As imagined by plan sponsors of closed defined benefit pension plans, the IRS issued Notice 2019-49, the fifth extension for an additional year of the temporary nondiscrimination relief for “closed” defined benefit pension plans originally announced by the IRS during 2014.  The extended relief applies to plan years beginning before 2021 for those “closed” plans that satisfy certain conditions in Notice 2014-5.  The relief for “closed” defined benefit plans refers to those defined benefit plans amended prior to December 13, 2013, to limit ongoing accruals to some or all employed participants in the plan as of a particular date, thus no longer admitting new participants into the plan.

Each extension has been in anticipation of finalization of the proposed regulations issued in January 2016.  The IRS received many comments on the proposed regulations and expects the final regulations to include several significant changes in response to the comments.  By extending the relief another year, the IRS acknowledges the plans will need sufficient time to make plan design decisions based on the final regulations, yet to be published, before the end of the most recent extension which is December 31, 2019

Notice 2019-49 does not indicate when to expect the final regulations but states an expectation the final regulations will allow reliance on the proposed regulations for plan years beginning before 2021.  Congress is considering legislation that would include both permanent and partial types of targeted relief from nondiscrimination testing for qualifying closed DB plans.  Both a Bill passed by the House earlier in the year and a new recently proposed stand-alone Senate Bill are now pending before the Senate.  Stay tuned as we continue to monitor Congress and the status of the final regulations.

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Photo of Kathryn W. Wheeler, CEBS Kathryn W. Wheeler, CEBS

Kathryn W. Wheeler is the Knowledge Management (“KM”) Attorney for Jackson Lewis P.C.’s Employee Benefits Practice Group, and is based in the Overland Park, Kansas, office of Jackson Lewis P.C. She has more than 25 years in the employee benefits industry, 14 of…

Kathryn W. Wheeler is the Knowledge Management (“KM”) Attorney for Jackson Lewis P.C.’s Employee Benefits Practice Group, and is based in the Overland Park, Kansas, office of Jackson Lewis P.C. She has more than 25 years in the employee benefits industry, 14 of those years as a benefits manager for private industry. She received her Certified Employee Benefit Specialist (CEBS) designation from the International Foundation of Employee Benefit Plans and the Wharton School of the University of Pennsylvania.

Ms. Wheeler has experience with employee benefits from the perspective of clients and of legal counsel, giving her the ability to understand the issues confronting clients from both sides of the table. Her zeal for protecting the company’s interests in employee benefit-related areas led her to receive her law license to better negotiate the statutes and regulations imposed on employers. She has experience in a broad range of benefit matters, including general compliance and administration of qualified retirement plans under ERISA and the Internal Revenue Code. She also has extensive experience with welfare plan design for self-insured health plans and welfare plan issues involving cafeteria plans, health plans, flexible spending accounts, group insurance products, COBRA, and HIPAA.

Ms. Wheeler has a particular focus on assisting employers with the various compliance requirements associated with qualified retirement plans and qualified welfare plans, including preparing the Form 5500 annual report for clients. She also prepares submissions for Voluntary Correction Program, Delinquent Filer Corrective Program, and Voluntary Fiduciary Correction Program. She has experience negotiating with outside benefits providers, including prototype plan sponsors, third party administrators, insurers, actuaries, and auditors.