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Showing results for tags 'anticutback rules'.
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General Rule: We have a plan where the sponsor wants change the pension formula from (Z x comp x service) to (1/2 Z x comp x service). Employee R did not have the 1,000 hours needed to accrue before the amendment and only accrued 500 hours during the year. Since Participant R has not yet met the 1,000 hours needed to accrue a benefit for the current year, it seems that anti-cutback does not apply and Employer can reduce his current year accrual. No problem there. However, the amendment will be adopted next week and will also reduce the hours required to accrue a current year benefit from 1,000 to 100. Since Employee R completed 500 hours, so he then get an accrual. The question is: which accrual is he entitled to receive? My interpretation is the reduced accrual under the 1/2 Z formula because he didn't gain the right to an accrual until the very day that the benefit formula had changed. Since both the formula and hour change occurs at the same time, it is confusing. Better to amend the formula first, then the hours requirement in the following day? Appreciate any comments here.