Source: https://www.irs.gov/irb/2013-49_IRB
Timestamp: 2019-04-26 08:46:00+00:00

Document:
The “base period T-bill rate” for the period ending September 30, 2013, is published, as required by section 995(f) of the Code.
The loss payment patterns and discount factors are set forth for the 2013 accident year. These factors will be used for computing discounted unpaid losses under § 846 of the Code.
The salvage discount factors are set forth for the 2013 accident year. These factors will be used for computing discounted estimated salvage recoverable under § 832 of the Code.
These proposed regulations would clarify that amounts paid to an Indian tribe member as remuneration for services performed in a fishing rights-related activity may be treated as compensation for purposes of applying the limits on qualified plan benefits and contributions. These regulations would affect sponsors of, and participants in, employee benefit plans of Indian tribal governments. Comments are requested by February 13, 2014.
2014 cost-of-living adjustments; retirements plans, etc. This notice sets forth certain cost-of-living adjustments effective January 1, 2014, applicable to the dollar limitations on benefits and contributions under qualified retirement plans. Other limitations applicable to deferred compensation plans are also affected by these adjustments under § 415. Under § 415(d), the adjustments are to be made pursuant to adjustment procedures which are similar to those used to adjust benefit amounts under § 215(i)(2)(A) of the Social Security Act. This notice also contains cost-of-living adjustments for several pension-related amounts in restating the data in IR–2013–86 issued October 31, 2013.
Weighted average interest rate update; corporate bond indices; 30-year Treasury securities; segment rates. This notice contains updates for the corporate bond weighted average interest rate for plan years beginning in November 2013; the 24-month average segment rates; the funding segment rates applicable for November 2013; and the minimum present value rates for October 2013. The rates in this notice reflect certain changes implemented by the Moving Ahead for Progress in the 21st Century Act, Public Law 112–141 (MAP-21).
The IRS has revoked its determination that Corral of Comfort Horse Rescue, Inc. of Palmdale, CA., Positive Energy Foundation of Lincoln, CA., Rainy Day Foundation, Inc. of Washington, D.C., Sunrise Residential and Lifeskills Center of Cincinnati, OH., and Thunder Air Museum Inc, of Lancaster, CA., qualify as organizations described in sections 501(c)(3) and 170(c)(2) of the Code.
Section 995(f)(1) of the Internal Revenue Code provides that a shareholder of a DISC shall pay interest each taxable year in an amount equal to the product of the shareholder’s DISC-related deferred tax liability for the year and the “base period T-bill rate.” Under section 995(f)(4), the base period T-bill rate is the annual rate of interest determined by the Secretary to be equivalent to the average of the 1-year constant maturity Treasury yields, as published by the Board of Governors of the Federal Reserve System, for the 1-year period ending on September 30 of the calendar year ending with (or of the most recent calendar year ending before) the close of the taxable year of the shareholder. The base period T-bill rate for the period ending September 30, 2013, is 0.140 percent.
Pursuant to section 6222 of the Code, interest must be compounded daily. The table below provides factors for compounding the base period T-bill rate daily for any number of days in the shareholder’s taxable year (including a 52-53 week accounting period) for the 2013 base period T-bill rate. To compute the amount of the interest charge for the shareholder’s taxable year, multiply the amount of the shareholder’s DISC-related deferred tax liability (as defined in section 995(f)(2)) for that year by the base period T-bill rate factor corresponding to the number of days in the shareholder’s taxable year for which the interest charge is being computed. Generally, one would use the factor for 365 days. One would use a different factor only if the shareholder’s taxable year for which the interest charge being determined is a short taxable year, if the shareholder uses the 52-53 week taxable year, or if the shareholder’s taxable year is a leap year.
For the base period T-bill rates for the periods ending in prior years, see Rev. Rul. 2012-22, 2012-48 I.R.B. 565; Rev. Rul. 2011-30, 2011-49 I.R.B. 826; Rev. Rul. 2010-28, 2010-49 I.R.B. 804; Rev. Rul. 2009-36, 2009-47 I.R.B. 650; and Rev. Rul. 2008-51, 2008-2 C.B. 1171.
The principal author of this revenue ruling is Teresa Burridge Hughes of the Office of Associate Chief Counsel (International). For further information regarding this revenue ruling, contact Ms. Hughes at (202) 317-6936 (not a toll-free call).
