The Internal Revenue Service has completed regulations that could help employers prune early-retirement benefits and optional, “noncore” forms of benefits.[@@]
The IRS also has started the process of developing regulations that could help employers determine how the rules in Section 411(d)(6) of the Internal Revenue Code, which limit cutbacks in “protected” benefits, interact with IRC Section 411(a), which sets nonforfeiture rules for the benefits that employees and other plan participants already have earned.
While developing the guidance about the interactions of sections 411(a) and 411(d)(6), the IRS will come up with a test that employers can use to eliminate obscure, unpopular forms of retirement and early-retirement benefits, the IRS says.
The new final regulation, Section 411(d)(6) Protected Benefits, appears today in the Federal Register and takes effect today.
The regulation gives IRS guidance on efforts to clean up complicated benefit plans that are littered with out-of-date benefits, unused benefits or duplicate benefits acquired as a result of employer mergers and acquisitions.