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Federal Plans - AntiCutback


Guest SMazliah
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Guest SMazliah

Is the federal retirement system (for Title 5 and Title 38 employees) subject to the anti cutback rule in the Code (or any equivelent?)

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It is not subject to Internal Revenue Code section 411, which contains the anticutback rules for private plans. However, the impairment of contracts language of Article I, Section 10 of the US Constitution has been held by many courts to impose an even more stringent anticutback rule on plans maintained by the federal government, or the government of any state or locality. Under this standard, not only must benefits already accrued be protected, but an employee may have a protected right to continue to accrue benefits in the future under at least as favorable a method as the most favorable one used for earlier periods of employment. Obviously, this is merely a general statement, and different facts or different courts may result in differing interpretations.

Employee benefits legal resource site

The opinions of my postings are my own and do not necessarily represent my law firm's position, strategies, or opinions. The contents of my postings are offered for informational purposes only and should not be construed as legal advice. A visit to this board or an exchange of information through this board does not create an attorney-client relationship. You should consult directly with an attorney for individual advice regarding your particular situation. I am not your lawyer under any circumstances.

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Guest SMazliah

Thanks for the quick response -

I thought Art. 1, Section 10 only applied to the states, how can it apply to plans maintained by federal gov't (since it would take Congressional action to establish the "cut back"?)

Do you have any cases?

Perhaps the Due Process clause?

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  • 2 months later...

Not a lawyer, but I thought that it was the Fourteenth Amendment that provided that extension.

I'm a retirement actuary. Nothing about my comments is intended or should be construed as investment, tax, legal or accounting advice. Occasionally, but not all the time, it might be reasonable to interpret my comments as actuarial or consulting advice.

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