Notice 2014-5 - Temporary nondiscrimination relief for closed defined benefit plans 

December 13:  The IRS today issued an advance copy of Notice 2014-5 providing temporary nondiscrimination relief for certain “closed” defined benefit pension plans (i.e., defined benefit plans 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 2014-5 [PDF 35 KB] permits certain employers that sponsor a closed defined benefit plan and a defined contribution plan to demonstrate that the aggregated plans comply with the nondiscrimination requirements of Reg. section 401(a)(4) on the basis of equivalent benefits, even if the aggregated plans do not satisfy the current conditions for testing on that basis.

Request for comments

Today’s notice also states that the IRS and Treasury Department are considering whether the regulations under section 401(a)(4) need to be amended to provide additional alternatives that would allow a defined benefit plan and a defined contribution plan to demonstrate satisfaction of the nondiscrimination in amount requirement of Reg. section 1.401(a)(4)-1(b)(2) on the basis of equivalent benefits.


Notice 2014-5 describes possible alternatives that would allow for this combined testing on the basis of equivalent benefits. Comments are requested on whether or not any of these additional alternatives would be made available, and whether there are any other alternatives that need to be considered.




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