http://www.irs.gov/pub/irs-drop/n-15-28.pdfSponsors of certain closed defined benefit plans got some good news from the IRS on March 19 — it has extended temporary relief from nondiscrimination rules under Internal Revenue Code Section 401(a)(4) for another year. The extension applies to DB plans that provide ongoing accruals but that have been amended to limit those accruals to some or all of the employees who participated in the plan on a specified date. The IRS made the announcement in Notice 2015-28.
The IRS provided this relief in Notice 2014-5, 2014-2 I.R.B. 276, and it was applicable for plan years that begin before Jan. 1, 2016. Notice 2015-28 extends that relief, and makes it applicable for plan years that begin before Jan. 1, 2017. Notice 2015-28 will appear in IRB 2015-14, which will be issued on April 6, 2015.
Closing a DB plan often occurs in conjunction with an amendment that provides new or greater contributions under a defined contribution plan intended to replace accruals under the DB plan for new hires or other employees to whom the DB plan is closed.
Notice 2014-5 permits certain employers that sponsor a closed DB plan and a DC plan to demonstrate that the aggregated plans comply with the nondiscrimination requirements of Section 401(a)(4) on the basis of equivalent benefits, even if the aggregated plans do not satisfy the current conditions for testing on that basis.
The IRS provided this relief in Notice 2014-5, 2014-2 I.R.B. 276, and it was applicable for plan years that begin before Jan. 1, 2016. Notice 2015-28 extends that relief, and makes it applicable for plan years that begin before Jan. 1, 2017. Notice 2015-28 will appear in IRB 2015-14, which will be issued on April 6, 2015.
Closing a DB plan often occurs in conjunction with an amendment that provides new or greater contributions under a defined contribution plan intended to replace accruals under the DB plan for new hires or other employees to whom the DB plan is closed.
Notice 2014-5 permits certain employers that sponsor a closed DB plan and a DC plan to demonstrate that the aggregated plans comply with the nondiscrimination requirements of Section 401(a)(4) on the basis of equivalent benefits, even if the aggregated plans do not satisfy the current conditions for testing on that basis.
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