An IRS news release said officials decided lifting the suspension was appropriate with the passage of the Pension Protection Act (PPA). The tax agency had shut down the process, pending a study on issues raised in such conversions, including the impact on older employees – an aspect of the plan changes that has proven immensely controversial and the subject of numerous court cases.
Even though the PPA included safe harbor protection for new cash balance plans, Thursday’s announcement said the agency will not include age-discrimination issues in the newly activated reviews.
The IRS said in the announcement this approach is consistent with its past practice and with the fact that the PPA’s safe harbor did not address the issue of age discrimination on pre-June 30, 2005, conversions.
The agency said it hopes to resolve a significant majority of the cash balance letter backlog by the end of 2007.
In Notice 2007-6, the IRS also provides interim guidance on provisions of the Pension Protection Act of 2006 involving cash balance plans, and requests public comments.
The IRS notice is here.