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Report on Second Treasury Meeting on Hybrid Plan Regulations

May 17, 2011

On May 10th, the Coalition and other business trade associations held a second meeting with senior representatives of the Treasury Department and the Internal Revenue Service regarding the agencies’ proposed regulations for certain hybrid plan provisions of the Pension Protection Act of 2006. As was the case with the first meeting last month, this second meeting was constructive. The government officials were willing to engage in frank discussion and were receptive to searching for potential solutions to the concerns we raised.

While the first meeting focused exclusively on market rate of return and interest crediting issues, this most recent meeting focused on the problems under the proposed regulations for subsidized benefit forms (particularly subsidized annuity forms of distribution). The meeting also covered the conditions imposed under the proposed regulations for entitlement to whipsaw relief and various transition issues that are likely to need attention given that the government’s targeted January 1, 2012 effective date for the proposed regulations, once finalized, no longer appears feasible. In fact, we have asked for a minimum of 12 months from the time of final regulations to the operational effective date. Agency officials seemed willing to entertain adjustments in the regulations on all three issues, though specific commitments were not made.

The Coalition and the other business trade associations that have been part of the meetings are now developing a written submission to Treasury and IRS that will recap the concerns we raised during the two meetings and provide our recommendations as to how these concerns should be addressed in the final regulations. The submission was requested by the government officials. We also suggested to the agency officials that a separate meeting on Pension Equity Plans would be helpful. This meeting has not yet been scheduled.

For more information about the most recent meeting or if you have any questions, please contact Jamey Delaplane at Davis & Harman LLP (; 202-662-2294).