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Additional temporary nondiscrimination relief through 2020, closed defined benefit plans

Closed defined benefit plans

The IRS today issued an advance version of Notice 2019-60 providing additional temporary nondiscrimination relief for “closed” defined benefit plans—i.e., defined benefit plans that provide ongoing accruals but that have been amended to limit those accruals to some or all of employees who participated in the plan on a specified date—that generally meet the eligibility conditions for the relief provided in Notice 2014-5.


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Notice 2019-60 [PDF 114 KB] provides that if a plan satisfies certain conditions, then the plan will be deemed to have satisfied certain of the nondiscrimination testing requirements relating to benefits, rights, and features.


Notice 2014-5 (issued in December 2013) permits certain employers that sponsor a defined benefit / defined contribution plan that includes a closed defined benefit plan to demonstrate that the aggregated plans comply with the nondiscrimination requirements of Reg. section 401(a)(4) on the basis of equivalent benefits—even if the aggregated plans do not satisfy the current conditions for testing on that basis. The relief was subsequently extended beginning in 2015 and then subsequently in the following years, provided that the conditions of Notice 2014-5 were satisfied. Read TaxNewsFlash

Proposed regulations (January 2016) relating to nondiscrimination requirements for closed plans provided relief for closed plans and included other proposed nondiscrimination rules. Those regulations are proposed to apply generally to plan years beginning on or after the date of publication of the final regulations in the Federal Register. The proposed regulations provide that taxpayers are permitted to apply certain provisions of the proposed regulations (including all of the provisions that apply specifically to closed plans) for certain plan years beginning before the proposed applicability date.

Notice 2019-60

The temporary relief provided by Notice 2019-60 applies to defined benefit plans for which the relief under Notice 2014-5 (as extended) is available—except that eligibility for this relief does not depend on the method used to satisfy the nondiscrimination requirements for the plan year beginning in 2013. This relief only applies if: (1) no amendment adopted after January 29, 2016, expands or restricts the eligibility for the benefit, right, or feature; or (2) any such amendment was adopted, then as of the amendment date the post-amendment ratio percentage of the group of employees eligible for the benefit, right or feature was not less than the pre-amendment ratio percentage of the group of employees eligible for the benefit, right or feature.

The temporary relief provided by today’s notice applies for plan years ending after November 13, 2019, and beginning before January 1, 2021. The last plan year that this relief applies is the same as the last plan year that relief under Notice 2014-5 applies.

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