November 19, 2015
The Department of the Treasury (Treasury) has issued regulations (final regulations) for hybrid plans, including cash balance plans. The final regulations generally only affect plans that have interest crediting rates higher than a rate Treasury defines as permissible. For plans that must be amended, the final regulations delay the effective date as follows: for calendar year plans, the amendment must be adopted by December 31, 2016 and be effective no later than January 1, 2017. There is a special rule that extends the adoption deadline for certain collectively bargained plans for up to two years.
The final regulations generally do not change the substantive rules under the 2014 final regulations. Rather, the regulations explain what methods plans may adopt to bring the plan’s interest crediting rate into compliance with the 2014 requirements without violating the anti-cutback rules. The final regulations continue to provide a limited correction for each violation, as in the proposed regulations, but provide additional correction choices.
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