On March 19, 2015, the Internal Revenue Service (IRS) issued Notice 2015-28, which extends the temporary nondiscrimination relief provided in IRS Notice 2014-5 for an additional year. The relief applies to closed defined benefit plans that have been aggregated with a defined contribution plan.

Typically, aggregated plans will fail to meet the nondiscrimination requirements of Internal Revenue Code (Code) Section 401(a)(4) (26 U.S.C. § 401(a)(4)) unless plan sponsors are permitted to demonstrate compliance with the nondiscrimination rules on the basis of equivalent benefits. IRS Notice 2014-5 provided temporary relief to certain closed defined benefit plans, permitting plan sponsors to comply with the nondiscrimination requirements on the basis of equivalent benefits if certain conditions were met, even if the plan did not meet any of the existing eligibility conditions (see Legal Update, IRS Notice 2014-5 Provides Temporary Nondiscrimination Relief for Closed Defined Benefit Plans). The relief applied to plan years beginning before 2016.

IRS Notice 2015-28 extends the relief under IRS Notice 2014-5 for an additional year. Specifically, IRS Notice 2015-28 provides that:

The extension is provided in anticipation of proposed amendments to the Code Section 401(a)(4) regulations which are expected to be finalized after the relief under this notice expires.