Two years | Download: PDF

Bible Reading Plan Generator

Still can’t find a plan that works for you? Generate your own.

Duration: You decide | Online: Bible Reading Plan Generator

Have you struggled to read through the entire Bible? R.C. Sproul’s basic overview of the Bible may help you.

In addition to your daily Bible reading, consider reading Tabletalk magazine for daily Bible studies to help you understand the Bible and apply it to daily living. Sign up for a free 3-month trial.


26 CFR § 1.401(a)(17)-1 - Limitation on annual compensation.

(1) In general. In order to be a qualified plan, a plan must satisfy section 401(a)(17). Section 401(a)(17) provides an annual compensation limit for each employee under a qualified plan. This limit applies to a qualified plan in two ways. First, a plan may not base allocations, in the case of a defined contribution plan, or benefit accruals, in the case of a defined benefit plan, on compensation in excess of the annual compensation limit. Second, the amount of an employee's annual compensation that may be taken into account in applying certain specified nondiscrimination rules under the Internal Revenue Code is subject to the annual compensation limit. These two limitations are set forth in paragraphs (b) and (c) of this section, respectively. Paragraph (d) of this section provides the effective dates of section 401(a)(17), the amendments made by section 13212 of the Omnibus Budget Reconciliation Act of 1993 (OBRA '93), and this section. Paragraph (e) of this section provides rules for determining post-effective-date accrued benefits under the fresh-start rules.

(2) Annual compensation limit for plan years beginning before January 1, 1994. For purposes of this section, for plan years beginning prior to the OBRA '93 effective date, annual compensation limit means $200,000, adjusted as provided by the Commissioner. The amount of the annual compensation limit is adjusted at the same time and in the same manner as under section 415(d). The base period for the annual adjustment is the calendar quarter ending December 31, 1988, and the first adjustment is effective on January 1, 1990. Any increase in the annual compensation limit is effective as of January 1 of a calendar year and applies to any plan year beginning in that calendar year. In any plan year beginning prior to the OBRA '93 effective date, if compensation for any plan year beginning prior to the statutory effective date is used for determining allocations or benefit accruals, or when applying any nondiscrimination rule, then the annual compensation limit for the first plan year beginning on or after the statutory effective date (generally $200,000) must be applied to compensation for that prior plan year.

(3) Annual compensation limit for plan years beginning on or after January 1, 1994 -

(i) In general. For purposes of this section, for plan years beginning on or after the OBRA '93 effective date, annual compensation limit means $150,000, adjusted as provided by the Commissioner. The adjusted dollar amount of the annual compensation limit is determined by adjusting the $150,000 amount for changes in the cost of living as provided in paragraph (a)(3)(ii) of this section and rounding this adjusted dollar amount as provided in paragraph (a)(3)(iii) of this section. Any increase in the annual compensation limit is effective as of January 1 of a calendar year and applies to any plan year beginning in that calendar year. For example, if a plan has a plan year beginning July 1, 1994, and ending June 30, 1995, the annual compensation limit in effect on January 1, 1994 ($150,000), applies to the plan for the entire plan year.

(ii) Cost of living adjustment. The $150,000 amount is adjusted for changes in the cost of living by the Commissioner at the same time and in the same manner as under section 415(d). The base period for the annual adjustment is the calendar quarter ending December 31, 1993.

(iii) Rounding of adjusted compensation limit. After the $150,000, adjusted in accordance with paragraph (a)(3)(ii) of this section, exceeds the annual compensation limit for the prior calendar year by $10,000 or more, the annual compensation limit will be increased by the amount of such excess, rounded down to the next lowest multiple of $10,000.

(4) Additional guidance. The Commissioner may, in revenue rulings and procedures, notices, and other guidance, published in the Internal Revenue Bulletin (see § 601.601(d)(2)(ii)( b ) of this chapter), provide any additional guidance that may be necessary or appropriate concerning the annual limits on compensation under section 401(a)(17).

(b) Plan limit on compensation -

(1) General rule. A plan does not satisfy section 401(a)(17) unless it provides that the compensation taken into account for any employee in determining plan allocations or benefit accruals for any plan year is limited to the annual compensation limit. For purposes of this rule, allocations and benefit accruals under a plan include all benefits provided under the plan, including ancillary benefits.

(2) Plan-year-by-plan-year requirement. For purposes of this paragraph (b), the limit in effect for the current plan year applies only to the compensation for that year that is taken into account in determining plan allocations or benefit accruals for the year. The compensation for any prior plan year taken into account in determining an employee's allocations or benefit accruals for the current plan year is subject to the applicable annual compensation limit in effect for that prior year. Thus, increases in the annual compensation limit apply only to compensation taken into account for the plan year in which the increase is effective. In addition, if compensation for any plan year beginning prior to the OBRA '93 effective date is used for determining allocations or benefit accruals in a plan year beginning on or after the OBRA '93 effective date, then the annual compensation limit for that prior year is the annual compensation limit in effect for the first plan year beginning on or after the OBRA '93 effective date (generally $150,000).

(3) Application of limit to a plan year -

(i) In general. For purposes of applying this paragraph (b), the annual compensation limit is applied to the compensation for the plan year on which allocations or benefit accruals are based.

(ii) Compensation for the plan year. If a plan determines compensation used in determining allocations or benefit accruals for a plan year based on compensation for the plan year, then the annual compensation limit that applies to the compensation for the plan year is the limit in effect for the calendar year in which the plan year begins. Alternatively, if a plan determines compensation used in determining allocations or benefit accruals for the plan year on the basis of compensation for a 12-consecutive-month period, or periods, ending no later than the last day of the plan year, then the annual compensation limit applies to compensation for each of those periods based on the annual compensation limit in effect for the respective calendar year in which each 12-month period begins.

