###### Editorial Note on Part 1

#### Editorial Note:

IRS redesignated the following sections to appear below the undesignated center heading “Regulations Applicable to Certain Bonds Sold Prior to July 8, 1997” and preceding the undesignated center heading “Deductions for Personal Exemptions.” See 62 FR 25507 and 25513, May 9, 1997 for the specific sections involved in the redesignation.

#### § 1.401(l)-0 Table of contents.

This section contains a listing of the headings of §§ 1.401(l)-1 through 1.401(l)-6.

## § 1.401(l)-1 Permitted disparity with respect to employer-provided contributions or benefits.

(a) Permitted disparity.

(1) In general.

(2) Overview.

(3) Exclusive rules.

(4) Exceptions.

(5) Additional rules.

(b) Relationship to other requirements.

(c) Definitions.

(1) Accumulation plan.

(2) Average annual compensation.

(3) Base benefit percentage.

(4) Base contribution percentage.

(5) Benefit formula.

(6) Benefit, right, or feature.

(7) Covered compensation.

(i) In general.

(ii) Special rules.

(A) Rounded table.

(B) Proposed regulation definition.

(iii) Period for using covered compensation amount.

(8) Defined benefit plan.

(9) Defined contribution plan.

(10) Disparity.

(11) Employee.

(12) Employer.

(13) Employer contributions.

(14) Excess benefit percentage.

(15) Excess contribution percentage.

(16) Excess plan.

(i) Defined benefit excess plan.

(ii) Defined contribution excess plan.

(17) Final average compensation.

(i) In general.

(ii) Limitations.

(iii) Determination of section 414(s) compensation.

(18) Gross benefit percentage.

(19) Highly compensated employee.

(20) Integration level.

(21) Nonexcludable employee.

(22) Nonhighly compensated employee.

(23) Offset level.

(24) Offset percentage.

(25) Offset plan.

(26) PIA.

(27) Plan.

(28) Plan year compensation.

(29) Qualified plan.

(30) Section 401(l) plan.

(31) Section 414(s) compensation.

(32) Social security retirement age.

(33) Straight life annuity.

(34) Taxable wage base.

(35) Year of service.

## § 1.401(l)-2 Permitted disparity for defined contribution plans.

(a) Requirements.

(1) In general.

(2) Excess plan requirement.

(3) Maximum disparity.

(4) Uniform disparity.

(5) Integration level.

(b) Maximum permitted disparity.

(1) In general.

(2) Maximum excess allowance.

(c) Uniform disparity.

(1) In general.

(2) Deemed uniformity.

(i) In general.

(ii) Overall permitted disparity.

(iii) Non-FICA employees.

(d) Integration level.

(1) In general.

(2) Taxable wage base.

(3) Single dollar amount.

(4) Intermediate amount.

(5) Prorated integration level for short plan year.

(e) Examples.

## § 1.401(l)-3 Permitted disparity for defined benefit plans.

(a) Requirements.

(1) In general.

(2) Excess or offset plan requirement.

(3) Maximum disparity.

(4) Uniform disparity.

(5) Integration or offset level.

(6) Benefits, rights, and features.

(b) Maximum permitted disparity.

(1) In general.

(2) Maximum excess allowance.

(3) Maximum offset allowance.

(4) Rules of application.

(i) Disparity provided for the plan year.

(ii) Reductions in disparity rate.

(iii) Normal and optional forms of benefit.

(A) In general.

(B) Level annuity forms.

(C) Other forms.

(D) Post-retirement cost-of-living adjustments.

(*1*) In general.

(*2*) Requirements.

(E) Section 417(e) exception.

(5) Examples.

(c) Uniform disparity.

(1) In general.

(2) Deemed uniformity.

(i) In general.

(ii) Use of fractional accrual and disparity for 35 years.

(iii) Use of fractional accrual and disparity for fewer than 35 years.

(iv) Different social security retirement ages.

(v) Reduction for integration level.

(vi) Overall permitted disparity.

(A) In general.

(B) Unit credit plans.

(C) Fractional accrual plans.

(vii) Non-FICA employees.

(viii) Average annual compensation adjustment for offset plan.

(ix) PIA offsets.

(3) Examples.

(d) Requirements for integration level or offset compensation.

(1) In general.

(2) Covered compensation.

(3) Uniform percentage of covered compensation.

(4) Single dollar amount.

(5) Intermediate amount.

(6) Intermediate amount safe harbor.

(7) Prorated integration level for short plan year.

