Post-Termination Pay - Proposed 415 Regs Suggest Changes To Come

Earlier in 2005, the IRS issued proposed regulations (the “Regs”) under Section 415 of the Internal Revenue Code, which governs the limitations on benefits and contributions under tax-qualified retirement plans. The proposed regulations are comprehensive and incorporate the many changes reflected in Internal Revenue Service notices, revenue rulings, and other guidance since the last time comprehensive regulations were published in 1981. This Management Alert discusses only post-termination compensation changes. In some cases, employers may rely on this new guidance immediately (as discussed in more detail below with respect to the effective date).