(iii) Compensation for a period of less than 12-months -

(A) Proration required. If compensation for a period of less than 12 months is used for a plan year, then the otherwise applicable annual compensation limit is reduced in the same proportion as the reduction in the 12-month period. For example, if a defined benefit plan provides that the accrual for each month in a plan year is separately determined based on the compensation for that month and the plan year accrual is the sum of the accruals for all months, then the annual compensation limit for each month is 1/12 th of the annual compensation limit for the plan year. In addition, if the period for determining compensation used in calculating an employee's allocation or accrual for a plan year is a short plan year (i.e., shorter than 12 months), the annual compensation limit is an amount equal to the otherwise applicable annual compensation limit multiplied by a fraction, the numerator of which is the number of months in the short plan year, and the denominator of which is 12.

(B) No proration required for participation for less than a full plan year. Notwithstanding paragraph (b)(3)(iii)(A) of this section, a plan is not treated as using compensation for less than 12 months for a plan year merely because the plan formula provides that the allocation or accrual for each employee is based on compensation for the portion of the plan year during which the employee is a participant in the plan. In addition, no proration is required merely because an employee is covered under a plan for less than a full plan year, provided that allocations or benefit accruals are otherwise determined using compensation for a period of at least 12 months. Finally, notwithstanding paragraph (b)(3)(iii)(A) of this section, no proration is required merely because the amount of elective contributions (within the meaning of § 1.401(k)-6, matching contributions (within the meaning of § 1.401(m)-5, or employee contributions (within the meaning of § 1.401(m)-5 that is contributed for each pay period during a plan year is determined separately using compensation for that pay period.

(4) Limits on multiple employer and multiemployer plans. For purposes of this paragraph (b), in the case of a plan described in section 413(c) or 414(f) (a plan maintained by more than one employer), the annual compensation limit applies separately with respect to the compensation of an employee from each employer maintaining the plan instead of applying to the employee's total compensation from all employers maintaining the plan.

(5) Family aggregation. [Reserved]

(6) Examples. The following examples illustrate the rules in this paragraph (b).

(b) The plan year compensation under the plan formula for Employee C is $75,172 ($80,000 minus $4,828). The allocation of employer contributions under the plan allocation formula for 1994 for Employee C is $9,805 ($75,172 (Employee C's plan year compensation for 1994) multiplied by 13.0435%). The plan year compensation under the plan formula before application of the annual limit under section 401(a)(17) for Employee D is $168,899 ($175,000 minus $6101). After application of the annual limit, the plan year compensation for the 1994 plan year for Employee D is $150,000 (the annual limit for 1994). Therefore, the allocation of employer contributions under the plan allocation formula for 1994 for Employee D is $19,565 ($150,000 (Employee D's plan year compensation after application of the annual limit for 1994) multiplied by 13.0435%).

(c) Limit on compensation for nondiscrimination rules -

(1) General rule. The annual compensation limit applies for purposes of applying the nondiscrimination rules under sections 401(a)(4), 401(a)(5), 401(l), 401(k)(3), 401(m)(2), 403(b)(12), 404(a)(2) and 410(b)(2). The annual compensation limit also applies in determining whether an alternative method of determining compensation impermissibly discriminates under section 414(s)(3). Thus, for example, the annual compensation limit applies when determining a self-employed individual's total earned income that is used to determine the equivalent alternative compensation amount under § 1.414(s)-1(g)(1). This paragraph (c) provides rules for applying the annual compensation limit for these purposes. For purposes of this paragraph (c), compensation means the compensation used in applying the applicable nondiscrimination rule.

(2) Plan-year-by-plan-year requirement. For purposes of this paragraph (c), when applying an applicable nondiscrimination rule for a plan year, the compensation for each plan year taken into account is limited to the applicable annual compensation limit in effect for that year, and an employee's compensation for that plan year in excess of the limit is disregarded. Thus, if the nondiscrimination provision is applied on the basis of compensation determined over a period of more than one year (for example, average annual compensation), the annual compensation limit in effect for each of the plan years that is taken into account in determining the average applies to the respective plan year's compensation. In addition, if compensation for any plan year beginning prior to the OBRA '93 effective date is used when applying any nondiscrimination rule in a plan year beginning on or after the OBRA '93 effective date, then the annual compensation limit for that prior year is the annual compensation limit for the first plan year beginning on or after the OBRA '93 effective date (generally $150,000).

(3) Plan-by-plan limit. For purposes of this paragraph (c), the annual compensation limit applies separately to each plan (or group of plans treated as a single plan) of an employer for purposes of the applicable nondiscrimination requirement. For this purpose, the plans included in the testing group taken into account in determining whether the average benefit percentage test of § 1.410(b)-5 is satisfied are generally treated as a single plan.

(4) Application of limit to a plan year. The rules provided in paragraph (b)(3) of this section regarding the application of the limit to a plan year apply for purposes of this paragraph (c).

(5) Limits on multiple employer and multiemployer plans. The rule provided in paragraph (b)(4) of this section regarding the application of the limit to multiple employer and multiemployer plans applies for purposes of this paragraph (c).

(1) Statutory effective date -

(i) General rule. Except as otherwise provided in this paragraph (d), section 401(a)(17) applies to a plan as of the first plan year beginning on or after January 1, 1989. For purposes of this section, statutory effective date generally means the first day of the first plan year that section 401(a)(17) is applicable to a plan. In the case of governmental plans, statutory effective date means the first day of the first plan year for which the plan is not deemed to satisfy section 401(a)(17) by reason of paragraph (d)(4) of this section.

