NU Online News Service, Aug. 30, 5:25 p.m. – The American Benefits Council, Washington, says the Internal Revenue Services should give employers as much flexibility as possible in explaining pension plan changes to plan members.
The new Economic Growth and Tax Relief Reconciliation Act requires employers to inform plan members about changes in pension plan benefits formulas that may lower benefits for some or all plan members.
The IRS should encourage the use of simple, prose descriptions of the changes, and ignore suggestions that employers include “before and after” comparisons, James Delaplane Jr., a vice president at the council, writes in an Aug. 24 letter to William Sweetnam Jr., benefits tax counsel for the U.S. Treasury Department.
“Examples of the application of the new formula provide participants with relevant information,” Delaplane writes. “Projections of the old formula provide information regarding future accrual patterns that will not exist.”
Employees may demand that employers provide comparisons, but the law should not require employers to do so, Delaplane argues.
The group also wants the IRS and the Treasury Department to let employers use any assumptions in illustrations of the effects of plan changes, as long as the employers disclose the assumptions.
The benefits council, a group for benefits plan sponsors, has posted the letter on the Web, at http://www.americanbenefitscouncil.com/issues/retirement/sweetnamnotice.pdf