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Showing results for tags 'accrual rules'.
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Can a new collective bargaining agreement reduce benefits that have already been accrued by retired employees? For instance if a new CBA states that the monthly pension payouts will be reduced offset by the amount of a Social Security check if the participant is drawing social security, can that be done legally if the person is vested with accrued credits and currently drawing a benefit that is not subject to a Social Security offset? I was under the impression that both were considered earned income after the required years of service. Can a CBA legally make this type of change to accrued benefits or would they be required to grandfather in the agreed pay at the time the CBA and Plan Document was changed? If not what CBA/Plan Document would cover the current participant's future pay? Does it matter if the participant is collecting disability or retirement?. -
The flat benefit formula using the fractional accrual rule--the question I am having is when is the 415 comp limit first applied. Is it to the projected benefit first, or to the accrued benefit. We have a plan document where it is not specified. My interpretation has been that without specific language in the plan as to when it is applied, it seems it should be applied to the projected benefit first since we can't accrue a fractional benefit to something that exceeds 415. In this plan the normal retirement benefit is 300% of average comp for 25 yrs of service at NRA. Consider an employee who is 40 yrs old, NRA 65 and has $300,000 average salary. -
This came up during d-letter review of a DB plan. Plan A requires 1,000 hours of service for a full year of credited service in all years except the participant's first and last years of participation. For those two years, Plan A requires 2,000 hours for a full year of credited service and credits partial years for anything less than that. Anything wrong with having such different rules for the first and last years? 2,000 hours (by itself) is fine as a minimum--the regs say so. § 2530.204-2. I can't find any guidance that says you can't use a different threshold for the first and last years.I don't think this constitutes an impermissible "last day" requirement for the first and last years because the participant need not be employed on any particular day, provided he/she gets 2,000 hours. § 2530.200b-1(b).I don't see a backloading issue--the plan uses a vanilla fixed-percentage-of-comp formula, so unless the "different rules for different years" is itself impermissible, it clearly passes the 133 1/3% test.Nonetheless, IRS is claiming the first and last year's rules are impermissible, simply because in an other plan year a participant with 1,000 hours would get a full year. Any thoughts appreciated.