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IRS rules could boost hybrid pensions

Experts at professional services company Towers Watson say recently released rules by the Internal Revenue Service should clear the path for more employers to renew their interest in cash balance and other types of hybrid pension plans.

By Jenny Ivy | Updated on January 17, 2011

Experts at professional services company Towers Watson say recently released rules by the Internal Revenue Service should clear the path for more employers to renew their interest in cash balance and other types of hybrid pension plans.

In 2006, the Pension Protection Act acknowledged the legitimacy of hybrid plans, and in October 2010, the IRS proposed rules that will provide more clarity on the plans. In particular, the proposed rules define the “market rate” that cash balance plan sponsors must use to credit interest to plan participants’ account balances. The IRS also issued final rules that clarify requirements for an age discrimination safe harbor.

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