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A pension plan covers Bill and Jill. Bill owns the business, Jill is a secretary.  The plan was set up in 2010 using a unit benefit accrual of 10% x High3 x Service ( including all past service). The plan is amended  as follows in 2017: the new formula is 20% x High3 x Service ( including all past service). We can't explain why this change was made ( takeover case this year), but question whether  the 133% rule was violated.

 In fact the amendment has no practical affect since the benefits are already at the 415 lints based on original formula! But my question is whether a retroactive change in the accrual rate for all current employees for all years could affect the safe harbor.  I don't see any violation since the change applies to all years of service. Checking the available vals there are no terminated employees since plan started.

Any thoughts anyone?

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Per 1.411(b)-1(b)(2)(ii)(A), a plan amendment in effect for current year is treated as having been in effect for all years, so you should be OK.

Luke Bailey

Senior Counsel

Clark Hill PLC

214-651-4572 (O) | LBailey@clarkhill.com

2600 Dallas Parkway Suite 600

Frisco, TX 75034

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Probably a can of worms I should just avoid:  if the amendment has no practical effect due to 415 limits, why is it being done?

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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