Nondiscrimination rules, retirement plan | KPMG | US

Proposed nondiscrimination rules, retirement plan benefit formula regulations withdrawn

Nondiscrimination rules, retirement plan

The IRS today released an advance version of Announcement 2016-16 stating that the IRS and Treasury Department are withdrawing provisions of proposed regulations relating to nondiscrimination requirements for qualified retirement plans under section 401(a)(4).


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Announcement 2016-16 [PDF 30 KB] states that the withdrawn provisions are those that would modify Reg. sections 1.401(a)(4)-2(c) and 1.401(a)(4)-3(c). As noted in the IRS announcement, these proposed regulations were intended to address certain qualified retirement plan designs that take advantage of flexibility in the existing nondiscrimination rules, to provide a special benefit formula for selected employees without extending that formula to a classification of employees that is reasonable and established under objective business criteria. 

After the proposed regulations were published in late January 2016, the IRS and Treasury determined that further consideration was needed with respect to issues to these proposed regulatory provisions. Accordingly, this part of the proposed regulations are withdrawn.

Today’s announcement states that other provisions of the proposed regulations—specifically, those that would provide relief from the nondiscrimination requirements for certain qualified retirement plans that provide additional benefits to a grandfathered group of employees following certain changes in the coverage of a defined benefit plan or defined benefit plan formula—are not affected.


Read text of the proposed regulations, as originally released, in TaxNewsFlash-United States.

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