IRS Comments on Contribution to Money Purchase Pension Plan which Terminates Mid-Year (Posted September 22, 1999) Technical Tip 13: The following question and answer were from the IRS Q&A Session at the 1998 ASPPA Annual Conference: A calendar year 10% MP [that is, money purchase pension] plan has no last day employment condition, no hours requirement for receiving a contribution, and defines compensation as compensation paid during the plan year. It terminates on 6/30/98 with all participants having accrued 1,000 hours of service in the plan year to that date. On the same day, the sole NHCE [nonhighly compensated employee] terminates employment. The sole HCE [highly compensated employee] continues in employment through the end of the year and beyond. The participating NHCE had $10K in compensation to the date of termination; the participating HCE had $50K in comp to date of plan termination and a total of $100K in compensation for the entire plan year. Is the contribution required to satisfy 411(d)(6) (and 412): a) $0 [applying RR 79-237]; b) $6,000 counting compensation to date of plan termination; or c) $11,000 counting all compensation for all participants for the entire plan year. IRS Response: B is the correct answer. View all Tips © 1999-2012 Reish Luftman Reicher & Cohen, a Professional Corporation Important notice: Answers are provided as general guidance on the subjects covered in the question and are not provided as legal advice to the questioner's situation. Any legal issues should be reviewed by your legal counsel to apply the law to the particular facts of your situation.