2014 Limitations Adjusted As Provided in Section 415(d), etc.
Section 415 of the Internal Revenue Code (the Code) provides for dollar limitations on benefits and contributions under qualified retirement plans. Section 415(d) requires that the Secretary of the Treasury annually adjust these limits for cost-of-living increases. Other limitations applicable to deferred compensation plans are also affected by these adjustments under § 415. Under § 415(d), the adjustments are to be made pursuant to adjustment procedures which are similar to those used to adjust benefit amounts under § 215(i)(2)(A) of the Social Security Act.
Effective January 1, 2014, the limitation on the annual benefit under a defined benefit plan under § 415(b)(1)(A) is increased from $205,000 to $210,000.
For a participant who separated from service before January 1, 2014, the participant’s limitation under a defined benefit plan under § 415(b)(1)(B) is computed by multiplying the participant’s compensation limitation, as adjusted through 2013, by 1.0155.
The limitation for defined contribution plans under § 415(c)(1)(A) is increased in 2014 from $51,000 to $52,000.
The limitation under § 402(g)(1) on the exclusion for elective deferrals described in § 402(g)(3) remains unchanged at $17,500.
The annual compensation limit under §§ 401(a)(17), 404(l), 408(k)(3)(C), and 408(k)(6)(D)(ii) is increased from $255,000 to $260,000.
The dollar limitation under § 416(i)(1)(A)(i) concerning the definition of key employee in a top-heavy plan is increased from $165,000 to $170,000.
The dollar amount under § 409(o)(1)(C)(ii) for determining the maximum account balance in an employee stock ownership plan subject to a 5-year distribution period is increased from $1,035,000 to $1,050,000, while the dollar amount used to determine the lengthening of the 5-year distribution period is increased from $205,000 to $210,000.
The limitation used in the definition of highly compensated employee under § 414(q)(1)(B) remains unchanged at $115,000.
The dollar limitation under § 414(v)(2)(B)(i) for catch-up contributions to an applicable employer plan other than a plan described in § 401(k)(11) or 408(p) for individuals aged 50 or over remains unchanged at $5,500. The dollar limitation under § 414(v)(2)(B)(ii) for catch-up contributions to an applicable employer plan described in § 401(k)(11) or 408(p) for individuals aged 50 or over remains unchanged at $2,500.
The annual compensation limitation under § 401(a)(17) for eligible participants in certain governmental plans that, under the plan as in effect on July 1, 1993, allowed cost-of-living adjustments to the compensation limitation under the plan under § 401(a)(17) to be taken into account, is increased from $380,000 to $385,000.
The compensation amount under § 408(k)(2)(C) regarding simplified employee pensions (SEPs) remains unchanged at $550.
The limitation under § 408(p)(2)(E) regarding SIMPLE retirement accounts remains unchanged at $12,000.
The limitation on deferrals under § 457(e)(15) concerning deferred compensation plans of state and local governments and tax-exempt organizations remains unchanged at $17,500.
The compensation amounts under § 1.61–21(f)(5)(i) of the Income Tax Regulations concerning the definition of “control employee” for fringe benefit valuation purposes is increased from $100,000 to $105,000. The compensation amount under § 1.61–21(f)(5)(iii) is increased from $205,000 to $210,000.
The adjusted gross income limitation under § 25B(b)(1)(A) for determining the retirement savings contribution credit for taxpayers filing a joint return is increased from $35,500 to $36,000; the limitation under § 25B(b)(1)(B) is increased from $38,500 to $39,000; and the limitation under §§ 25B(b)(1)(C) and 25B(b)(1)(D) is increased from $59,000 to $60,000.
The adjusted gross income limitation under § 25B(b)(1)(A) for determining the retirement savings contribution credit for taxpayers filing as head of household is increased from $26,625 to $27,000; the limitation under § 25B(b)(1)(B) is increased from $28,875 to $29,250; and the limitation under §§ 25B(b)(1)(C) and 25B(b)(1)(D) is increased from $44,250 to $45,000.
The adjusted gross income limitation under § 25B(b)(1)(A) for determining the retirement savings contribution credit for all other taxpayers is increased from $17,750 to $18,000; the limitation under § 25B(b)(1)(B) is increased from $19,250 to $19,500; and the limitation under §§ 25B(b)(1)(C) and 25B(b)(1)(D) is increased from $29,500 to $30,000.
