Effective Date of Interest Crediting Rates for Hybrid Plans Pushed Back

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IRS and Treasury say in Announcement 2009-82 they are giving sponsors of hybrid pension plans, such as cash balance plans, more time to bring their plans into compliance with pending regulations, which would prohibit hybrid plans from using interest crediting rates that are greater than a market rate of return. By extending the compliance deadline from Dec. 31, 2009, to Jan. 1, 2011, IRS and Treasury will gain additional time to formulate guidance on what constitutes “an above market rate of return,” and practitioners with clients that sponsor hybrid plans will be rid of uncertainty.