Comments With Respect to Prop. Treas. Reg. §§ 1.401(A)(4)-8(B)(1) and 9(B)(2)(V)
Governing So-Called “New Comparability Plans”
March 23, 2001

Contents | Introduction | Summary | I | II | III | IV | V

Introduction

This is in response to the request for comments by the Department of the Treasury (the "Treasury") and the Internal Revenue Service (the "Service") to proposed amendments (REG-114697-00) to 26 CFR part 1 under section 401(a)(4) of the Internal Revenue Code of 1986 ("Code"). The proposed regulations, Prop. Treas. Reg. §§ 1.401(a)(4)-8(b)(1) and 9(b)(2)(v), would prescribe conditions under which defined contribution plans, and defined benefit/defined contribution ("DB/DC") aggregated plans, known as "new comparability" plans, would be permitted to demonstrate compliance with applicable nondiscrimination requirements based on benefits rather than contributions.

These Comments address a number of testing issues, including the definition of compensation to be used, the use of a combination of age and service in determining "broadly available allocation rates," the "broadly available allocation" rates requirement itself, the applicability of these rules to target benefit plans, and the "primarily defined benefit" test.

Background

Under section 401(a)(4) of the Code, plan sponsors have been able to cross-test new comparability plans by actuarially projecting current contributions to determine an anticipated retirement benefit and then using the anticipated benefit in testing for nondiscrimination. The proposed regulations would retain the cross-testing rules for plans that either have "broadly available allocation rates" or meet a "minimum allocation gateway."

The regulations would be effective for plan years beginning after 2001.

Contents | Introduction | Summary | I | II | III | IV | V