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IRS Issues Transition Relief for Hybrid Plans

November 16, 2015, Bloomberg BNA

Partners Richard Shea and Robert Newman are quoted in a BNA article discussing new rules governing hybrid pension retirement plans. 

More transitional guidance is needed, according to Shea. “The rules finalized today only address how to transition from a noncompliant market rate of return. They do not address how to transition from plan provisions that do not comply with other aspects of the hybrid plan rules, including the failure to have a lump-sum-based formula. The lack of transition will pose special challenges for many plans.” 

Newman comments on the flexibility of the rules: “The regulations provide more ways in which a noncompliant plan may become compliant. However, the regulations maintain the so-called ‘silo approach,’ in which each type of interest crediting rate is categorized and subject to a different set of transition rules. The final rules add flexibility, but still within the silo framework.”

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