The Treasury Department and the IRS withdrew a proposed cash balance plan regulation that would have ensured that employers do not provide inordinately generous benefits to highly paid employees compared with what rank-and-file workers receive. Comments received on the proposal, issued last December, indicated the provision would have made it more difficult for plan sponsors switching to cash balance plans to give some workers the choice of more generous benefits or remaining in the traditional defined benefit plan. "When the effect was identified, Treasury and IRS decided to withdraw the proposed nondiscrimination regulations immediately so they do not prevent employers from reducing the impact of cash balance conversions on their employees, Pam Olson, assistant Treasury secretary, said in a statement. The regulators plan to propose new nondiscrimination regulations for cash balance plan conversions in the future.
The withdrawal of the provision comes two days before the scheduled hearings on the proposed regulations.