Internal Revenue Code (IRC)

The Internal Revenue Code represents the tax law that is created and amended by Congress and codified in regulation and revenue rulings and other formal statements. The Internal Revenue Service is responsible for ensuring compliance with the Internal Revenue Code, including the rules for operating a qualified retirement plan. A retirement plan that meets the requirements of IRC section 401(a) is deemed to be a "qualified plan." This IRC section sets standards for retirement plans including:

Who is eligible for plan participation;

When participants have a non-forfeitable right to their plan benefits;

How much may be contributed to the plan by both the participant and the employer; and

When and how distributions from the plan may be made.

A qualified plan offers special tax benefits to both the plan sponsor and plan participants. Plan sponsors can take a deduction for contributions made to the plan while plan participants can shelter income and plan earnings from income tax until distributed. More information on IRS regulations can be found at the IRS Web site, irs.gov.

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