Issues: Hybrid Plans

Hybrid plans are defined benefit plans that combine the advantages of a 401(k) plan with those of a traditional pension plan. Hybrid plans include cash balance plans and pension equity plans. An employer may choose to implement a new hybrid plan, but a significant number of hybrid plans have arisen from conversions. In a conversion, an employer converts a traditional benefit plan into a hybrid plan. All benefits that have accrued under the traditional plan are protected and cannot be reduced. Due to conflicting judicial interpretations, there is currently uncertainty concerning the legal status of hybrid plans. The member s of the Coalition urge Congress to validate the legality of all hybrid plans.

Legislation:

• S. 219
• H.R. 2830

Talking Points:

• Liability Impact on Hybrids of Cooper v. IBM Decision - Adobe PDF file
• US Chamber - Most Court Decisions Validate Cash Balace and Hybrid Plans - Adobe PDF file
• Hybrid Defined Benefit Plans: Background Briefing on Issues Relevant to Legislation Pending in Congress - Adobe PDF file (11 MB)

Testimony and Statements:

• ABC July 2004 Congressional Testimony on Hybrid Plans