Cash Balance and Determination Letter

[waid10]

Does anyone know if the Service has made any statements about ruling on a cash balance feature in a determination letter?

[mbozek]

The IRS will accept requests for determinion on cash balance plans but spokesmen have stated that CB requests for plans which have been converted from traditonal DB plans are sent to washington for an indefinite review. It is my understanding that CB plan requests which are for new plans which are not conversions from traditional DB plans will be processed by the IRS. There may be another thread on this topic a few months ago.

[MGB]

Even new plans may get caught in the moratorium, although some get through.

The IRS will not give determination letters until they finalize regulations concerning conversions. The proposed version of this should be out by the end of this year, according to recent statements by IRS officials. Of course, it could take a long time to finalize the proposed, so I wouldn't expect anything for another six months or more. Also, the proposed rules coming out may only address age discrimination in a conversion. It is possible they will still hold these up until more thorough regulations are issued on topics such as whipsaw in lump sum calculations. That could take a lot longer.

It has been over three years since they have been piling up the determination letter requests (over 300) without acting on them.