OK to Amend Interest Rate Look-Back Month for Cash Balance Plan

The IRS rules in a Private Letter Ruling that it is okay to amend the interest rate lookback month for a cash balance plan’s pre-conversion benefit.

Document Excerpt
The determination of the present value of a participant’s Protected Benefit is a determination of the present value of an optional form of benefit and therefore is covered by § 1.417(e)-1(d)(10)(ii). Because “other applicable law” for purposes of 1.411(b)(5)-1(c)(2)(ii) includes the rules governing the determination of present value under section 417(e)(3) and § 1.417(e)-1(d)(10)(ii), the terms of the plan amendment, as represented by the Taxpayer, are consistent with the requirements of
§ 1.411(b)(5)-1(c)(2).

Accordingly, we conclude that the proposed amendment, as described above, to the Plan’s interest rate lookback month for present value determinations with respect to Protected Benefits of participants whose Cash Balance Effective Date is Date 2 will not cause the Plan to violate the requirements of section 411(b)(5)(B)(ii) or (iii).


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