For Immediate Release
Washington, DC – The ERISA Industry Committee (ERIC) today testified before a panel of U.S. Department of Treasury and Internal Revenue Service (IRS) officials regarding proposed regulations on nondiscrimination testing for so-called “closed” defined benefit plans.
Richard Shea, of Covington and Burling, addressed the panel on behalf of ERIC. As the only national association advocating solely for the employee benefit and compensation interests of the country’s largest employers, ERIC appreciates the efforts of the Agencies to remove obstacles that prevent employers from providing on-going accruals under a defined benefit plan or additional contributions under a defined contribution plan to grandfathered groups of employees who have previously participated in a defined benefit plan. However, ERIC finds the proposed regulations to be too narrowly tailored, only benefitting a limited number of plans, and requests that they be substantially revised.
Mr. Shea appealed to the panel to have the agencies reconcile the testing rules when an employer offers both defined contribution and defined benefit plans, as well as make other technical clarifications to the proposed regulations. He also urged the panel to make needed changes to expand the number of plans that can utilize more flexible testing rules once the regulation is finalized.
A study of employers with closed defined benefit plans, conducted by Aon Hewitt, found that thirty-five percent of respondents indicated that they would be unable to utilize the proposed regulation as drafted.
To read ERIC’s original comments on the proposed regulation, please click here.