IRS Withdraws Proposed RegsApril 27, 2016
On April 14, the Internal Revenue Service (IRS) and the Department of Treasury released Announcement 2016-16 that will withdraw certain provisions of proposed regulations published in January 2016 relating to certain nondiscrimination requirements applicable to qualified retirement plans. NSBA Past Chairman Gary Kushner played an instrumental role in scoring this major win for small businesses retirement plans and the employees who benefit from them.
The provisions of the Withdrawn Regulation’s would have modified the nondiscrimination requirements applicable to certain retirement plans that provide additional benefits to a grandfathered group of employees following certain changes in the coverage of a defined benefit plan or a defined benefit plan formula. The proposed regulations also made certain other changes to the nondiscrimination rules that are not limited to these plans. These regulations would have affected participants in, beneficiaries of, employers maintaining, and administrators of tax-qualified retirement plans. In the Announcement, the Treasury Department and the IRS said that, following publication of the Proposed Regulations; they have given additional consideration to the potential effects of the provisions, “and have concluded that further consideration will be needed with respect to issues relating to those provisions.”
The provisions, published in January as part of a broader set of regulations involving large defined benefit plans, targeted the discrimination testing rules affecting “cross-tested” plans in a way that would have made it much harder for small businesses to keep or form new retirement plans – changing rules that have been in place and working for more than a decade. Specifically, small businesses and professional service firms would have found it more difficult or perhaps impossible to pass these proposed rules, and therefore, NSBA applauds the IRS and Treasury for withdrawing them.