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ML BeneBits

Our March 17 post discussed an IRS proposal that, in many circumstances, would have made it more difficult for employers to offer enhanced executive retirement benefits under their qualified retirement plans using arrangements generally called qualified supplemental executive retirement plans (QSERPs). On April 14, the IRS posted Announcement 2016-16, which withdraws this proposal. The announcement explains that regulators gave “additional consideration to the potential effects of [the proposal] on the adoption and continued maintenance of qualified retirement plans with a variety of designs and have concluded that further consideration will be needed with respect to issues relating to those provisions.”

The now-withdrawn proposal targeting QSERPs had been released with a package of proposed regulations that offered relief from nondiscrimination issues that loom for sponsors of certain defined benefit plans closed to new entrants. Although the withdrawal of the proposal targeting QSERPs is welcome news, this likely will not be the IRS’s last word on this issue; stay tuned for further developments. The announcement’s withdrawal of the proposal does not apply to the proposed closed plan relief provisions, which may still be relied on immediately in many cases.