New Analysis of Hybrid Plan Regulations

Richard Shea and Robert Newman Covington & Burling LLP highlight the key provisions of the new hybrid plan regulations in “Hybrid Plan Regulations Could Reinvigorate the Defined Benefit Plan System”. In the article, they indicate that:

“Treasury and the IRS recently issued long-awaited regulations governing cash balance and other hybrid pension plans. Final regulations implement the intent of Congress in the Pension Protection Act of 2006 (the “PPA”) to eliminate the so-called “whipsaw calculation” and permit more generous rates of return for employees and retirees. Proposed regulations issued at the same time set forth a path for non-compliant plans to become compliant. Private sector plans must adopt these changes before the first day of first plan year beginning in 2016. Most significantly, however, is that the regulations − for the first time − specify the way in which employers can marry the efficiency of delivering benefits under through a defined benefit plan with the reduced financial volatility of a defined contribution plan. In short, the regulations make possible a new design for retirement benefits that may prove attractive for employers and employees alike: the shared-risk pension plan.”

To read more from Covington, click here.
ERIC members and trial members can read more about the regulations here.