Guidance allowing Pre-approved Cash Balance Plans to Use Plan’s Actual Rate of Return

Revenue Procedure 2018-21 modifies prior guidance governing the procedures for pre-approved defined benefit plan to allow cash balance plans to provide for the actual rate of return on plan assets as the rate used to determine interest credits.

Document Excerpt

This revenue procedure modifies the procedures of the Internal Revenue Service (IRS) for issuing opinion and advisory letters for pre-approved master and prototype and volume submitter plans as provided in Rev. Proc. 2015-36, 2015-27 I.R.B. 20. In particular, this revenue procedure modifies sections 6.03(7)(c) and 16.03(7)(c) of Rev. Proc. 2015-36 to allow pre-approved defined benefit plans containing a cash balance formula to provide for the actual rate of return on plan assets as the rate used to determine interest credits. This revenue procedure also modifies section 6.03(7)(c) of Rev. Proc. 2017-41 relating to the rates that are permitted to be used to determine interest credits in pre-approved defined benefit plans containing a cash balance formula. In addition, this revenue procedure changes references to “hypothetical interest” and “hypothetical interest credits” in Rev. Proc. 2015-36 to “interest credits”, consistent with terminology in Rev. Proc. 2017-41.

Link

https://www.irs.gov/pub/irs-drop/rp-18-21.pdf

About Us

Benefits Forward is a news site for professionals in the field of employee benefits. Our goal is to provide the latest information about the benefits field and to host a community discussion regarding related issues.

Seminars, Conferences & Other Events

  • Sorry, there are no articles in this category.

Need Help Correcting Plan Errors?

Contact us for either consultation on how you can Self Correct or to propose cost effective correction methods using VCP. Or contact us to submit under VCP on your behalf or on behalf of your client. Contact us by email.