Final Treasury Regulations Issued On Diversification Requirements for Defined Contribution Plans with Employer Securities
The IRS issued final regulations (Final Regulations) on May 19, 2010, covering the diversification requirements imposed by Section 401(a)(35) of the Internal Revenue Code of 1986, as amended (Code), on defined contribution plans that hold employer securities. Although the Final Regulations are similar in most respects to the proposed regulations published in January 2008, the Final Regulations clarify and to some extent modify the scope of Code Section 401(a)(35) and the permitted restrictions and conditions on investments of employer securities. This Alert provides a brief background on Code Section 401(a)(35) and summarizes key changes made by the Final Regulations.
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