Incidental limitations in retirement plans refer to what?

Incidental limitations in retirement plans primarily relate to the additional features or components that are considered secondary or peripheral to the main purpose of the retirement plan. In this context, the option focusing on the maximum life insurance allowable is correct. This refers to the limits set on the amount of life insurance that can be included within a qualified retirement plan, ensuring that the primary function of the plan remains retirement savings rather than serving as a vehicle for life insurance.

The relevant regulations establish that any life insurance benefits must be considered incidental, meaning they should not overshadow the primary retirement benefits offered by the plan. This is important for maintaining the tax-deferred nature of these plans and ensuring compliance with IRS guidelines.

The other choices, although they pertain to elements of retirement planning, do not fit the definition of incidental limitations. The types of annuity payout options represent different forms of benefit disbursement rather than limitations, the tax treatment of Roth IRAs concerns taxation rather than restrictions in a retirement plan, and contribution limits directly address how much can be added to a retirement account instead of focusing on the incidental aspects of life insurance.