The Internal Revenue Service (IRS) is hosting a free webcast about the nondiscrimination rules for closed pension plans.
The agency proposed nondiscrimination relief for closed defined benefit (DB) plans in January.
The IRS explained that a significant number of DB plans have been closed to new entrants, and the plan sponsor of a closed DB plan typically provides a DC plan for its new hires. Under these arrangements, in the early years after the DB plan has been closed to new entrants, the plan may be able to satisfy the coverage requirement of § 410(b) without being aggregated with the DC plan. However, the § 410(b) minimum coverage test typically becomes more difficult for the closed DB plan to satisfy over time, as grandfathered employees in the old system typically build seniority and become more highly compensated than younger workers entering the DC plan.
Webinar attendees will learn about:
- Testing for nondiscriminatory amounts;
- Testing for nondiscriminatory availability; and
- Considering practical situations.