Freeze MPPP

[chris]

Employer considering freezing its MPPP. There is a last day of the plan year employment requirement regarding a participant being entitled to an allocation. There is no "500 hour " rule, however, there is an exception to the employment requirement for those participants who die, retire or become disabled. Currently, no participants meet that exception. Can an amendment be made to freeze the plan, ie. amend allocation formula to 0% of comp., such that no contribution will be made for the plan year, or must the e/er carve out for potential participants who meet the death, retirement, disability exception prior to pye?

[david rigby]

What is the plan year?

[chris]

Plan year end is 6/30. E/er wil clearly fund the PYE 6/30/02. Issue re freeze concerns PYE 6/30/03.

[david rigby]

Sounds like you can amend the plan to change the percentage to zero, effective after the appropriate 204(h) notice.

[chris]

And that will apply to all participants across the board, assuming I've got no one who has died, retired or become disabled prior to the amendment taking effect? If a participant has met either of those requirements (death, retired, disabled) for an allocation prior to the amendment, then they can't be cut back. If unsure given the number of participants that may be involved, I would think the amendment could be drafted to keep any such participants from being cut-back. For example, amend the cont. formula to 0%, except for participants, if any, who have died, retired, become disabled prior to the effective date of the amendment. ?? Thanks.

[jaemmons]

Unless you have participants who have died, become disabled or retired, as of the date of the amendment, I don't feel you have a cutback. They haven't accrued a benefit until one of these events occurs prior to the end of the year. Therefore, I would give out the 204(h) notice and amend the document to zero without worrying about any cutback issues.