Change requirement of eligibility

[Guest LTurner]

Hello out there!

I am reviewing a plan that is currently a standardized prototype, has 1 year and age 21 as eligibility, with a 1000 hours of service requirement on profit sharing and match contributions.

Company sponsoring plan has sold. Trustee is still the former owner.

New owner went to a bank trust department and had a new non-standardized plan designed. Intends to have assets transferred from on to the other as of 6-30-01.

New plan requires end of year employment for employer contributions.

Is this a cut-back of benefits or eligibility? Can they just "start all over" with a new plan design? What type of things can be changed without grandfathering in long term employees? (i.e. can triggering events for distributions be changed, can normal retirement age be changed, shouldn't there be a summary of material modifications, ????)

I am just so confused that the new owner could just run off and start something new, without considering the plan that is in place.

please provide insight.... thanks!

[Tom Poje]

you indicated that the orignal plan was a standardized plan - assuming the 'worse' case was checked - no hrs to receive a contribution and 500 hrs if terminated versus the new document, last day requirement.

The rules are once someone has accrued a benefit for a given year you can't take it away. thus, in the year 2001, once someone has worked 500 hours, you would not be able to amend the plan FOR THE CURRENT YEAR. But you can always amend for future years.

You did not indicate whether the plan was MP or profit sharing, so there may be other issues involved as well.