The Internal Revenue Service has drafted a new rule for defined benefit pension plans that are using 2 or more benefit formulas.

The proposed rule would create a mechanism for sponsors to show that each formula separately satisfies the “133 1/3% rule,” IRS officials write in a notice of proposed rulemaking that appears today in the Federal Register.

The 133 1/3% rule helps prevent employers from giving workers who are close to retirement far more benefits than younger workers get.

The rule prohibits defined benefit pension plans from letting plan participants accrue 33 1/3% more in benefits in a given year than they accrued in any earlier year.

Under the current rules, sponsors must aggregate the benefits under formulas to see if the benefits meet the 133 1/3% rule, or the “fractional rule,” another rule that can be used to test for benefits “backloading.”

Users of the proposed rule could include employers that have converted to pay-as-you-go, cash balance pension formulas, from traditional, career-based formulas, and are letting “grandfathered” participants choose the formula that will pay them the highest benefits, officials write.

Questions about how to handle backloading testing for plans going through that kind of transition have occurred in a number of situations over the past few years, officials write.

A plan could use the proposed exception only if the formulas involved relied on different approaches to determining benefits, officials write.

“The proposed regulations would provide that a plan is not eligible for separate testing if the [IRS] commissioner determines that the plan’s use of separate formulas with different bases is structured to evade the general requirements to aggregate formulas,” officials write.