Pension Protection Act Blog

The effective dates for the Code section 430 regulations are an interesting mix.

Congress made new Code section 430 effective to plan years beginning after December 31, 2007. With the Pension Protection Act being enacted into law on August 17, 2006, implementing regulations to encompass the changes made by Code section 430 by December 31, 2007, was clearly going to be difficult for the IRS. As expected, the IRS was not able to release all of the needed guidance by December 31, 2007, so the various regulations were released with varying applicability dates. (Note: these are my notes on the effective dates and are provided for discussion purposes, not for relying on in order to operate plans.)

Regulations for Code section 430, including effective dates:

Regulations released on May 29, 2007 providing guidance on mortality tables and Code section 430(h):

• Effective for plan years beginning after Dec. 31, 2007, and applicable for plan years beginning on or after January 1, 2008.

Regulations released on Aug. 31, 2007 providing guidance for benefit restrictions on underfunded defined benefit plans and on Code sections 430(f) and 436:

• Regulations under Code section 430(f) apply to plan years beginning on or after January 1, 2008. The regulations under Code section 436 are proposed to apply to plan years beginning on or after January 1, 2008, except for plans for which the effective date of Code section is delayed in accordance with sections 104, 105, or 106 of the Pension Protection Act. The effective date for collectively bargained plans is delayed, and follow separate effective dates.

Proposed regulations released on Dec. 31, 2007 providing guidance on determination of plan assets and benefit liabilities for purposes of funding requirements that apply to single employer defined benefit plans and Code sections 430(d), 430(g), 430(h), and 430(i):

• These regulations apply to plan years beginning on or after January 1, 2009, except for plans for which the effective date of section 430 is delayed in accordance with sections 104, 105, or 106 of PPA. For plan years beginning in 2008, plans can rely on these regulations for purposes of satisfying the requirements of Code section 430.

Regulations released on April 11, 2008 providing guidance on Code sections 430(a), 430(c), 430(e) and 430(j) along with Excise Tax Regulations under Code section 4971:

• These proposed regulations apply generally to plan years beginning on or after January 1, 2009. When these regulations are finalized, plans will be permitted to apply these regulations for plan years beginning in 2008. Additionally, for plan years beginning in 2008, plans are permitted to rely on these proposed regualtions for purposes of satisfying the requirements of Code section 430. For plans where the effective date of Code section 430 is delayed in accordance with sections 104, 105 and 106 of PPA, these regulations are proposed to apply to plan years beginning on or after the date Code section 430 first applies with respect to the plan.

Code section 430 and all of these proposed regulations deserve a lot of study and analysis. One of the larger questions is whether Code section 430 was really needed.

Technorati Tags: Pension Protection Act, IRC Code 430, IRS, defined benefit, ERISA