Benefit Wear-Away, Cutbacks, and Backloading, Oh My

The following article outlines recent hybrid plan guidance issued by the IRS (cash balance plans are often referred to as hybrid plans because they share features of both defined benefit and defined contribution plans). On December 28, 2007, the IRS issued proposed regulations implementing changes m...

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Bibliographic Details
Published in:Journal of pension benefits 2008-04, Vol.15 (3), p.45
Main Authors: Haynes, Linda J, Graves, Amy L
Format: Article
Language:English
Subjects:
Compensation
Conversion
Defined benefit plans
Defined contribution plans
Federal regulation
Pension Protection Act 2006-US
Retirement plans
Subsidies
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Summary:The following article outlines recent hybrid plan guidance issued by the IRS (cash balance plans are often referred to as hybrid plans because they share features of both defined benefit and defined contribution plans). On December 28, 2007, the IRS issued proposed regulations implementing changes made by the Pension Protection Act of 2006 ("PPA") with respect to cash balance and other hybrid defined benefit plans. These regulations generally incorporate and expand on the transitional guidance provided in Notice 2007-6. The preamble to the proposed regulations also provides relief from the requirements of Internal Revenue Code section 41 1 (d)(6) for plan amendments that are implemented pursuant to section 1107 of the PPA (section 1 107 allows plan sponsors generally until the last day of 2009 plan years to amend their plans for certain PPA changes). This protection will remain in place until further guidance is provided by the IRS. In addition, the IRS issued Revenue Ruling 2008-7 on February 1, 2008. This ruling provides limited relief for some plans that would otherwise run afoul of the "backloading" rules of Internal Revenue Code Section 411(b). [PUBLICATION ABSTRACT]
ISSN:1069-4064