April 28, 2016
On April 22, 2016, the Internal Revenue Service (IRS) issued Chief Counsel Advice (CCA) 201617006 addressing whether a cash balance plan that pays a lump sum that is greater than the account balance satisfies the age discrimination safe harbor for “lump-sum based” plans in Internal Revenue Code (IRC) §411(b)(5)(A). The CCA concludes that this type of plan is not eligible for the lump-sum based plan safe harbor from age discrimination, but generally would be eligible for the safe harbor for indexed plans found in the IRC §411(b)(5)(E).
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