(ii) Exception for collectively bargained plans. In the case of a plan maintained pursuant to one or more collective bargaining agreements between employee representatives and one or more employers ratified before March 1, 1986, section 401(a)(17) applies to allocations and benefit accruals for plan years beginning on or after the earlier of -

(B) The later of January 1, 1989, or the date on which the last of the collective bargaining agreements terminates (determined without regard to any extension or renegotiation of any agreement occurring after February 28, 1986). For purposes of this paragraph (d)(1)(ii), the rules of § 1.410(b)-10(a)(2) apply for purposes of determining whether a plan is maintained pursuant to one or more collective bargaining agreements, and any extension or renegotiation of a collective bargaining agreement, which extension or renegotiation is ratified after February 28, 1986, is to be disregarded in determining the date on which the agreement terminates.

(i) In general. For purposes of this section, OBRA '93 effective date means the first day of the first plan year beginning on or after January 1, 1994, except as provided in this paragraph (d)(2).

(ii) Exception for collectively bargained plans -

(A) In general. In the case of a plan maintained pursuant to one or more collective bargaining agreements between employee representatives and 1 or more employers ratified before August 10, 1993, OBRA '93 effective date means the first day of the first plan year beginning on or after the earlier of -

(ii) The date on which the last of such collective bargaining agreements terminates (without regard to any extension, amendment, or, modification of such agreements on or after August 10, 1993) or

(iii) In the case of a plan maintained pursuant to collective bargaining under the Railway Labor Act, the date of execution of an extension or replacement of the last of such collective bargaining agreements in effect on August 10, 1993 or

(B) Determination of whether plan is collectively bargained. For purposes of this paragraph (d)(2)(ii), the rules of § 1.410(b)-10(a)(2) apply for purposes of determining whether a plan is maintained pursuant to one or more collective bargaining agreements, except that August 10, 1993, is substituted for March 1, 1986, as the date before which the collective bargaining agreements must be ratified.

(3) Regulatory effective date. This § 1.401(a)(17)-1 applies to plan years beginning on or after the OBRA '93 effective date. However, in the case of a plan maintained by an organization that is exempt from income taxation under section 501(a), including plans subject to section 403(b)(12)(A)(i) (nonelective plans), this § 1.401(a)(17)-1 applies to plan years beginning on or after January 1, 1996. For plan years beginning before the effective date of these regulations and on or after the statutory effective date, a plan must be operated in accordance with a reasonable, good faith interpretation of section 401(a)(17), taking into account, if applicable, the OBRA '93 reduction to the annual compensation limit under section 401(a)(17).

(4) Special rules for governmental plans -

(i) Deemed satisfaction by governmental plans. In the case of governmental plans described in section 414(d), including plans subject to section 403(b)(12)(A)(i) (nonelective plans), section 401(a)(17) is considered satisfied for plan years beginning before the later of January 1, 1996, or 90 days after the opening of the first legislative session beginning on or after January 1, 1996, of the governing body with authority to amend the plan, if that body does not meet continuously. For purposes of this paragraph (d)(4), the term governing body with authority to amend the plan means the legislature, board, commission, council, or other governing body with authority to amend the plan.

(ii) Transition rule for governmental plans -

(A) In general. In the case of an eligible participant in a governmental plan (within the meaning of section 414(d)), the annual compensation limit under this section shall not apply to the extent that the application of the limitation would reduce the amount of compensation that is allowed to be taken into account under the plan below the amount that was allowed to be taken into account under the plan as in effect on July 1, 1993. Thus, for example, if a plan as in effect on July 1, 1993, determined benefits without any reference to a limit on compensation, then the annual compensation limit in effect under this section will not apply to any eligible participant in any future year.

(B) Eligible participant. For purposes of this paragraph (d)(4)(ii), an eligible participant is an individual who first became a participant in the plan prior to the first day of the first plan year beginning after the earlier of -

(1) The last day of the plan year by which a plan amendment to reflect the amendments made by section 13212 of OBRA '93 is both adopted and effective or

(C) Plan must be amended to incorporate limits. This paragraph (d)(4)(ii) shall not apply to any eligible participant in a plan unless the plan is amended so that the plan incorporates by reference the annual compensation limit under section 401(a)(17), effective with respect to noneligible participants for plan years beginning after December 31, 1995 (or earlier, if the plan amendment so provides).

(5) Benefits earned prior to effective date -

(i) In general. Allocations under a defined contribution plan or benefits accrued under a defined benefit plan for plan years beginning before the statutory effective date are not subject to the annual compensation limit. Allocations under a defined contribution plan or benefits accrued under a defined benefit plan for plan years beginning on or after the statutory effective date, but before the OBRA '93 effective date, are subject to the annual compensation limit under paragraph (a)(2) of this section. However, these allocations or accruals are not subject to the OBRA '93 reduction to the annual compensation limit described in paragraph (a)(3) of this section.

(ii) Allocation for a plan year. The allocations for a plan year include amounts described in § 1.401(a)(4)-2(c)(ii) or § 1.401(m)-1(f)(6) plus the earnings, expenses, gains, and losses attributable to those amounts.

(iii) Benefits accrued for years before the effective date. The benefits accrued for plan years prior to a specified date by any employee are the employee's benefits accrued under the plan, determined as if those benefits had been frozen (as defined in § 1.401(a)(4)-13(c)(3)(i)) as of the day immediately preceding such specified date. Thus, for example, benefits accrued for those plan years generally do not include any benefits accrued under an amendment increasing prior benefits that is adopted after the date on which the employee's benefits under the plan must be treated as frozen.

