Document: Treasury Releases Final Regulations on Measurement of Assets and Liabilities for Pension Funding and Benefit Restrictions for Underfunded Plans: ERIC

ERIC memorandum template

	Regulatory Documents

Treasury Releases Final Regulations on Measurement of Assets and Liabilities for Pension Funding and Benefit Restrictions for Underfunded Plans

The Treasury Department and Internal Revenue Service on October 7 released final regulations regarding the determination of the value of plan assets and benefit liabilities for purposes of the funding requirements that apply to single employer defined benefit plans, the use of certain funding balances maintained for those plans, and benefit restrictions for certain underfunded defined benefit pension plans.

The regulations, which implement provisions added by the Pension Protection Act of 2006 (PPA), as amended by the Worker, Retiree, and Employer Recovery Act of 2008 (WRERA), generally are effective on October 15, 2009, and apply to plan years beginning on or after January 1, 2010.

The regulations apply to Internal Revenue Code sections 430(d), 430(f), 430(g), 430(h)(2), 430(i), and 436, as added by the PPA, and amended by WRERA, which made extensive changes to the minimum funding requirements for defined benefit plans. Section 430 specifies the minimum funding requirements that apply to single employer defined benefit pension plans pursuant to section 412. Section 436 sets forth certain limitations on benefits that may apply to a single employer defined benefit plan based on its funded status. The regulations also apply for purposes of sections 206(g) and 303 of ERISA.

The regulations finalize, with certain modifications, rules proposed in August 2007 regarding funding balances and benefit restrictions for underfunded plans, and rules proposed in December 2007 regarding measurement of assets and liabilities for pension funding purposes. ERIC submitted separate comments on these proposed regulations. In April 2008, proposed regulations relating to other portions of the rules under section 430 (including sections 430(a), (c), and (j)), but those regulations will be finalized separately, according to the preamble.

###

Websites: