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February 01, 2008 at 11:27 AM
The Internal Revenue Service is trying to clarify what it considers to be the limits on pension plan provisions that may lead to backloading.
IRS officials have given their views in Revenue Ruling 2008-7, which deals with a question about minimum vesting standards at pension plans and accrued benefit requirements.
In the ruling, officials answer a question about the method an employer uses to compute pension benefits after converting a traditional, “whole career formula” pension plan to a “fund one year at a time” cash balance plan.
The employer converted the plan before the new Pension Protection Act of 2006 plan conversion rules took effect.