(e) Determination of post-effective-date accrued benefits -

(1) In general. The plan formula that is used to determine the amount of allocations or benefit accruals for plan years beginning on or after the dates described in paragraph (d)(1) or (2) must comply with section 401(a)(17) as in effect on such date. This paragraph (e) provides rules for applying section 401(a)(17) in the case of section 401(a)(17) employees who accrue additional benefits under a defined benefit plan in a plan year beginning on or after the relevant effective date. Paragraph (e)(2) of this section contains definitions used in applying these rules. Paragraphs (e)(3) and (e)(4) of this section explain the application of the fresh-start rules in § 1.401(a)(4)-13 to the determination of the accrued benefits of section 401(a)(17) employees.

(2) Definitions. For purposes of this paragraph (e), the following definitions apply:

(i) Section 401(a)(17) employee. An employee is a section 401(a)(17) employee as of a date, on or after the statutory effective date, if the employee's current accrued benefit as of that date is based on compensation for a year prior to the statutory effective date that exceeded the annual compensation limit for the first plan year beginning on or after the statutory effective date. In addition, an employee is a section 401(a)(17) employee as of a date, on or after the OBRA '93 effective date, if the employee's current accrued benefit as of that date is based on compensation for a year prior to the OBRA '93 effective date that exceeded the annual compensation limit for the first plan year beginning on or after the OBRA '93 effective date. For this purpose, a current accrued benefit is not treated as based on compensation that exceeded the relevant annual compensation limit, if a plan makes a fresh start using the formula with wear-away described in § 1.401(a)(4)-13(c)(4)(ii), and the employee's accrued benefit determined under § 1.401(a)(4)-13(c)(4)(ii)(B), taking into account the annual compensation limit, exceeds the employee's frozen accrued benefit (or, if applicable, the employee's adjusted accrued benefit) as of the fresh-start date.

(ii) Section 401(a)(17) fresh-start date. Section 401(a)(17) fresh-start date means a fresh-start date as defined in § 1.401(a)(4)-12 not earlier than the last day of the last plan year beginning before the statutory effective date, and not later than the last day of the last plan year beginning before the effective date of these regulations.

(iii) OBRA '93 fresh-start date. OBRA '93 fresh-start date means a fresh-start date as defined in § 1.401(a)(4)-12 not earlier than the last day of the last plan year beginning before the OBRA '93 effective date, and not later than the last day of the last plan year beginning before the effective date of these regulations.

(iv) Section 401(a)(17) frozen accrued benefit. Section 401(a)(17) frozen accrued benefit means the accrued benefit for any section 401(a)(17) employee frozen (as defined in § 1.401(a)(4)-13(c)(3)(i)) as of the last day of the last plan year beginning before the statutory effective date.

(v) OBRA '93 frozen accrued benefit. OBRA '93 frozen accrued benefit means the accrued benefit for any section 401(a)(17) employee frozen (as defined in § 1.401(a)(4)-13(c)(3)(i)) as of the OBRA '93 fresh-start date.

(3) Application of fresh-start rules -

(i) General rule. In order to satisfy section 401(a)(17), a defined benefit plan must determine the accrued benefit of each section 401(a)(17) employee by applying the fresh-start rules in § 1.401(a)(4)-13(c). The fresh-start rules must be applied using a section 401(a)(17) fresh-start date and using the plan benefit formula, after amendment to comply with section 401(a)(17) and this section, as the formula applicable to benefit accruals in the current plan year. In addition, the fresh-start rules must be applied to determine the accrued benefit of each section 401(a)(17) employee using an OBRA '93 fresh-start date and using the plan benefit formula, after amendment to comply with the reduction in the section 401(a)(17) annual compensation limit described in paragraph (a)(3) of this section, as the formula applicable to benefit accruals in the current plan year.

(ii) Consistency rules in § 1.401(a)(4)-13(c) and (d) -

(A) General rule. In applying the fresh-start rules of § 1.401(a)(4)-13(c) and (d), the group of section 401(a)(17) employees is a fresh-start group. See § 1.401(a)(4)-13(c)(5)(ii)(A). Thus, the consistency rules of those sections govern, unless otherwise provided. For example, if the plan is using a fresh-start date applicable to all employees and is not adjusting frozen accrued benefits under § 1.401(a)(4)-13(d) for employees who are not section 401(a)(17) employees, then the frozen accrued benefits for section 401(a)(17) employees may not be adjusted under § 1.401(a)(4)-13(d) or this paragraph (e).

(B) Determination of adjusted accrued benefit. If the fresh-start rules of § 1.401(a)(4)-13(c) and (d) are applied to determine the benefits of all employees after a fresh-start date, the plan will not fail to satisfy the consistency requirement of § 1.401(a)(4)-13(c)(5)(i) merely because the plan makes the adjustment described in § 1.401(a)(4)-13(d) to the frozen accrued benefits of employees who are not section 401(a)(17) employees, but does not make the adjustment to the frozen accrued benefits of section 401(a)(17) employees. In addition, the plan does not fail to satisfy the consistency requirement of § 1.401(a)(4)-13(c)(5)(i) merely because the plan makes the adjustment described in § 1.401(a)(4)-13(d) for section 401(a)(17) employees on the basis of the compensation formula that was used to determine the frozen accrued benefit (as required under paragraph (e)(4)(iii) of this section) but makes the adjustment for employees who are not section 401(a)(17) employees on the basis of any other method provided in § 1.401(a)(4)-13(d)(8).

(4) Permitted adjustments to frozen accrued benefit of section 401(a)(17) employees -

(i) General rule. Except as otherwise provided in paragraphs (e)(4)(ii) and (iii) of this section, the rules in § 1.401(a)(4)-13(c)(3) (permitting certain adjustments to frozen accrued benefits) apply to section 401(a)(17) frozen accrued benefits or OBRA '93 frozen accrued benefits.

