Clarification of benefit accrual standards

(a)

Rules relating to reduction in accrued benefits because of attainment of any age

(1)

Comparison to similarly situated, younger individuals

(A)

In general

A pension plan described in subsection (c) shall not be treated as failing to meet the requirements of section 204(b)(1)(H)(i) of the Employee Retirement Income Security Act of 1974 or section 411(b)(1)(H)(i) of the Internal Revenue Code of 1986 if a participant’s entire accrued benefit, as determined as of any date under the formula for determining benefits as set forth in the text of the plan documents, would be equal to or greater than that of any similarly situated, younger individual. (B)

Similarly situated individual

For purposes of this paragraph, an individual is similarly situated to a participant if such individual is identical to such participant in every respect (including period of service, compensation, position, date of hire, work history, and any other respect) except for age. (C)

Subsidized portion of early retiremen benefit disregarded

In determining the entire accrued benefit for purposes of this paragraph, the subsidized portion of any early retirement benefit (including any early retirement subsidy that is fully or partially included or reflected in an employee’s opening balance or other transition benefits) shall be disregarded. (2)

Treatment of interest accrued on hypothetical account

Allowable offsets

A pension plan described in subsection (c) shall not be treated as failing to meet the requirements of section 204(b)(1)(H) of the Employee Retirement Income Security Act of 1974 or section 411(b)(1)(H) of the Internal Revenue Code of 1986 solely because the plan provides allowable offsets against those benefits under the plan which are attributable to employer contributions, based on benefits which are provided under title II of the Social Security Act, the Railroad Retirement Act of 1974, another plan described in section 401(a) of the Internal Revenue Code of 1986 maintained by the same employer, or under any retirement program for officers or employees of the Federal Government or of the government of any State or political subdivision thereof. For purposes of this paragraph, allowable offsets based on such benefits consist of offsets equal to all or part of the actual benefit payment amounts, reasonable projections or estimations of such benefit payment amounts, or actuarial equivalents of such actual benefit payment amounts, projections, or estimations (determined on the basis of reasonable actuarial assumptions). (4)

Compliance with rules permitting disparity in plan contributions or benefits

Pre-retirement indexing

(A)

In general

Definition

For purposes of this clause, the term pre-retirement indexing means, in connection with an accrued benefit, the periodic adjustment of the accrued benefit by means of the application of a recognized index or methodology so as to protect the economic value of the benefit against inflation prior to distribution. (b)

Determinations of accrued benefit as balance of benefit account

(1)

In general

A pension plan described in subsection (c) under which the accrued benefit payable under the plan upon distribution (or any portion thereof) is expressed as the balance of a hypothetical account maintained for the participant shall not be treated as failing to meet the requirements of section 203(a)(2) or 205(g) of the Employee Retirement Income Security Act of 1974 or section 411(a)(2) or 417(e) of the Internal Revenue Code of 1986 solely because of the amount actually made available for such distribution under the terms of the plan, in any case in which the applicable interest rate that would be used under the terms of the plan to project the amount of the participant’s account balance to normal retirement age is not greater than a market rate of return. (2)

Regulations

The Secretary of the Treasury may provide by regulation for rules governing the calculation of a market rate of return for purposes of paragraph (1) and for permissible methods of crediting interest to the account (including variable interest rates) resulting in effective rates of return meeting the requirements of paragraph (1). (c)

Pension plan described

A pension plan described in this subsection is a defined benefit plan (as defined in section 3(35) of the Employee Retirement Income Security Act of 1974 or section 414(j) of the Internal Revenue Code of 1986) maintained by the Young Women’s Christian Association Retirement Fund, a corporation created by an Act of the State of New York which became law on April 12, 1924.