Application of 411(d)(6) to compensation

[Everett Moreland]

Would an amendment ceasing benefit accruals effective 8/1/03 violate 411(d)(6) by limiting 2003 plan year compensation to pre-8/1/03 compensation?

Assume a calendar year accumulation plan with a benefit of 2% of plan year compensation; the full benefit is provided with 1000 HOS; and no benefit with less than 1000 HOS.

If this would be allowed in a money purchase plan (and I believe it would), is there any reason it would not be allowed in a defined benefit plan?

The amendment would not violate the double-proration rule in 2530.204-2(d) or the anti-cutback rule in 1.411(a)-7©(5). Neither discrimination nor top heavy is a consideration.

[Mike Preston]

It shouldn't. But are you in the 9th Circuit? Anything is possible there.

[david rigby]

How is the 8/1/03 amendment different from a plan freeze?

[Everett Moreland]

Pax: It is a freeze.

Mike: I am in the 9th Circuit, where the possibilities are wonderous (see Lessard v. Applied Risk Management and Schott v. Commissioner), but modest compared with those in the 5th Circuit (see Rickey v. United States ["We . . .. reject a crabbed reading of the Code"]).

[Mike Preston]

Indeed. Michael v. Riverside Cement is the 9th Circuit case I was thinking about. That case stands for the proposition that 411(d)(6) can be applied in wondrous ways by those Federal judges.