(ii) Optional forms of benefit. After either the section 401(a)(17) fresh-start date or the OBRA '93 fresh-start date, a plan may be amended either to provide a new optional form of benefit or to make an optional form of benefit available with respect to the section 401(a)(17) frozen accrued benefit or the OBRA '93 frozen accrued benefit, provided that the optional form of benefit is not subsidized. Whether an optional form is subsidized may be determined using any reasonable actuarial assumptions.

(iii) Adjusting section 401(a)(17) accrued benefits -

(A) In general. If the plan adjusts accrued benefits for employees under the rules of § 1.401(a)(4)-13(d) as of a fresh-start date, the adjusted accrued benefit (within the meaning of section § 1.401(a)(4)-13(d)) for each section 401(a)(17) employee must be determined after the fresh-start date by reference to the plan's compensation formula that was actually used to determine the frozen accrued benefit as of the fresh-start date. For this purpose, the plan's compensation formula incorporates the plan's underlying compensation definition and compensation averaging period. In making the adjustment, the denominator of the adjustment fraction described in § 1.401(a)(4)-13(d)(8)(i) is the employee's compensation as of the fresh-start date using the plan's compensation formula as of that date and, in the case of an OBRA '93 fresh-start date, reflecting the annual compensation limits that applied as of the fresh-start date. The numerator of the adjustment fraction is the employee's updated compensation (i.e., compensation for the current plan year within the meaning of § 1.401(a)(4)-13(d)(8)), determined after applying the annual compensation limits to each year's compensation that is used in the plan's compensation formula as of the fresh-start date. Similarly, in applying the alternative rule in § 1.401(a)(4)-13(d)(8)(v), the updated compensation that is substituted must be determined after applying the annual compensation limits to each year's compensation that is used in the plan's compensation formula. Thus, no adjustment will be permitted unless the updated compensation (determined after applying the annual compensation limit) exceeds the compensation that was used to determine the employee's frozen accrued benefit.

(B) Multiple fresh starts. If a plan makes more than one fresh start with respect to a section 401(a)(17) employee, the employee's frozen accrued benefit as of the latest fresh-start date will either be determined by applying the current benefit formula to the employee's total years of service as of that fresh-start date or will consist of the sum of the employee's frozen accrued benefit (or adjusted accrued benefit (as defined in § 1.401(a)(4)-13(d)(8)(i))) as of the previous fresh-start date plus additional frozen accruals since the previous fresh start. If the frozen accrued benefit consists of such a sum, in making the adjustments described in paragraph (e)(4)(iii)(A) of this section, separate adjustments must be made to that previously frozen accrued benefit (or adjusted accrued benefit) and the additional frozen accruals to the extent that the frozen accrued benefit and the additional accruals have been determined using different compensation formulas or different compensation limits (i.e., the section 401(a)(17) limit before and after the reduction in limit described in paragraph (a)(3) of this section). In this case, if the plan is applying the adjustment fraction of § 1.401(a)(4)-13(d)(8)(i), the denominator of the separate adjustment fraction for adjusting each portion of the frozen accrued benefit must reflect the actual compensation formula, and, if applicable, compensation limit, originally used for determining that portion. For example, the frozen accrued benefit of a section 401(a)(17) employee as of the OBRA '93 fresh-start date may be based on the sum of the section 401(a)(17) frozen accrued benefit (determined without any annual compensation limit) plus benefit accruals in the years between the statutory effective date and the OBRA '93 effective date (based on compensation that was subject to the annual compensation limits for those years). In this example, in adjusting the section 401(a)(17) frozen accrued benefit, the denominator of the adjustment fraction does not reflect any annual compensation limit. Similarly, in adjusting the frozen accruals for years between the statutory effective date and the OBRA '93 effective date, the denominator of the adjustment fraction reflects the level of the annual compensation limit in effect for those years.

(5) Examples. The following examples illustrate the rules in this paragraph (e).

(i) The employee's benefit under the plan's benefit formula (after the plan formula is amended to comply with section 401(a)(17)) as applied to the employee's total years of service and

(ii) The employee's accrued benefit as of December 31, 1988, determined as though the employee terminated employment on that date without regard to any plan amendments after that date.

Employer X decides not to amend Plan Y to provide for the adjustments permitted under § 1.401(a)(4)-13(d) to the accrued benefit of section 401(a)(17) employees as of December 31, 1988.

(b) Under Plan Y, Employee A's accrued benefit at the end of 1989 is $25,000, which is the greater of Employee A's accrued benefit as of the last day of the 1988 plan year ($25,000), and $24,000, which is Employee A's benefit based on the plan's benefit formula applied to Employee A's total years of service ($200,000 multiplied by (2 percent multiplied by 6 years of service)). The formula of Plan Y applicable to section 401(a)(17) employees for calculating their accrued benefits for years after the section 401(a)(17) fresh-start date is the formula in § 1.401(a)-13(c)(4)(ii) (formula with wear-away). The fresh-start formula is applied using a benefit formula for the 1989 plan year that satisfies section 401(a)(17) and this section, and the December 31, 1988 fresh-start date used for the plan is a section 401(a)(17) fresh-start date within the meaning of paragraph (e)(2)(ii) of this section. Thus, Plan Y, as amended, satisfies paragraph (e)(3)(i) of this section for plan years commencing prior to the OBRA '93 effective date.

