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Amending Money Purchase Plan Mid-Year


Guest PAINPA
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We have a governmental Money Purchase Plan of which all employee's receive the same contribution rate.

There are 2 different unions that have a collective bargaining agreement that are negotiated at different time spans.

After having the same contribution rate for the last 10+ years the plan sponsor has entered into negotiations to drop the rate for the one union which is confirmed and the other will go into negotiations at mid year 2006, with the hopes of getting them to the same rate.

Can a MPP be amended to lower the rate MID-YEAR, with proper notice to employees?

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Your "government" word is giving me grief, but my understanding is, once the benefit is accrued it cannot be reduced - i.e. if you have anything other than a last-day provision in the plan the participants will accrue it during the course of the year, perhaps after 1000 hours, perhaps at some other interval.

You can amend it for the next benefit year for sure, you may just have some issues with this year.

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Erik Read, APR CKC

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Thanks....

To further clarify, if the collective bargaining agreement passes in e.g. July 1, 2006, they will get the old contribution rate for the first 6 months and then the new amended rate (which will be lower) from July 1st until the end of the year, with proper notices and timely amendments.

What they accued is what they will get until amended.

I just wasn't sure you can amend a MPP at mid-year.

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