Reducing Compensation Limit

[Guest dactyl]

I am aware of the rule that when a plan changes its accrual computation period, that credit must be given to those participants who would have received a year of service prior to the amendment.

Is there a similar rule for changes in the compensation limit? For example, a plan currently provides that compensation shall be limited to $200,000 for the year, but wants to change that limit to say $150,000 effective for the plan year beginning 1/1/03. If an employee has earned $175,000 on the date of the amendment, must that employee have $175,000 of compensation considered for the 2003 plan year?

Any authority is appreciated.

[AndyH]

You must calculate and protect the accrued benefit through the date that timely ERISA 204(h) Notice becomes effective. Start with IRC 411(d)(6) and ERISA 204(h), including the regs just issued.