(8) Demographic requirements.

(i) In general.

(ii) Attained age requirement.

(iii) Nondiscrimination requirement.

(A) Minimum percentage test.

(B) Ratio test.

(C) High dollar amount test.

(D) Individual disparity reductions.

(9) Reduction in the 0.75-percent factor if integration or offset level exceeds covered compensation.

(i) In general.

(ii) Uniform percentage of covered compensation.

(iii) Single dollar amount.

(A) Plan-wide reduction.

(B) Individual reductions.

(iv) Reductions.

(A) Table.

(B) Interpolation.

(10) Examples.

(e) Adjustments to the 0.75-percent factor for benefits commencing at ages other than social security retirement age.

(1) In general.

(2) Adjustments.

(i) Benefits commencing on or after age 55 and before social security retirement age.

(ii) Benefits commencing after social security retirement age and on or before age 70.

(iii) Benefits commencing before age 55.

(iv) Benefits commencing after age 70.

(3) Tables.

(4) Benefit commencement date.

(i) In general.

(ii) Qualified social security supplement.

(5) Examples.

(f) Benefits, rights, and features.

(1) Defined benefit excess plan.

(2) Offset plan.

(3) Examples.

(g) No reductions in 0.75-percent factor for ancillary benefits.

(h) Benefits attributable to employee contributions not taken into account.

(i) Multiple integration levels. [Reserved]

(j) Additional rules.

## § 1.401(l)-4 Special rules for railroad plans.

(a) In general.

(b) Defined contribution plans.

(1) In general.

(2) Single integration level method.

(i) In general.

(ii) Definitions.

(3) Two integration level method.

(i) In general.

(ii) Total disparity requirement.

(iii) Intermediate disparity requirement.

(iv) Definitions.

(c) Defined benefit excess plans.

(1) In general.

(2) Single integration level method.

(i) In general.

(ii) Definitions.

(3) Two integration level method.

(i) In general.

(ii) Employee with lower covered compensation.

(iii) Employee with lower railroad retirement covered compensation.

(iv) Definitions.

(d) Offset plans.

(1) In general.

(2) Maximum tier 2 and supplementary annuity offset allowance.

(e) Additional rules.

(1) Definitions.

(2) Adjustments to 0.75-percent factor.

(3) Adjustments to 0.56-percent factor.

(4) Overall permitted disparity.

## § 1.401(l)-5 Overall permitted disparity limits.

(a) Introduction.

(1) In general.

(2) Plan requirements.

(3) Plans taken into account.

(b) Annual overall permitted disparity limit.

(1) In general.

(2) Total annual disparity fraction.

(3) Annual defined contribution plan disparity fraction.

(4) Annual defined benefit excess plan disparity fraction.

(5) Annual offset plan disparity fraction.

(i) In general.

(ii) PIA offset plans.

(6) Annual imputed disparity fraction.

(7) Annual nondisparate fraction.

(8) Determination of fraction.

(i) General rule

(ii) Multiple formulas.

(iii) Offset arrangements.

(A) In general.

(B) Defined benefit plans.

(C) Defined contribution plans.

(iv) Applicable percentages.

(v) Fractional accrual plans.

(9) Examples.

(c) Cumulative permitted disparity limit.

(1) In general.

(i) Employees who benefit under defined benefit plans.

(ii) Employees who do not benefit under defined benefit plans.

(iii) Certain plan years disregarded.

(iv) Determination of type of plan.

(v) Applicable plan years.

(vi) Transition rule for defined contribution plans.

(2) Cumulative disparity fraction.

(3) Determination of total annual disparity fractions for prior years.

(4) Special rules for greater of formulas and offset arrangements.

(i) Greater of formulas.

(A) In general.

(B) Separate satisfaction by formulas.

(C) Single plan.

(ii) Offset arrangements.

(A) In general.

(B) Separate satisfaction by plans.

(C) No other plan.

(5) Examples.

(d) Additional rules.

## § 1.401(l)-6 Effective dates and transition rules.

(a) Statutory effective date.

(1) In general.

(2) Collectively bargained plans.

(b) Regulatory effective date.

(1) In general.

(2) Plans of tax-exempt organizations.

(3) Defined contribution plans.

(4) Defined benefit plans.

(c) Compliance during transition period.

[T.D. 8359, 56 FR 47617, Sept. 19, 1991; 57 FR 10818, Mar. 31, 1992, as amended by T.D. 8486, 58 FR 46830, Sept. 3, 1993]