IRS Releases Regulations Related to Hybrid Pension Plans

By Stephen Breeding, FSA, E.A., Dallas, and Arthur Conat, ASA, E.A., Chicago

Editor: Michael Dell, CPA

Employee Benefits & Pensions

On Sept. 19, 2014, the IRS issued long-awaited final regulations (T.D. 9693) related to hybrid pension plans pursuant to the Pension Protection Act of 2006, P.L. 109-280. A hybrid pension plan is a defined benefit plan that, similar to a defined contribution plan, defines benefits in the form of an account balance rather than as an annuity payable upon retirement. Hybrid plans include what are commonly called cash balance and pension equity plans, as well as other retirement plans with similar features.

Until the final regulations were released, plan sponsors were operating under a patchwork of guidance, including previously released proposed regulations. While the final regulations formalize guidance in some areas, the IRS also released for public comment new proposed regulations (REG-111839-13) related to additional topics not fully addressed in the final regulations.

The final regulations generally apply to plan years that begin on or after Jan. 1, 2016. The proposed regulations also address some considerations with respect to the transition period prior to the effective date of the final regulations.

The features of hybrid plans can vary significantly from one employer to the next. Plan sponsors should review both the final and proposed regulations to assess applicability of these regulations to their plans' provisions and past administrative practices.


Michael Dell is a partner at Ernst & Young LLP in Washington.

For additional information about these items, contact Mr. Dell at 202-327-8788 or

Unless otherwise noted, contributors are members of or associated with Ernst & Young LLP.

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