If a governmental agency "picks up" employee contributions in a defined contribution plan under IRC 414(h)(2), I understand that the contributions are considered annual additions. Assuming the contributions "picked up" meet the criteria outlined in Rev. Rul. 81-35 and 81-36 to qualify as excludable from the employee's gross income in the current year, is any further testing necessary?

About the only nonobvious thing you need to worry about in this context is that the amount by which an employee's salary is reduced to fund the pick-up is not treated as part of compensation for all sorts of purposes, e.g., 415 and 403(B) testing. Thus, unlike contributions made under 403(B) or similar salary reduction agreements, picked up contributions must be subtracted from compensation in determining those limits.
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