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October 15, 2009 at 08:00 PM
The Internal Revenue Services has posted a final rule that will affect how defined benefit pension plans measure assets and liabilities, including insurance contracts used to fund benefits.
In addition to measurement of assets and liabilities, the regulations cover benefit restrictions for underfunded pension plans.
The regulations, which have an effective date of Oct. 15, 2009, affect sponsors, administrators, participants, and beneficiaries of single-employer pension plans.
The IRS will start applying the regulations to plan years beginning on or after Jan. 1, 2010.
One section deals with treatment of use of insurance to fund pension benefits.
As under the proposed regulations, the final “regulations provide that a plan generally is required to reflect in the plan’s funding target and target normal cost the liability for benefits that are funded through insurance contracts held by the plan, and to include the corresponding insurance contracts in plan assets,” officials write in a preamble to the regulations, which appear today in the Federal Register.
