Employers that sponsor cash balance plans with certain provisions may need to take quick action to adopt plan amendments before the end of the year. A number of provisions in the Pension Protection Act of 2006 (PPA) apply to cash balance plans, including: (1) a requirement that a plan's interest crediting rate not exceed a market rate of return; and (2) a clarification that the payment of a participant's vested cash balance account satisfies the minimum lump sum requirements of sections 411(c) and 417(e) of the Internal Revenue Code. Section 1107 of PPA provides that plan amendments made pursuant to PPA are eligible for relief from the anti-cutback provisions of ERISA and the Internal Revenue Code, but only if those amendments are adopted by the end of the 2009 plan year. A new Hewitt Actuarial Advisory discusses the limited guidance on the PPA provisions that has been issued to date by the IRS and employers' options for complying with the PPA requirements.

The Actuarial Advisory is available here.

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