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TITLE 26-INTERNAL REVENUE CODE § 415. Limitations on benefits and contribution under qualified plans (a) General rule (1) Trusts A trust which is a part of a pension, profit- sharing, or stock bonus plan shall not consti- tute a qualified trust under section 401(a) if- (A) in the case of a defined benefit plan, the plan provides for the payment of bene- fits with respect to a participant which exceed the limitation of subsection (b), (D) in the case of a defined contribution plan, contributions and other additions under the plan with respect to any partici- pant for any taxable year exceed the limita- tion of subsection (c), or (C) in any case in which an individual is a participant in both a defined benefit plan and a defined contribution plan maintained by the employer, the trust has been dis- qualified under subsection (g). (2) Section applies to certain annuities and ac- counts Except as provided in paragraph (3), in the case of- (A) an employee annuity plan described in section 403(a), (B) an annuity contract described in sec- tion 403(b), (C) an individual retirement account de- scribed in section 408(a), (D) an individual retirement annuity de- scribed in section 408(b), (E) a plan described in section 405(a), or (F) a retirement bond described in section 409, such contract, annuity plan, account, annuity, plan, or bond shall not be considered to be de- scribed in section 403(a), 403(b), 405(a), 408(a), 408(b), or 409, as the case may be, unless it satisfies the requirements of subpar- agraph (A) or subparagraph (B) of paragraph (1), whichever s appropriate, and has not been disqualified under subsection (g). In the case of an annuity contract described in sec- tion 403(b),' the preceding sentence shall apply only to the portion of the annuity con- tract which exceeds the limitation of subsec- tion (b) or the limitation of subsection (c), whichever is appropriate, and the amount of the contribution for such portion shall reduce the exclusion allowance as provided in section 403(b)(2). (3) Accounts, etc., established for non-employed spouse Paragraph (2) shall not apply for any year to an account, amuity, or bond described in section 408(a), 408(b), or 409, respectively, es- tablished for the benefit of the spouse of the individual contributing to such account, or for such annuity or bond, if a deduction is al- lowed under section 220 to such individual with respect to such contribution for such year. (b) Limitation for defined benefit plans (1) In general Benefits with respect to a participant exceed the limitation of this subsection if, when expressed as an annual benefit (within the meaning of paragraph (2)), such annual benefit Is greater than the lesser of- (A) $75,000, or (B) 100 percent of the participant's aver- age compensation for his high 3 years. (2) Annual benefit (A) In general For purposes of paragraph (1), the term "annual benefit" means a benefit payable annually in the form of a straight life annu- ity (with no ancillary benefits) under a plan to which employees do not contribute and under which no rollover contributions (as defined in sections 402(a)(5), 403(a)(4), 408(d)(3), and 409(b)(3)(C)) are made. (B) Adjustment for certain other forms of benefit If the benefit under the plan is payable in any form other than the form described In subparagraph (A), or if the employees con- tribute to the plan or make rollover contri- butiors (as defined in sections 402(a)(5), 403(a)(4), 408(d)(3) and 409(b)(3)(C)), the determinations as to whether the limitation described in paragraph (1) has been satis- fied shall be made, in accordance with regu- lations prescribed by the Secretary by ad- justing such benefit so that it is equivalent to the benefit described in subparagraph (A). For purposes of this subparagraph, any ancillary benefit which is not directly relat- ed to retirement income benefits shall not be taken into account; and that portion of any Joint and survivor annuity which con- stitutes a qualified joint and survivor annu- ity (as defined in section 401(a)(11)(G)(iii)) shall not be taken into account. (C) Adjustment to $75,000 limit where benefit begins before age 55 If the retirement income benefit under the plan begins before age 55, the determi- nation as to whether the $75,000 limitation set forth in paragraph (1)(A) has been satis- fied shall be made, in accordance with regu- lations prescribed by the Secretary, by ad- Justing such benefit so that it is equivalent to such a benefit beginning at age 55. (3) Average compensation for high 3 years For purposes of paragraph (1), a partici- pant's high 3 years shall be the period of con- secutive calendar years (not more than 3) during which the participant both was an active participant in the plan and had the greatest aggregate compensation from the employer. In the case of an employee within the meaning of section 401(c)(1), the preced- ing sentence shall be applied by substituting for "compensation from the employer" the following: "the participant's earned Income (within the meaning of section 401(c)(2) but determined without regard to any exclusion under section 911)". (4) Total annual benefits not in excess of $10,000 Notwithstanding the preceding provisions of this subsection, the benefits payable with respect to a participant under any defined benefit plan shall be deemed not to exceed the limitation of this subsection if- (A) the retirement benefits payable with respect to such participant under such plan and under all other defined benefit plans of § 415 Page 340