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CCH® PENSION — 05/19/11

IRS to issue funding relief guidance on charity plans, officials say

The IRS intends to issue guidance on funding relief provided for eligible charity plans, IRS actuary Tonya Manning indicated during an April 28, 2011 phone forum sponsored by the IRS. Manning discussed funding relief provided for single-employer plans and charities by the Preservation of Access to Care for Medicare Beneficiaries and Pension Relief Act of 2010 (P.L. 111-192).

The 2010 Act provides a delayed effective date for funding and benefit restrictions imposed on eligible charity plans (ECP) by Code Secs. 430 and 436. The restrictions will not apply until the earlier of the first plan year the plan ceases to be an ECP or the first plan year beginning in 2017. An ECP is a plan maintained by two or more Code Sec. 501(c)(3) charitable organizations (even if the employers are not in the same controlled group). The delayed effective dates only apply if the plan was in existence on June 26, 2005. The delayed dates are mandatory and retroactive to 2008, Manning pointed out.

Future guidance will clarify congressional intent regarding the application of the delayed dates and will address whether relief applies to plans that have an accumulated funding deficiency for 2008 or 2009 under rules in effect before the Pension Protection Act of 2006 (PPA; P.L. 109-280), Manning indicated. The guidance will also cover plans that elected to apply PPA rules for 2008. In addition, future guidance will address the impact of relief from Code Sec. 436 benefit restrictions: when and how are restricted distributions corrected, and what relief is available for the period before the guidance.

For more information, visit http://www.wolterskluwerlb.com/rbcs.

For more information on this and related topics, consult the CCH Pension Plan Guide, CCH Employee Benefits Management, and Spencer's Benefits Reports.

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