Pension Protection Act Blog

Just in time for the New Year, the IRS has released two major pieces of guidance in the form of proposed regulations. The first is Proposed Regulations on Hybrid Plans, providing guidance on changes made to cash balance plans by the Pension Protection Act and recent litigation. The release of this guidance is well-timed, as I was just finishing work on our Cycle C cash balance plans and can now incorporate this guidance into that plan document before it is released. I am also still working on a law review article about the AK Steel case, which is directly mentioned in these proposed regulations and which I blogged about here.

The other major piece of guidance is the long-awaited guidance on the Measurement of Assets and Liabilities for Pension Funding Purposes. In 74 pages, the IRS has provided proposed regulations on determining plan assets and benefit liabilities for purposes of the funding requirements which apply to single employer defined benefit plans. These regulations state that they are applicable to plan years beginning on or after January 1, 2009. They also state:

However, in the case of a plan for which the effective date of section 430 is delayed in accordance with sections 104 through 106 of the Pension Protection Act of 2006, Public Law 109-280, the regulations are proposed to apply to plan years beginning on or after the date section 430 applies with respect to the plan. For plan years beginning in 2008, plans are permitted to rely on the provisions set forth in these proposed regulations for purposes of satisfying the requirements of section 430.

New Code section 430 generally applies to plan years beginning on or after January 1, 2008. (hat tip to BenefitsLink.com for copies of the proposed regulations)

Look for more on both of these proposed regulations in future posts.

Technorati Tags: Pension Protection Act, ppa, lump sum, defined benefit, cash balance, hybrid plan, ERISA

Tweet This