In Notice 2014-5, the IRS provided temporary relief from the Code’s nondiscrimination rules for certain defined benefit plans that are closed to new participants. (This is sometimes referred to as a “soft freeze.”).
The temporary relief allows employers who sponsor a closed defined benefit plan and a defined contribution plan to comply with Code’s nondiscrimination requirements by aggregating the defined benefit and defined contribution plans and testing the plan on the basis of equivalent benefits, even if the plan would not otherwise satisfy the requirements to be tested on an equivalent benefits basis under the current regulations.
This temporary relief is available for plan years beginning before January 1, 2016 if the defined benefit was closed to new participants prior to December 31, 2013. The Treasury Department and the IRS are considering modifications to the nondiscrimination requirement for closed defined benefit plans. In the meantime, the transition relief should help closed defined benefit plans pass nondiscrimination tests.
A copy of Notice 2014-5 is available here.