The applicable dollar amount under § 219(g)(3)(B)(i) for determining the deductible amount of an IRA contribution for taxpayers who are active participants filing a joint return or as a qualifying widow(er) is increased from $95,000 to $96,000. The applicable dollar amount under § 219(g)(3)(B)(ii) for all other taxpayers (other than married taxpayers filing separate returns) is increased from $59,000 to $60,000. The applicable dollar amount under § 219(g)(3)(B)(iii) for a married individual filing a separate return is not subject to the annual cost-of-living adjustment and remains $0. The applicable dollar amount under § 219(g)(7)(A) for a taxpayer who is not an active participant but whose spouse is an active participant is increased from $178,000 to $181,000.
The adjusted gross income limitation under § 408A(c)(3)(B)(ii)(I) for determining the maximum Roth IRA contribution for married taxpayers filing a joint return or for taxpayers filing as a qualifying widow(er) is increased from $178,000 to $181,000. The adjusted gross income limitation under § 408A(c)(3)(B)(ii)(II) for all other taxpayers (other than married taxpayers filing separate returns) is increased from $112,000 to $114,000. The applicable dollar amount under § 408A(c)(3)(B)(ii)(III) for a married individual filing a separate return is not subject to an annual cost-of-living adjustment and remains $0.
The dollar amount under § 430(c)(7)(D)(i)(II) used to determine excess employee compensation with respect to a single-employer defined benefit pension plan for which the special election under § 430(c)(2)(D) has been made is increased from $1,066,000 to $1,084,000.
The principal author of this notice is John Heil of the Employee Plans, Tax Exempt and Government Entities Division. For further information regarding the data in this notice, please contact the Employee Plans’ taxpayer assistance telephone service at 1-877-829-5500 (a toll-free call) between the hours of 8:30 a.m. and 4:30 p.m. Eastern time Monday through Friday. For information regarding the methodology used in arriving at the data in this notice, please e-mail Mr. Heil at RetirementPlanQuestions@irs.gov.
This notice provides guidance on the corporate bond monthly yield curve (and the corresponding spot segment rates), and the 24-month average segment rates under § 430(h)(2) of the Internal Revenue Code. In addition, this notice provides guidance as to the interest rate on 30-year Treasury securities under § 417(e)(3)(A)(ii)(II) as in effect for plan years beginning before 2008, the 30-year Treasury weighted average rate under § 431(c)(6)(E)(ii)(I), and the minimum present value segment rates under § 417(e)(3)(D) as in effect for plan years beginning after 2007. These rates reflect certain changes implemented by the Moving Ahead for Progress in the 21st Century Act, Public Law 112-141 (MAP-21). MAP-21 provides that for purposes of § 430(h)(2), the segment rates are limited by the applicable maximum percentage or the applicable minimum percentage based on the average of segment rates over a 25 year period.
Generally, except for certain plans under sections 104 and 105 of the Pension Protection Act of 2006, § 430 of the Code specifies the minimum funding requirements that apply to single employer plans pursuant to § 412. Section 430(h)(2) specifies the interest rates that must be used to determine a plan’s target normal cost and funding target. Under this provision, present value is generally determined using three 24-month average interest rates (“segment rates”), each of which applies to cash flows during specified periods. To the extent provided under § 430(h)(2)(C)(iv), these segment rates are adjusted by the applicable percentage of the 25-year average segment rates for the period ending September 30 of the year preceding the calendar year in which the plan year begins. However, an election may be made under § 430(h)(2)(D)(ii) to use the monthly yield curve in place of the segment rates.
Generally for plan years beginning after 2007, § 431 specifies the minimum funding requirements that apply to multiemployer plans pursuant to § 412. Section 431(c)(6)(B) specifies a minimum amount for the full-funding limitation described in section 431(c)(6)(A), based on the plan’s current liability. Section 431(c)(6)(E)(ii)(I) provides that the interest rate used to calculate current liability for this purpose must be no more than 5 percent above and no more than 10 percent below the weighted average of the rates of interest on 30-year Treasury securities during the four-year period ending on the last day before the beginning of the plan year. Notice 88–73, 1988–2 C.B. 383, provides guidelines for determining the weighted average interest rate. The rate of interest on 30-year Treasury securities for October 2013 is 3.68 percent. The Service has determined this rate as the average of the daily determinations of yield on the 30-year Treasury bond maturing in August 2043. The following rates were determined for plan years beginning in the month shown below.
This revenue procedure prescribes the loss payment patterns and discount factors for the 2013 accident year. These factors will be used to compute discounted unpaid losses under § 846 of the Internal Revenue Code. See Rev. Proc. 2012–44, 2012–49 I.R.B. 645, for background concerning the loss payment patterns and application of the discount factors.
