The U.S. Equal Employment Opportunity Commission

EEOC Office of Legal Counsel staff members wrote the following informal discussion letter in response to an inquiry from a member of the public. This letter is intended to provide an informal discussion of the noted issue and does not constitute an official opinion of the Commission.

ADEA: Age/Pension/Cash Balance

March 10, 2003


This is in reply to your recent letter to Ida Castro, former Chair of the Equal Employment Opportunity Commission (EEOC). Your letter has been referred to this office for a response. Your letter indicates that you believe that recent conversion to a cash balance pension plan is age discriminatory.

The Departments of Treasury and Labor enforce laws that protect previously accrued benefits. The EEOC is responsible for the enforcement of the Age Discrimination in Employment Act of 1967 (ADEA), which prohibits an employer from taking an employment action against any individual because of age. Section 4(i) of the ADEA specifies that the rate of accrual in defined benefit pension plans may not be reduced because of age. EEOC aggressively pursues violations of the ADEA as part of its overall enforcement policy.

Because this is a particularly complex issue, the EEOC has assembled an internal task force to investigate the legality of cash balance pension plans. In addition, because questions about cash balance plans implicate some Department of the Treasury tax regulations and Department of Labor pension regulations, the EEOC has and continues to consult with the Department of Treasury, the Internal Revenue Service and the Department of Labor.

In this regard, you should note that the Department of the Treasury published a Notice of Proposed Rulemaking in the Federal Register of December 11, 2002, 67 FR 76123. The Notice discusses the tax law treatment of cash balance plans and seeks public comment on the proposed rules.

We do appreciate and share your concern regarding age discrimination in employment and we hope this information will be helpful.


Dianna B. Johnston
Assistant Legal Counsel

This page was last modified on April 27, 2007.

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