<nobr>May 18, 2007</nobr>

ERIC Files Comments on IRS Notice 2007-6 Concerning Hybrid Plans

ERIC today filed comments with the Treasury Department and Internal Revenue Service (IRS) in response to Notice 2007-6. The notice, which was issued in December 2006, announced the end of the moratorium on cash balance determination letters and requested comments on a number of issues and requirements that were raised in the Pension Protection Act of 2006. The notice also provided preliminary guidance on some issues for both prior and post PPA-effective date conversions. At the Retirement Security Meeting on April 26, 2007, the Committee concluded that ERIC should file a comment letter addressing certain issues.

The Retirement Security Committee suggested that ERIC's comment letter focus on the following issues:

o The availability of a good faith standard in any proposed regulations;
o The application of the backloading tests to hybrid plans;
o The definition of market rates of return;
o The treatment of early retirement subsidies; and
o The crediting rate for variable annuity plans.

ERIC will continue to engage Treasury and the Service as they move forward in the guidance process.

ERIC members are requested to provide comments, concerns, and feedback on these issues to Mike Chittenden (mchittenden@eric.org) of the ERIC staff.

Text Files:

ERIC Comment Letter

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