The IRS has announced that it is extending temporary nondiscrimination relief for closed defined benefit plans so the relief is available for plan years beginning before 2018. The announcement is contained in Notice 2016-57.
The temporary nondiscrimination relief does have a condition, however — a plan must satisfy the conditions of Notice 2014-5 in order to take advantage of it. Notice 2014-5 provides temporary nondiscrimination relief for certain closed DB plans (i.e., those that provide ongoing accruals but that have been amended to limit those accruals to some or all of the employees who participated in the plan on a specified date). Notice 2015-28, 2015-14 I.R.B. 848, extends that relief for an additional year by applying that relief to plan years beginning before 2017 if the conditions of Notice 2014-5 are satisfied.
The temporary nondiscrimination relief does have a condition, however — a plan must satisfy the conditions of Notice 2014-5 in order to take advantage of it. Notice 2014-5 provides temporary nondiscrimination relief for certain closed DB plans (i.e., those that provide ongoing accruals but that have been amended to limit those accruals to some or all of the employees who participated in the plan on a specified date). Notice 2015-28, 2015-14 I.R.B. 848, extends that relief for an additional year by applying that relief to plan years beginning before 2017 if the conditions of Notice 2014-5 are satisfied.
Proposed regulations relating to nondiscrimination requirements for closed plans were published in the Federal Register on Jan. 29, 2016 (81 FR 4976).
What’s Ahead
The IRS says that it has provided this extension in anticipation of issuing final amendments to the Code Section 401(a)(4) regulations. Those regulations are expected:
- to be effective for plan years beginning on or after Jan. 1, 2018; and
- to permit plan sponsors to apply the provisions of the regulations that apply specifically to closed plans for certain earlier plan years.
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