This revenue procedure applies to any taxpayer that is required to discount unpaid losses under § 846 for a line of business using the discount factors published by the Secretary.
.01 The following tables present separately for each line of business the discount factors under § 846 for accident year 2013. All the discount factors presented in this section were determined using the applicable interest rate under § 846(c) for 2013, which is 2.16 percent, and by assuming all loss payments occur in the middle of the calendar year.
.02 If the groupings of individual lines of business on the annual statement change, taxpayers must discount unpaid losses on the resulting line of business in accordance with the discounting patterns that would have applied to those unpaid losses based on their classification on the 2010 annual statement. See Rev. Proc. 2012–44, 2012–49 I.R.B. 645, section 2, for additional background on discounting under § 846 and the use of the Secretary’s tables.
.03 Section V of Notice 88–100, 1988–2 C.B. 439, sets forth a composite method for computing discounted unpaid losses for accident years that are not separately reported on the annual statement. The tables separately provide discount factors for taxpayers who elect to use the composite method of section V of Notice 88–100. See Rev. Proc. 2002–74, 2002–2 C.B. 980.
Taxpayers that do not use the composite method of Notice 88–100 should use 98.9372 percent to discount unpaid losses incurred in this line of business in the 2013 accident year and that are outstanding at the end of the 2013 and later taxable years.
Taxpayers that use the composite method of Notice 88–100 should use 98.9372 percent to discount all unpaid losses in this line of business that are outstanding at the end of the 2013 taxable year.
Taxpayers that do not use the composite method of Notice 88–100 should use the following factor to discount unpaid losses incurred in this line of business in the 2013 accident year and that are outstanding at the end of the tax year shown.
Taxpayers that use the composite method of Notice 88–100 should use 98.9372 percent to discount unpaid losses incurred in this line of business in 2013 and prior years and that are outstanding at the end of the 2015 taxable year.
Taxpayers that do not use the composite method of Notice 88–100 should use the following factors to discount unpaid losses incurred in this line of business in the 2013 accident year and that are outstanding at the end of the tax year shown.
Taxpayers that use the composite method of Notice 88–100 should use 95.2133 percent to discount unpaid losses incurred in this line of business in 2013 and prior years and that are outstanding at the end of the 2023 taxable year.
Taxpayers that use the composite method of Notice 88–100 should use 94.0296 percent to discount unpaid losses incurred in this line of business in 2013 and prior years and that are outstanding at the end of the 2023 taxable year.
Taxpayers that use the composite method of Notice 88–100 should use 98.9372 percent to discount unpaid losses incurred in this line of business in 2013 and prior years and that are outstanding at the end of the 2023 taxable year.
Taxpayers that use the composite method of Notice 88–100 should use 95.3404 percent to discount unpaid losses incurred in this line of business in 2013 and prior years and that are outstanding at the end of the 2023 taxable year.
Taxpayers that use the composite method of Notice 88–100 should use 94.5541 percent to discount unpaid losses incurred in this line of business in 2013 and prior years and that are outstanding at the end of the 2023 taxable year.
Taxpayers that use the composite method of Notice 88–100 should use 98.6406 percent to discount unpaid losses incurred in this line of business in 2013 and prior years and that are outstanding at the end of the 2023 taxable year.
Taxpayers that use the composite method of Notice 88–100 should use 92.9062 percent to discount unpaid losses incurred in this line of business in 2013 and prior years and that are outstanding at the end of the 2023 taxable year.
Taxpayers that use the composite method of Notice 88–100 should use 93.5799 percent to discount unpaid losses incurred in this line of business in 2013 and prior years and that are outstanding at the end of the 2023 taxable year.
Taxpayers that use the composite method of Notice 88–100 should use 97.2932 percent to discount unpaid losses incurred in this line of business in 2013 and prior years and that are outstanding at the end of the 2023 taxable year.
Taxpayers that use the composite method of Notice 88–100 should use 91.9206 percent to discount unpaid losses incurred in this line of business in 2013 and prior years and that are outstanding at the end of the 2023 taxable year.
Taxpayers that use the composite method of Notice 88–100 should use 91.9297 percent to discount unpaid losses incurred in this line of business in 2013 and prior years and that are outstanding at the end of the 2023 taxable year.
Taxpayers that use the composite method of Notice 88–100 should use 98.5436 percent to discount unpaid losses incurred in this line of business in 2013 and prior years and that are outstanding at the end of the 2023 taxable year.
Taxpayers that use the composite method of Notice 88–100 should use 93.4456 percent to discount unpaid losses incurred in this line of business in 2013 and prior years and that are outstanding at the end of the 2023 taxable year.
