FROM THE OFFICE OF PUBLIC AFFAIRS
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June 30, 2004
JS-1762
Treasury Delays Effective Date of Disclosure Rules
for Certain Pension Plans
The Treasury Department and the IRS issued Announcement 2004-58 today stating that there will be a delay in the effective date for recently issued regulations that set forth information required to be explained to pension plan participants regarding the optional forms of benefit offered by the plan.
The announcement states that the delay does not apply to the extent a plan offers a lump sum payment that is less valuable than the qualified joint and survivor annuity offered by the plan.
"Participants who are eligible for a subsidized early retirement annuity and a lump sum payment that does not include that subsidy shouldn't have to pay for professional advice to find out the value of the subsidy that is lost if the lump sum is elected," said Greg Jenner, Treasury's Acting Assistant Secretary for Tax Policy. "However, for plans offering lump sums that include this subsidy, we have delayed the effective date so that they may evaluate all of their optional forms. This should be done in coordination with rules we hope to finalize next year regarding burdensome and complex forms of payment that are of de minimis value to participants."
The announcement also clarifies certain issues that have been raised about the new required disclosure, including that a plan will not fail to satisfy the spousal protection rules merely because the plan's lump sum payment is calculated using the statutory required interest and mortality assumptions.
REPORTS