ERIC’s comments to the Department of Treasury and Internal Revenue Service on proposed regulations relating to hybrid pension plans urged the agencies to make significant changes in the regulations and the philosophy with which Treasury and IRS are pursuing. 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.
While acknowledging the significant effort by Treasury and IRS staff, ERIC comments reflect a deep concern that 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. The comments also express concern that the proposed regulations call into question other defined benefit plans that provide participants guaranteed indexing of their benefits.
