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February 16, 2009

Omnibus Budget Reconciliation Act (OBRA )

Your Guide

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Definition

There are several versions of OBRA

  • OBRA 90 increased the employer reversion penalty from 15 to 50%
  • OBRA 93 instituted the compensation cap
  • Section 407(d)(9) of ERISA, as added by section 9345(a)(2) of OBRA ’87, provides that, for purposes of section 407, an arrangement which consists of a defined benefit plan and an individual account plan shall be treated as one plan if the benefits of such arrangement are taken into account in determining the benefits payable under such defined benefit plan.

Referring Cite

www.irs.gov  , www.dol.gov

Additional Helpful Information

  • Section 407(d)(3)(C) of ERISA, was added by section 9345(a)(1) of OBRA ’87,  and provides that the term “eligible individual account plan” does not include any individual account plan the benefits of which are taken into account in determining the benefits payable to a participant under any defined benefit plan.
  • Section 9345(a)(3) of OBRA ’87 provides that sections 407(d)(3)(C) and 407(d)(9) shall apply with respect to arrangements established after December 17, 1987. Thus, sections 407(d)(3)(C) and 407(d)(9) of ERISA do not apply to floor-offset arrangements established on or before December 17, 1987.

Written By

Denise Appleby

Denise is CEO of Appleby Retirement Consulting Inc., a firm that provides IRA resources for financial/ tax/legal professionals. She has over 20 years of experience in the retirement plans field, which includes training and technical consultation.

Denise writes and publishes educational /marketing tools for advisors; available at http://irapublications.com. Denise co-authored several books on IRAs

Denise is a graduate of The John Marshall Law School, where she obtained a Masters of Jurisprudence in Employee Benefits, and has earned 5 professional retirement designations.
She has appeared on numerous media programs, sharing her insights on retirement tax laws.

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