(b) Assume that for each of the years 1991-93 Employee A's annual compensation under the plan compensation formula, disregarding the amendment to comply with section 401(a)(17) is $300,000. The annual compensation limit is adjusted to $222,220, $228,860, and $235,840 for plan years beginning January 1, 1991, 1992, and 1993, respectively. Because Employer X has decided to amend Plan Y to comply with the provisions of this section effective for plan years beginning on or after January 1, 1989, and has used December 31, 1988 as the section 401(a)(17) fresh-start date, the compensation that may be taken into account for plan benefits in 1993 cannot exceed $228,973 (the average of $222,220, $228,860, and $235,840). Therefore, as of December 31, 1993, the benefit determined under the fresh-start formula with wear-away would be $45,795 ($228,973 multiplied by (2 percent multiplied by 10 years of service)). The benefit determined under the fresh-start formula without wear-away would be $47,897, which is equal to $25,000 (Employee A's section 401(a)(17) frozen accrued benefit) plus $22,897 ($228,973 multiplied by (2 percent multiplied by 5 years of service)). Because Employee A's accrued benefit is being determined using the fresh-start formula with extended wear-away, Employee A's accrued benefit as of December 31, 1993, is equal to $47,897, the greater of the two amounts.

(b) As of December 31, 1993, the numerator of Employee A's compensation fraction is $228,973 (the average of Employee A's annual compensation for 1991, 1992, and 1993, as limited by the respective annual limit for each of those years). The denominator of Employee A's compensation fraction determined in accordance with paragraph (e)(4)(iii) of this section is $250,000 (the average of Employee A's high 3 consecutive calendar year compensation as of December 31, 1988, determined without regard to section 401(a)(17)). Therefore, Employee A's compensation fraction is $228,973/$250,000. Because the compensation adjustment fraction is less than 1, Employee A's section 401(a)(17) frozen accrued benefit is not adjusted. Therefore, Employee A's accrued benefit as of December 31, 1993, would still be $47,897, which is equal to $25,000 (Employee A's section 401(a)(17) frozen accrued benefit) plus $22,897 ($228,973 multiplied by (2 percent multiplied by 5 years of service).

(b) Assume that for each of the years 1996-98 Employee A's annual compensation under the plan compensation definition, disregarding the amendment to comply with section 401(a)(17), is $400,000. Assume that the annual compensation limit is first adjusted to $160,000 for plan years beginning on or after January 1, 1997, and is not adjusted for the plan year beginning on or after January 1, 1998. The compensation that may be taken into account for the 1998 plan year cannot exceed $156,667 (the average of $150,000 for 1996, $160,000 for 1997, and $160,000 for 1998).

(c) Therefore, at the end of December 31, 1998, Employee A's accrued benefit is $63,564, which is equal to $47,897 (Employee A's OBRA '93 frozen accrued benefit) plus $15,667 ($156,667 multiplied by (2 percent multiplied by 5 years of service)).

(b) Employee A's frozen accrued benefit as of December 31, 1993, is adjusted as of December 31, 1998, as follows:

(1) Employee A's frozen accrued benefit as of December 31, 1993, is the sum of Employee A's section 401(a)(17) frozen accrued benefit ($25,000) and Employee A's frozen accruals for the years 1989-93 ($22,897).

(2) The numerator of Employee A's adjustment fraction is $156,667 (the average of $150,000, $160,000, and $160,000). The denominator of Employee A's adjustment fraction with respect to Employee A's section 401(a)(17) frozen accrued benefit is $250,000, and the denominator of Employee A's adjustment fraction with respect to the rest of Employee A's frozen accrued benefit is $228,973 (the average of Employee A's annual compensation for 1991, 1992, and 1993, as limited by the respective annual limit for each of those years).

(3) Employee A's section 401(a)(17) frozen accrued benefit as adjusted through December 31, 1998, remains $25,000. The compensation adjustment fraction determined in accordance with paragraph (e)(4)(iii) of this section is less than one ($156,667 divided by $250,000).

(4) Employee A's frozen accruals for the years 1989-93, as adjusted through December 31, 1998, remain $22,897 because the adjustment fraction is less than one ($156,667 divided by $228,973).

(5) Employee A's adjusted accrued benefit as of December 31, 1998, equals $47,897 (the sum of the $25,000 and $22,897 amounts from paragraphs (b)(3) and (b)(4), respectively, of this Example ).

(c) Employee A's section 401(a)(17) frozen accrued benefit will not be adjusted for compensation increases until the numerator of the fraction used to adjust that frozen accrued benefit exceeds the denominator of $250,000 used in determining those accruals.

Similarly, the portion of Employee A's OBRA '93 frozen accrued benefit attributable to the frozen accruals for the years 1989-1993 will not be adjusted for compensation increases until the numerator of the fraction used to adjust those frozen accruals exceeds the denominator of $228,973 used in determining those accruals.


• WUSF: History Of Phosphate Mining In Florida Fraught With Peril. “Long before Piney Point, phosphate processing plants in the greater Tampa Bay region have caused some of Florida’s worst environmental disasters. Accidents like these fill the history books in Florida.”

• WPTV: DeSantis says Florida to help Arizona, Texas in fight for southern border security. “During a news conference at the Escambia County Sheriff’s Office in Pensacola, DeSantis said Florida is the first state to provide mutual aid to Arizona and Texas, whose Republican governors sent a letter seeking help after President Joe Biden rolled back the immigration policies of former President Donald Trump.”

• News Service of Florida: DeSantis Pushes Through Pardon For COVID-19 Violators. “With Gov. Ron DeSantis saying lockdown restrictions and mask mandates meant to stop the spread of COVID-19 did more harm than good, the state clemency board on Wednesday pardoned all Floridians who were arrested or fined for violating local-government requirements about wearing masks or social distancing.”

• Florida Politics: Survey: Misinformation, party affiliation driving vaccination decisions. “A majority of Floridians have received at least one shot of a COVID-19 vaccine, but many still remain hesitant about the jab, according to a newly released survey from the University of South Florida.”

• News Service of Florida: Florida Misses Deadline On Federal Money For Schools. “Florida missed a June 7 deadline to submit its plan, citing a delay “due to (the) legislative session and required State Board review,” according to the federal agency. The Florida Department of Education did not immediately respond to questions from The News Service of Florida about when the State Board of Education will review a plan and submit it to Washington.”

