<nobr>Jun 10, 2008</nobr>

ERIC Counsel Testifies Before IRS on Proposed Hybrid Plan Regulations

ERIC Counsel Richard Shea of Covington & Burling on June 6 testified before the IRS for a hearing on proposed regulations relating to hybrid pension plans. The Treasury Department and IRS published the proposed regulations in December 2007, which relate to the hybrid plan provisions of the Pension Protection Act of 2006, and introduced new terminology and provided additional guidance on the issues addressed in IRS Notice 2007-6.

Shea's testimony expanded on comments submitted in April by ERIC to Treasury and IRS that urged the agencies to make significant changes in the regulations and the philosophy with which Treasury and IRS are pursuing.

Shea discussed how the proposed regulations would not effectuate Congress's intent to provide a predictable legal environment in which employers can safely offer retirement benefits to their employees through cash balance and pension equity plans. Shea also expressed concern that the proposed regulations call into question other defined benefit plans that provide participants guaranteed indexing of their benefits.

The Pension Protection Act of 2006, in which Congress effectively "blessed" the development of cash balance and other hybrid plans, largely took effect on January 1, 2008, but plan sponsors have been left waiting for final regulations from Treasury and IRS to flesh out the details.

Questions or comments on this issue should be addressed to Kathryn Ricard, kricard@eric.org.

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Websites:

Outline of Testimony

Slides of Testimony

ERIC Comments

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