The Treasury Department and the Internal Revenue Service issued guidance to address the application of accrual rules for pension plans under the Tax Code.

Revenue Ruling 2008-7 analyzes a traditional pension plan that was converted into a cash balance pension plan prior to the effective date of the new conversion requirements under the Pension Protection Act of 2006. The scenario in the revenue ruling is one in which certain participants had their pensions determined using the greater of the benefit under a continuation of the pre-conversion plan formula for a limited number of years after the conversion date and the benefit under the new cash formula.

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