The principal author of this revenue procedure is David Remus of the Office of Associate Chief Counsel (Financial Institutions & Products). For further information regarding this revenue procedure contact Mr. Remus on (202) 622-3970 (not a toll-free call).
This revenue procedure prescribes the salvage discount factors for the 2013 accident year. These factors must be used to compute discounted estimated salvage recoverable under § 832 of the Internal Revenue Code.
Section 832(b)(5)(A) requires that all estimated salvage recoverable (including that which cannot be treated as an asset for state accounting purposes) be taken into account in computing the deduction for losses incurred. Under § 832(b)(5)(A), paid losses are reduced by salvage and reinsurance recovered during the taxable year. This amount is adjusted to reflect changes in discounted unpaid losses on nonlife insurance contracts and in unpaid losses on life insurance contracts. An adjustment is then made to reflect any changes in discounted estimated salvage recoverable and in reinsurance recoverable.
.01 The following tables present separately for each line of business the discount factors under § 832 for the 2013 accident year. All the discount factors presented in this section were determined using the applicable interest rate under § 846(c) for 2013, which is 2.16 percent, and by assuming all estimated salvage is recovered in the middle of the calendar year.
.02 These tables must be used by taxpayers irrespective of whether they elected to discount unpaid losses using their own experience under § 846(e).
.03 Section V of Notice 88–100, 1988–2 C.B. 439, provides a composite discount factor to be used in determining the discounted unpaid losses for accident years that are not separately reported on the annual statement approved by the National Association of Insurance Commissioners. The tables separately provide discount factors for taxpayers who elect to use the composite method. Rev. Proc. 2002–74, 2002–2 C.B. 980, clarifies that for certain insurance companies subject to tax under § 831 the composite method for discounting unpaid losses set forth in Notice 88–100, section V, is permitted but not required. Rev. Proc. 2002–74 further provides alternative methods for computing discounted unpaid losses that are permitted for insurance companies not using the composite method, and sets forth a procedure for insurance companies to obtain automatic consent of the Commissioner to change to one of the methods described therein.
Taxpayers that do not use the composite method of Notice 88–100 should use 98.9372 percent to discount salvage recoverable with respect to losses incurred in this line of business in the 2013 accident year as of the end of the 2013 and later taxable years.
Taxpayers that use the composite method of Notice 88–100 should use 98.9372 percent to discount all salvage recoverable in this line of business as of the end of the 2013 taxable year.
Taxpayers that do not use the composite method of Notice 88–100 should use the following factor to discount salvage recoverable as of the end of the tax year shown with respect to losses incurred in this line of business in the 2013 accident year.
Taxpayers that use the composite method of Notice 88–100 should use 98.9372 percent to discount salvage recoverable as of the end of the 2015 taxable year with respect to losses incurred in this line of business in 2013 and prior years.
Taxpayers that do not use the composite method of Notice 88–100 should use the following factors to discount salvage recoverable as of the end of the tax year shown with respect to losses incurred in this line of business in the 2013 accident year.
Taxpayers that use the composite method of Notice 88–100 should use 95.0296 percent to discount salvage recoverable as of the end of the 2023 taxable year with respect to losses incurred in this line of business in 2013 and prior years.
Taxpayers that use the composite method of Notice 88–100 should use 97.2205 percent to discount salvage recoverable as of the end of the 2023 taxable year with respect to losses incurred in this line of business in 2013 and prior years.
Taxpayers that use the composite method of Notice 88–100 should use 98.9372 percent to discount salvage recoverable as of the end of the 2023 taxable year with respect to losses incurred in this line of business in 2013 and prior years.
Taxpayers that use the composite method of Notice 88–100 should use 98.3944 percent to discount salvage recoverable as of the end of the 2023 taxable year with respect to losses incurred in this line of business in 2013 and prior years.
Taxpayers that use the composite method of Notice 88–100 should use 98.3136 percent to discount salvage recoverable as of the end of the 2023 taxable year with respect to losses incurred in this line of business in 2013 and prior years.
Taxpayers that use the composite method of Notice 88–100 should use 96.4869 percent to discount salvage recoverable as of the end of the 2023 taxable year with respect to losses incurred in this line of business in 2013 and prior years.
Taxpayers that use the composite method of Notice 88–100 should use 98.4548 percent to discount salvage recoverable as of the end of the 2023 taxable year with respect to losses incurred in this line of business in 2013 and prior years.