• Associated Press: Energy milestone: Florida utility topples last coal chimney. “Florida Power & Light imploded the towering chimney stack of its last coal-fired generating plant on Wednesday, a milestone in its transition to cleaner energy sources.”

• Spectrum News: Florida supervisors of election slam Arizona ‘audit’ of 2020 presidential election. “At the annual summer meeting in Tampa this week, there’s a sense of relief among many of the state’s local supervisors of election in attendance. While some still question the need for an election reform bill signed into law by Gov. Ron DeSantis last month, things could be much worse.”

• Tallahassee Democrat ($): Incoming FSU president’s contract calls for base salary of $700,000. “Richard McCullough is scheduled to start in August, pending state approval.”

• WTSP-Tampa: Coastal farm on a mission to make sustainable farming possible and profitable. “Their aquaponics house, where all of the lettuce and greens are grown required constant fans. The electricity bill was regularly over $500 a month. So, the Curci’s installed 90 solar panels to provide energy for the entire farm.”


401(k) Plans - Deferrals and matching when compensation exceeds the annual limit

Unless your plan terms provide otherwise, the salary (elective) deferral limit is applied uniformly to the compensation that the employee receives throughout the year.

Compensation and contribution limits are subject to annual cost-of-living adjustments. The annual limits are:

  • salary deferrals - $19,500 in 2020 and 2021 ($19,000 in 2019), plus $6,500 in 2020 and 2021 ($6,000 in 2015 - 2019) if the employee is age 50 or older (IRC Sections 402(g) and 414(v))
  • annual compensation - $290,000 in 2021, $285,000 in 2020, $280,000 in 2019 (IRC Section 401(a)(17))
  • total employee and employer contributions (including forfeitures) - the lesser of 100% of an employee’s compensation or $58,000 for 2021 ($57,000 for 2020 not including "catch-up" elective deferrals of $6,500 in 2020 and 2021 ($6,000 in 2015 - 2019) for employees age 50 or older) (IRC section 415(c))

Example: Mary, age 49, whose annual compensation is $360,000 ($30,000 per month), elects to defer $1,500 per calendar month, up to $19,000 for the 2019 year. Mary may contribute to the plan until she reaches her annual deferral limit of $19,000 even though her compensation will exceed the annual limit of $280,000 in October.

Employer matching contributions

If your plan provides for matching contributions, you must follow the plan’s match formula.

Example: Your plan requires a match of 50% on salary deferrals that do not exceed 5% of compensation. Although Mary earned $360,000, your plan can only use up to $280,000 of her compensation when applying the matching formula for 2019. Mary’s matching contribution would be $7,000 (50% x (5% x $280,000)). Although Mary makes salary deferrals of $19,000, only $14,000 (5% of $280,000) will be matched. She must receive a matching contribution of $7,000 (50% x $14,000) under the terms of the plan.

What does your plan say?

Although not common, a plan can specifically require that salary deferrals cease once a participant’s compensation reaches the annual limit.

If your plan specifies that salary deferrals be based on a participant’s first $280,000 of compensation, then you must stop allowing Mary to make salary deferrals when her year-to-date compensation reaches $280,000, even though she hasn’t reached the annual $19,000 limit on salary deferrals, and must base the employer match on her actual deferrals.


Resources

A plan may not base allocations for a plan year on compensation exceeding the dollar limit imposed under IRC Section 401(a)(17) or use more than this amount in applying certain nondiscrimination rules. Treas. Reg. Section 1.401(a)(17)-1(a)(1).

In 2018, the annual compensation dollar limit is $275,000. See COLA Increases for Dollar Limitations on Benefits and Contributions for other years.

The dollar limit applies for a 12-month period. If the plan uses a compensation measurement period of less than 12 months in calculating employee allocations, the limit must be prorated. Treas. Reg. Section 1.401(a)(17)-1(b)(3)(iii)(A). Proration of the annual limit is generally not necessary when employees join or leave the plan mid-year, since the 12-month compensation measuring period (i.e., the plan year) remains the same. Treas. Reg. Section 1.401(a)(17)-1(b)(3)(iii)(B).

Proration of limit

The compensation limit for a short year is determined by multiplying the applicable annual compensation dollar limit for the calendar year in which the short year begins by a fraction, the numerator of which is the number of months in the short plan year, and the denominator of which is 12. See Treas. Reg. Section 1.401(a)(17)-1(b)(3)(iii)(A).

Example 1 – Amendment creating a short plan year

Plan A is a profit sharing plan with a calendar plan year. On June 30, 2018, the plan is amended to change the plan year to a fiscal year ending June 30. The amendment creates a short plan year from January 1 to June 30, 2018 (6 months). The plan document provides that allocations for the plan year ending June 30 are based on compensation for the 6-month period. Because the short plan year begins in 2018, the prorated short year limit is calculated based on the 2018 limit of $275,000 under IRC Section 401(a)(17). The prorated short year limit is $137,500 ($275,000 x (6/12) = $137,500).

Example 2 – Initial short plan year

Company C establishes a new § 401(k) profit sharing plan effective October 1, 2018. The plan is a calendar year plan and the first plan year ends December 31, 2018 (3 months). The plan has matching contributions equal to 100% of the first 4% of compensation deferred by a participant for the plan year. For the first plan year, compensation taken into account under the plan is compensation earned after the effective date of the plan. Thus, for the first plan year, the prorated short year limit for the initial plan year under IRC Section 401(a)(17) is $68,750 ($275,000 x (3/12) = $68,750).

