IRS Delays Effective Date for New DB Funding Calculations

January 31, 2008 (PLANSPONSOR.com) - The Treasury Department and the Internal Revenue Service (IRS) announced that, when proposed regulations regarding maintenance of certain funding balances and regarding substitute mortality tables to be used in defined benefit plan funding calculations are finalized, the final regulations will not apply to plan years beginning before January 1, 2009.

In Notice 2008-21, the IRS said that in the interim it will not challenge a reasonable interpretation of an applicable statutory provision for plan years beginning during 2008. Plan sponsors can rely on the proposed regulations for purposes of satisfying the new funding calculation requirements for plan years beginning in 2008.

In December, the agency issued proposed regulations providing employers sponsoring single-employer defined benefit plans with guidance regarding the measurement of pension assets and liabilities under the new funding rules enacted as part of the Pension Protection Act (See IRS Issues Proposed Rule Relating to DB Plan Funding Calculations ).

According to the IRS, those proposed regulations, together with proposed regulations related to mortality issued in May, proposed regulations relating to funding balances and funding-based benefit limitations issued in August, the yield curve guidance issued in October, and guidance on lump sum determinations issued in November will assist plan sponsors in determining the contribution requirements that apply to their defined benefit plans for the first year that the new funding rules apply. 

Notice 2008-21 is here .

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