IRS Seeks Public Comment on Pensions

The Internal Revenue Service, which is investigating whether certain pension plan conversions discriminate against older workers, is seeking public comment about cash-balance pension plans. Congress has been peppered with complaints about the way some companies have gone about converting traditional defined-benefit pensions to so-called cash-balance plans, which can have the effect of benefiting younger workers but hurting longtime employees. Cash-balance pension plans accrue credits evenly from year to year. In traditional defined-benefit plans, most of the benefit is pegged to the final five years of a worker’s career at a company--older workers who have been at a company a long time tend to make more then. As part of a broader review of cash-balance plans, the IRS and Treasury Department said they want input from companies, workers and others for analysis “of tax law issues raised by these plans.” Comments are due by Jan. 18.