Wednesday, April 1, 2009

IRS widens window for funding calculations for defined benefit plans

The IRS will allow defined benefit plans to use a spot-rate yield curve from as early as four months before their plan year begins to calculate their plan funding requirements for 2009.

“Thus, for a calendar year plan with a Jan. 1, 2009, valuation date, the IRS will not challenge the use of the monthly yield curve for January 2009, or any one of the four months immediately preceding January 2009,” the IRS said in a statement.

“Today’s announcement is welcome news for many employer defined benefit plan sponsors that are facing unprecedented funding obligations as a result of the economic downturn,” James Klein, president of the American Benefits Council, said in a statement.

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