The Treasury Department today withdrew proposed regulations that had determined cash balance plans are not inherently age discriminatory. The Treasury Department's withdrawal of the regulations, proposed in December 2002, opens the way for lawmakers to craft legislation that addresses concerns of both plan sponsors and participants about the plans. The withdrawal was mandated by an appropriations law earlier this year that forbade the Treasury Department from using federal funds to finalize the age discrimination regulations for cash balance plans.
The Bush administration, in its fiscal 2005 budget, proposed requiring companies that convert their defined benefit plans to cash balance plans to protect older workers for a five-year period after the conversion, and would ban any "wearaway" in which no new benefits are accrued.
Sen. Judd Gregg, R-N.H., chairman of the Senate Health, Education, Labor and Pensions Committee, called the withdrawal "regrettable because it now shifts the sole responsibility to Congress." In a statement, Mr. Gregg said that he will hold hearings to resolve questions about conversions and age-discrimination issues. Rep. George Miller, D-Calif., the ranking minority member on the House Education and the Workforce Committee, hailed the withdrawal of the proposed regulations, calling them "ill-advised," and pushed for legislation that would protect older workers in cash balance conversions.
