align=”left”>Regulators said the input may be used generally to allow them to prepare more specific guidance on the types of benefits properly included in a qualified DB plan.
align=”left”>In an IRS notice , the agencies said examples of benefits about which it has concern include those that are payable only on the involuntary termination of an employee or in other limited circumstances that are unrelated to retirement; as well as those that could exceed the amount of the plan’s accrued benefit.
align=”left”>The guidance might specifically deal with the issue of plant shutdown benefits and similar ancillary benefits. Regulators said that, for example, the guidance might require that the benefit be payable as a result of an objectively defined plant shutdown event, such as one that requires notice under the Worker Adjustment and Retraining Notification Act of 1988.
align=”left”>Finally, according to the regulators, the guidance might deal with contingent accruals and early retirement benefits. The guidance might provide that, except for the payment of the accrued benefit in an optional form, a retirement-type benefit is permitted to be provided in a qualified defined benefit plan only if the amount of the benefit is no greater than the unreduced accrued benefit provided under the plan.
align=”left”>If these benefits are contingent on future events that are not reasonably and reliably predictable on an actuarial basis (such as a participant’s death), regulators said it is difficult to determine whether they comply with the incidental benefit requirements. .
Also, the regulators said that benefits payable only upon an employee’s involuntary separation from service raise questions regarding whether the availability of the benefits is based on conditions that are within the employer’s control, and whether such benefits circumvent the vesting and antibackloading protections of Â§ 411, and the definitely determinable benefits requirement of Â§ 401(a).
Written comments should be submitted by May 13, 2007. Send submissions to CC:PA:LPD:PR, (Notice 2007-14), Room 5203, Internal Revenue Service, PO Box 7604, Ben Franklin Station, Washington, D.C. 20044.Comments may also be hand delivered Monday through Friday between the hours of 8:30 a.m. and 4:00 p.m. to Internal Revenue Service, CC:PA:LPD:PR, (Notice 2007-14), Courier’s Desk, Internal Revenue Service, 1111 Constitution Avenue, N.W., Washington DC.Comments may be submitted via the Internet at email@example.com(Notice 2007-14).