Taxpayers that use the composite method of Notice 88–100 should use 97.2990 percent to discount salvage recoverable as of the end of the 2023 taxable year with respect to losses incurred in this line of business in 2013 and prior years.
This document contains proposed regulations that would clarify that amounts paid to an Indian tribe member as remuneration for services performed in a fishing rights-related activity may be treated as compensation for purposes of applying the limits on qualified plan benefits and contributions. These regulations would affect sponsors of, and participants in, employee benefit plans of Indian tribal governments.
Comments and requests for a public hearing must be received by February 13, 2014.
Send submissions to CC:PA:LPD:PR (REG–120927–13), room 5205, Internal Revenue Service, PO Box 7604, Ben Franklin Station, Washington D.C. 20044. Submissions may be hand-delivered Monday through Friday between the hours of 8 a.m. and 4 p.m. to CC:PA:LPD:PR (REG–120927–13), Courier’s Desk, Internal Revenue Service, 1111 Constitution Avenue, N.W., Washington, DC, 20224, or sent electronically via the Federal eRulemaking Portal at www.regulations.gov (IRS REG–120927–13).
Concerning the proposed regulations, Sarah Bolen or Pamela Kinard at (202) 622-6060 or (202) 317-6700; concerning the submission of comments or to request a public hearing, Oluwafunmilayo Taylor, (202) 622-7180 or (202) 317-6901 (not toll-free numbers).
Indian tribal governments (ITGs) and individual tribe members conduct fishing activities to generate revenue, protect critical habitats, and preserve tribal customs and traditions. Various treaties, federal statutes, and Presidential executive orders reserve to Indian tribe members the right to fish for subsistence and commercial purposes both on and off reservations. Because many of the treaties, statutes, and executive orders were adopted before passage of the Federal income tax, they often do not expressly address the question of whether income derived by Indians and ITGs from protected fishing activities is exempt from taxation. See H.R. Rep. 100–1104, at p. 77 (1988).
Congress added section 7873 to the Internal Revenue Code as part of the Technical and Miscellaneous Revenue Act of 1988 (Public Law 100-647). Section 7873(a)(1) provides that no income tax shall be imposed on income derived from a fishing rights-related activity of an Indian tribe by (A) a member of the tribe directly or through a qualified Indian entity, or (B) a qualified Indian entity. Section 7873(a)(2) provides that no employment tax shall be imposed on remuneration paid for services performed in a fishing rights-related activity of an Indian tribe by a member of such tribe for another member of such tribe or for a qualified Indian entity. Thus, section 7873(a) exempts income derived from a fishing rights-related activity (“fishing rights-related income”) from both income and employment taxes.
Section 7873(b)(1) defines fishing rights-related activity with respect to an Indian tribe as any activity directly related to harvesting, processing, or transporting fish harvested in the exercise of a recognized fishing right of the tribe or to selling such fish but only if substantially all of such harvesting was performed by members of such tribe.
Section 415(a)(1) provides that a trust that is part of a pension, profit-sharing, or stock bonus plan shall not constitute a qualified trust under section 401(a) if (A) in the case of a defined benefit plan, the plan provides for the payment of benefits with respect to a participant which exceed the limitation of section 415(b), or (B) in the case of a defined contribution plan, contributions and other additions under the plan with respect to any participant for any taxable year exceed the limitation of section 415(c).
Section 415(b)(1) provides that benefits with respect to a participant exceed the annual limitation for defined benefit plans if, when expressed as an annual benefit (within the meaning of section 415(b)(2)), the participant’s annual benefit is greater than the lesser of $160,000 (as adjusted in accordance with section 415(d)(1)) or 100 percent of the participant’s average compensation for the participant’s high 3 years.
Section 415(c)(1) provides that contributions and other additions with respect to a participant exceed the annual limitation for defined contribution plans if, when expressed as an annual addition (within the meaning of section 415(c)(2)) to the participant’s account, the participant’s annual addition is greater than the lesser of $40,000 (as adjusted in accordance with section 415(d)(1)) or 100 percent of the participant’s compensation. Section 415(c)(3) provides that the term “participant’s compensation” means the compensation of the participant from the employer for the year. Section 1.415(c)–2(a) of the Income Tax Regulations generally provides that compensation from the employer within the meaning of section 415(c)(3) includes all items of remuneration described in §1.415(c)–2(b), but excludes the items of remuneration described in §1.415(c)–2(c).
