September 19, 1991
TO: PENSION COMMITTEE NO. 26-91
RE: IRS ISSUES FINAL NONDISCRIMINATION REGULATIONS
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Attached are the final regulations regarding non-
discrimination requirements for qualified retirement plans. Also
attached are final regulations regarding the definition of
compensation, permitted disparity (social security integration),
minimum coverage requirements and the annual limitation on
compensation for qualified plans. The regulations were proposed
last year. (See Institute Memoranda to Pension Members Nos.
25-90 and 35-90 dated May 7, 1990 and September 19, 1990,
respectively.)
The final regulations generally follow the proposed
regulations with miscellaneous enhancements and additional
examples. Of particular note is final regulation section
1.411(d)-4 A-1(d) which lists benefits which are not "section
411(d)(6) protected benefits." This means that an employer with
an existing plan may eliminate these benefits when adopting a
prototype plan which does not contain such provisions without
violating the anti-cutback rules of Internal Revenue Code section
411(d)(6). They include, but are not limited to, the
availability of loans, the right to make after-tax employee
contributions or elective deferrals, the right to direct
investments, the right to a particular form of investment (e.g.,
employer securities), and rights that derive from administrative
and operational provisions, such as mechanical procedures for
allocating investment experience among accounts in defined
contribution plans.
We will keep you informed of related developments.
W. Richard Mason
Assistant Counsel - Pension
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