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DB Freeze Notice To Participants Non-electing Church Plan


Guest IRISH79
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Guest IRISH79

Non-electing church plan is freezing DB plan. I know ERISA 204(h) Notice is not required. What kind of notice and medium is typically provided to participants concerning reduction in future benefit accruals?

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1. First Q as always is "what does the plan say?"

2. Whether or not the plan says anything, one would be wise to give complete and thorough notice and plenty of time in advance, probably not dissimilar to what 204(h) would require, if not more than what 204(h) would require.

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Guest Danny Miller

To expand a bit on the first reply post: I've seen several situations in which a DB church plan document was drafted in such a way that employees were contractually promised ERISA and Code protections that were not required for a non-electing church plan. So, checking the plan document to see what it says about the ability to amend the plan to reduce benefits, even on prospective basis, is important.

In terms of what type of notice to give, I agree with the first reply post that, although legally no notice is required, it would be a good idea to give participants the same type of information which is provided through a 204(h) notice. Not sure why more than that would be needed, however.

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Beyond the church plan administrator’s consideration of (1) the plan documents, (2) relevant State law, and (3) smart fiduciary communication, the church authority that has power to amend the plan might consider whether the internal law of the church affects a pension plan amendment or notice of it. For example, a church might have rules about decreasing a minister’s compensation. And even for an amendment that’s fully permitted, there might be rules about how to adopt, implement, and communicate an amendment. Some of the internal law of a church might be legally enforceable, and much might not be; but church people might seek to obey the rules made within their own authority.

Peter Gulia PC

Fiduciary Guidance Counsel

Philadelphia, Pennsylvania

215-732-1552

Peter@FiduciaryGuidanceCounsel.com

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Danny Miller, I am not sure I agree that no notice is "legally" required, unless you meant "required under ERISA." Presumably the employer's ability to freeze benefits will be assessed in accordance with general uniliateral contract law principles, and although it's been a while since I studied Contracts in law school, I would think that some notice is a predicate to the ability of the employer to terminate or amend the contract.

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