Today the IRS issued final regulations (T.D. 9693) on hybrid retirement plans. In general, these regulations provide guidance with respect to certain issues under Sections 411(a)(13) and 411(b)(5) that are not addressed in the 2010 final regulations and make certain other changes to the final regulations under Sections 411(a)(13) and 411(b)(5).
The IRS also issued proposed regulations on hybrid retirement plans regarding interest credit rates. In a case where a defined benefit plan, contrary to the regulations, has used an effective interest rate greater than the market rate, the proposed regulations would permit the plan to change to a permissible interest crediting rate without violating the anti-cutback rules of Section 411(d)(6). A public hearing for the proposed regulations is scheduled for January 9, 2015.
Additionally, the IRS issued proposed regulations on Roth Accounts regarding the allocation of after-tax amounts when disbursements are made to multiple destinations. Under the proposed regulations the allocation rule would apply only to distributions made before the earlier of January 1, 2015 or a date chosen by the taxpayer that is on or after September 18, 2014.
The IRS also released Notice 2014-54, which provides rules for allocating pretax and after-tax amounts among disbursements that are made to multiple destinations from a qualified plan described in Section 401(a) of the Internal Revenue Code. These rules also apply to disbursements from a Section 403(b) plan or a “governmental Section 457(b) plan.”
T.D. 9693 and the proposed regulations are scheduled to appear in the Federal Register tomorrow. Notice 2014-54 will appear in IRB 2014-41 on October 6.