Example 3 – Initial short plan year – 12-month measurement period

The same facts as Example 2 except Company C establishes a new Section 401(k) profit sharing plan in July 2018, but the plan is effective January 1, 2018, and the plan document states that compensation taken into account under the plan is compensation earned for the calendar year. The limit under IRC Section 401(a)(17) is not prorated for the first plan year because the compensation measurement period under the plan is 12 months.

Example 4 – Plan termination

Plan B is a profit sharing plan with a calendar plan year. The plan sponsor adopts a resolution to terminate the plan effective September 30, 2018. Final allocations under the plan are based on compensation earned from January 1 to September 30, 2018 (9 months). Because the compensation measurement period is less than 12 months in 2018, the compensation limit must be prorated. The prorated short year limit is calculated based on the 2018 limit of $275,000 under IRC Section 401(a)(17). The prorated short year limit is $206,250. ($275,000 x (9/12) = $206,250).

Participants who join or leave the plan mid-year

A plan may allocate contributions to participants based on compensation earned by an employee only while he or she is a participant in the plan. If that is the case, the IRC Section 401(a)(17) compensation limit is not prorated for employees who participate for only a portion of the plan year (for example, who enter the plan in July of a calendar plan year) provided the plan continues to use a measurement period of 12 months for the other employees. See Treas. Reg. Section 1.401(a)(17)-1(b)(3)(iii)(B).

Example 5 – New participant

Plan P is a calendar year Section 401(k) plan. The plan allocates nonelective contributions to participants based on compensation earned during each employee’s period of participation under the plan. Participant B begins employment on January 1, 2018, and becomes a participant in the plan on August 1, 2018. B’s elective deferrals and allocated nonelective contribution for 2018 is based on compensation earned during the period August 1 – December 31, 2018. However, the IRC Section 401(a)(17) limit is not prorated because the compensation measurement period applicable to all employees is 12 months.


1869 – 1902

Clark continued to hold the post of Architect of the Capitol until his death in 1902. During his tenure, the U.S. Capitol underwent considerable modernization. Steam heat was gradually installed in the Old Capitol. In 1873 the first elevator was installed, and in the 1880s electric lighting began to replace gas lights.

Between 1884 and 1891, the marble terraces on the north, west and south sides of the Capitol were constructed. As part of the grounds plan devised by landscape architect Frederick Law Olmsted, these terraces not only added over 100 rooms to the Capitol Building but also provided a broader, more substantial visual base for the building.

On November 6, 1898, a gas explosion and fire in the original north wing dramatically illustrated the need for fireproofing. The roofs over the Statuary Hall wing and the original north wing were reconstructed and fireproofed, the work being completed in 1902 by Clark's successor, Elliott Woods. In 1901 the space in the west central front vacated by the Library of Congress was converted to committee rooms.


Historical Snapshot

The C-17 Globemaster III is a high-wing, four-engine, T-tailed aircraft with a rear loading ramp. In 1980, the U.S. Air Force asked for a larger transport that could be refueled in flight and use rough forward fields so that it could fly anywhere in the world. On Aug. 28, 1981, McDonnell Douglas won the contract with its proposal to build the C-17. The design met or exceeded all Air Force design specifications, and the huge transport was able to use runways at 19,000 airfields.

The C-17 was built in Long Beach, California, and the first C-17 squadron was operational in January 1995. The C-17 fleet has been involved in many contingency operations, including flying troops and equipment to Operation Joint Endeavor to support peacekeeping in Bosnia and the Allied Operation in Kosovo. Eight C-17s, in 1998, completed the longest airdrop mission in history, flying more than 8,000 nautical miles (14,816 kilometers) from the United States to Central Asia, dropping troops and equipment after more than 19 hours in the air.

With its 160,000-pound (72,600-kilogram) payload, the C-17 can take off from a 7,600-foot (2,316-meter) airfield, fly 2,400 nautical miles (4,444 kilometers) and land on a small, austere airfield in 3,000 feet (914 meters) or less. The C-17 can be refueled in flight. On the ground, a fully loaded aircraft, using engine reversers, can back up a 2% slope.

During normal testing, C-17s have set 33 world records, including payload to altitude time-to-climb and the short takeoff and landing mark, in which the C-17 took off in less than 1,400 feet (427 meters), carried a payload of 44,000 pounds (20,000 kilograms) to altitude and landed in less than 1,400 feet (427 meters).

In May 1995, the C-17 received the prestigious Collier Trophy, symbolizing the top aeronautical achievement of 1994. In February 1999, President Bill Clinton presented the nation's top award for quality &mdash the Malcolm Baldrige National Quality Award &mdash to Boeing Airlift and Tanker programs, maker of the C-17, for business excellence.

On Dec. 20, 2010, the worldwide fleet of C-17 Globemaster III airlifters surpassed 2 million flying hours during an airdrop mission over Afghanistan. Reaching 2 million flight-hours equates to 1.13 billion nautical miles &mdash the equivalent of a C-17 flying to the moon and back 2,360 times.

On Sept. 18, 2013, Boeing announced it would complete production of the C-17 Globemaster III and close the C-17 final assembly facility in Long Beach in 2015. Dennis Muilenburg, who was president and CEO of Boeing Defense, Space & Security at the time but today serves as chairman, president and CEO of The Boeing Company, said, &ldquoOur customers around the world face very tough budget environments.&rdquo


Watch the video: The Schlieffen Plan Vs Plan 17 - The History Argument - World War One


Comments:

  1. Niru

    It should be in the quotation book

  2. Roman

    Rather valuable message

  3. Hippocampus

    I think he is wrong. Write to me in PM, speak.

  4. Husto

    In my opinion, mistakes are made. Write to me in PM.

  5. Gunther

    I apologize, but this does not suit me. Who else can breathe?

  6. Yazid

    I congratulate, a brilliant idea and it is duly

  7. Neron

    Is not present at all. I know.



Write a message