Final Regs. on Single-Employer Defined Benefit Plans

By Alistair M. Nevius, J.D.

The IRS issued final regulations to provide guidance on (1) the determination of the value of plan assets and benefit liabilities for purposes of the single-employer defined benefit plan funding requirements, (2) the use of certain funding balances maintained for those plans, and (3) benefit restrictions for certain underfunded defined benefit pension plans (T.D. 9467). The final regulations reflect various provisions added by the Pension Protection Act of 2006, P.L. 109-280, as amended by the Worker, Retiree, and Employer Recovery Act of 2008, P.L. 110-458. They affect single-employer defined benefit pension plan sponsors, administrators, participants, and beneficiaries.

Sec. 430 specifies the minimum funding requirements that apply to singleemployer defined benefit pension plans (including multiple-employer plans) under Sec. 412. Sec. 436 limits the benefits that may apply to a single-employer defined benefit plan based on its funded status. Secs. 430 and 436 do not apply to multiemployer plans.

In 2007, the IRS issued proposed regulations on the Sec. 403(f) rules for funding balances and the Sec. 436 benefit restrictions for underfunded plans (REG- 113891-07). It also issued proposed regulations that year on the measurement of assets and liabilities for pension funding purposes (REG-139236-07). These proposed regulations generally covered the rules of Secs. 430(d), (g), (h)(2), and (i). T.D. 9467 finalized the proposed rules in REG-113891-07 regarding funding balances and benefit restrictions for underfunded plans and (with certain revisions) the rules proposed in REG-139236-07 regarding measurement of assets and liabilities for pension funding purposes.

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