Section 1.415(c)–2(b) generally provides that, for purposes of applying the limitations of section 415, the term compensation means remuneration for services. Specifically, under §1.415(c)–2(b)(1), compensation includes employee wages, salaries, fees for professional services, and other amounts received (without regard to whether or not an amount is paid in cash) for personal services actually rendered in the course of employment with the employer maintaining the plan, to the extent that the amounts are includible in gross income. In addition, §1.415(c)–2(b)(2) provides that in the case of an employee within the meaning of section 401(c)(1) (a self-employed employee), compensation includes the employee’s earned income (as described in section 401(c)(2)) plus amounts deferred at the election of the employee that would be includible in gross income but for the rules of section 402(e)(3), 402(h)(1)(B), 402(k), or 457(b).
Section 1.415(c)–2(c) excludes certain items from the definition of compensation under section 415(c)(3). Specifically, §1.415(c)–2(c)(1) excludes contributions (other than certain elective contributions) made by the employer to a plan of deferred compensation to the extent that the contributions are not includible in the gross income of the employee for the taxable year in which contributed. Likewise, distributions from plans (whether qualified or not) are generally not considered to be compensation for section 415 purposes. Section 1.415(c)–2(c)(2) excludes from compensation amounts realized from the exercise of nonstatutory options and amounts realized when restricted stock or other property held by an employee becomes freely transferable or is no longer subject to a substantial risk of forfeiture. Section 1.415(c)–2(c)(3) excludes from compensation amounts realized from the sale, exchange, or other disposition of stock acquired under a statutory stock option (as defined in §1.421–1(b)). Finally, §1.415(c)–2(c)(4) excludes from compensation other amounts that receive special tax benefits, such as certain premiums for group-term life insurance.
Section 1.415(c)–2(d) provides safe harbor definitions that a plan is permitted to use to define compensation in a manner that satisfies section 415(c)(3). Section 1.415(c)–2(d)(2) provides a safe harbor definition of compensation that includes only those items listed in §1.415(c)–2(b)(1) or (b)(2) and excludes all the items listed in §1.415(c)–2(c). Section 415(c)–2(d)(3) provides a separate safe harbor definition of compensation that includes wages within the meaning of section 3401(a), plus amounts that would be included in wages but for an election under section 125(a), 132(f)(4), 402(e)(3), 402(h)(1)(b), 402(k), or 457(b).
Because fishing rights-related income is not subject to income tax, an issue has been raised as to whether such income is included as compensation for purposes of section 415(c)(3) and §1.415(c)–2(b). The proposed regulations would clarify that certain fishing rights-related income is included in the definition of compensation. Specifically, these regulations would provide that amounts paid to a member of an Indian tribe as remuneration for services performed in a fishing rights-related activity (as defined in section 7873(b)(1)) do not fail to be treated as compensation under §1.415(c)–2(b)(1) and (b)(2) (and are not excluded from the definition of compensation pursuant to §1.415(c)–2(c)(4)) merely because those amounts are not subject to income tax as a result of section 7873(a)(1). Thus, the determination of whether an amount constitutes wages, salaries, or earned income for purposes of §1.415(c)–2(b)(1) or (b)(2) is made without regard to the exemption from taxation under section 7873(b)(1) and (b)(2). In addition, by permitting fishing rights-related income to be treated as wages, salaries, or earned income under §1.415(c)–2(b)(1) and (b)(2), plans that accept contributions of fishing rights-related income would not be precluded from utilizing the safe harbor definitions of compensation under §1.415(c)–2(d)(2) and (d)(3) of the regulations.
These regulations are proposed to apply for taxable years ending on or after the date of publication of the Treasury decision adopting these rules as final regulations in the Federal Register. Taxpayers, however, may rely on these proposed regulations for periods preceding the effective date, pending the issuance of final regulations. If, and to the extent, the final regulations are more restrictive than the rules in these proposed regulations, those provisions of the final regulations will be applied without retroactive effect.
It has been determined that this notice of proposed rulemaking is not a significant regulatory action as defined in Executive Order 12866, as supplemented by Executive Order 13563. Therefore, a regulatory assessment is not required. It has also been determined that 5 U.S.C. 533(b) of the Administrative Procedure Act (5 U.S.C. chapter 5) does not apply to these regulations. Because these regulations do not impose a collection of information on small entities, the provisions of the Regulatory Flexibility Act (5 U.S.C. chapter 6) do not apply and a Regulatory Flexibility Analysis is not required. Pursuant to section 7805(f) of the Internal Revenue Code, these regulations have been submitted to the Office of Chief Counsel for Advocacy of the Small Business Administration for comments on its impact on small business.
Before these proposed regulations are adopted as final regulations, consideration will be given to any comments that are submitted timely to the IRS as prescribed in this preamble under the “Addresses” heading. In addition to general comments on the proposed regulations, the IRS and the Treasury Department request comments on the taxation of qualified plan distributions that are attributable to fishing rights-related income, and the application of section 72(f)(2) (which treats certain amounts as basis for purposes of computing employee contributions if those amounts would have not been includible in income had they been paid directly to the employee). All comments are available at www.regulations.gov or upon request. A public hearing will be scheduled if requested in writing by any person who timely submits written comments. If a public hearing is scheduled, notice of the date, time, and place of the public hearing will be published in the Federal Register.
These proposed regulations take into account comments provided through a number of general consultation sessions held with the Indian tribal community in recent years. Consistent with Executive Order 13175, the Treasury Department and the IRS expect to hold a telephone consultation on a date between November 15, 2013 and February 13, 2014. This telephone consultation session will focus principally on the contribution of section 7873 income to qualified retirement plans and the taxation of qualified plan distributions that are attributable to this income. Information relating to the consultation, including the date, time, registration requirements, and procedures for submitting written and oral comments, will be available on the IRS website relating to Indian tribal governments at: http://www.irs.gov/Government-Entities/Indian-Tribal-Governments.
The principal author of these regulations is Sarah R. Bolen, Office of Division Counsel/Associate Chief Counsel (Tax Exempt and Government Entities). However, other personnel from the IRS and the Treasury Department participated in the development of these regulations.
(9) Income derived by Indians from exercise of fishing rights. Amounts paid to a member of an Indian tribe directly or through a qualified Indian entity (within the meaning of section 7873(b)(3)) as compensation for services performed in a fishing rights-related activity (as defined in section 7873(b)(1)) of the tribe do not fail to constitute compensation under paragraphs (b)(1) and (b)(2) of this section and are not excluded from the definition of compensation pursuant to paragraph (c)(4) of this section merely because those amounts are not subject to income or employment taxes as a result of section 7873(a)(1) and (a)(2). Thus, the determination of whether an amount constitutes wages, salaries, or earned income for purposes of paragraph (b)(1) or (a)(2) of this section is made without regard to the exemption from taxation under section 7873(a)(1) and (a)(2).
(h) Effective/applicability date. Section 1.415(c)–2(g)(9) shall apply for plan years ending on or after the date of publication of the Treasury decision adopting these rules as final regulations in the Federal Register.
This announcement serves notice to donors that on July 9, 2013, the United States Tax Court entered an order and decision that, effective January 1, 2005, the organization listed below is not recognized as an organization described in section 501(c)(3), is not exempt from tax under section 501(a), and is not an organization described in section 170(c)(2).
The Internal Revenue Service has revoked its determination that the organizations listed below qualify as organizations described in sections 501(c)(3) and 170(c)(2) of the Internal Revenue Code of 1986. Generally, the Service will not disallow deductions for contributions made to a listed organization on or before the date of announcement in the Internal Revenue Bulletin that an organization no longer qualifies. However, the Service is not precluded from disallowing a deduction for any contributions made after an organization ceases to qualify under section 170(c)(2) if the organization has not timely filed a suit for declaratory judgment under section 7428 and if the contributor (1) had knowledge of the revocation of the ruling or determination letter, (2) was aware that such revocation was imminent, or (3) was in part responsible for or was aware of the activities or omissions of the organization that brought about this revocation. If on the other hand, a suit for declaratory judgment has been timely filed, contributions from individuals and organizations described in section 170(c)(2) that are otherwise allowable will continue to be deductible. Protection under section 7428(c) would begin on December 2, 2013, and would end on the date the court first determines that the organization is not described in section 170(c)(2) as more particularly set forth in section 7428(c)(1). For individual contributors, the maximum deduction protected is $1,000, with a husband and wife treated as one contributor. This benefit is not extended to any individual, in whole or in part, for the acts or omissions of the organization that were the basis for revocation.
Corral of Comfort Horse Rescue, Inc.
Dr. R. C. Samantha Roy Institute of Science and Technology, Inc.
A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2013–1 through 2013–26 is in Internal Revenue Bulletin 2013–26, dated June 24, 2013.
A cumulative list of current actions on previously published items in Internal Revenue Bulletins 2013–1 through 2013–26 is in Internal Revenue Bulletin 2013–26, dated June 24, 2013.

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