Minimum present value, defined benefit plans | KPMG | GLOBAL

Proposed regulations: Minimum present value, defined benefit plans

Minimum present value, defined benefit plans

The U.S. Treasury Department and IRS today released for publication in the Federal Register proposed regulations (REG-107424-12) relating to the minimum present value requirements for certain defined benefit pension plans.

1000

Related content

Today’s proposed regulations [PDF 238 KB] provide guidance with respect to changes made by the Pension Protection Act of 2006 (PPA ‘06), and:

  • Would amend the current final regulations under section 417(e) regarding the minimum present value requirements of section 417(e)(3) in several areas
  • Would update the regulations for changes made by PPA ’06 and to eliminate certain obsolete provisions
  • Contain a few other clarifying changes

Overview

The proposed regulations reflect the statutory changes made by PPA ’06, including the new interest rates and mortality tables in section 417(e)(3) and the exception from the valuation rules for certain applicable defined benefit plans set forth in section 411(a)(13). 

The proposed regulations clarify that the interest rates that are published by the IRS Commissioner (pursuant to the provisions as modified by PPA ’06) are to be used without further adjustment. In addition, the proposed regulations would eliminate obsolete provisions of the regulations relating to the transition from pre-1995 law to the interest rates and mortality assumptions provided by GATT (the Uruguay Round Agreements Act, Public Law 103-465). 

The proposed regulations make conforming changes to reflect the final regulations under section 417(e) that permit defined benefit plans to simplify the treatment of certain optional forms of benefit that are paid partly in the form of an annuity and partly in a more accelerated form.

© 2017 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.

Connect with us

 

Request for proposal

 

Submit