Anticutback violation?

[Guest RONNIE WASEL]

401K Plan is amending for GUST/EGTRRA and no longer wishes to offer loans to it's participants. Would this be an anticutback violation? It seems as if it would not be since benefits are not being lowered.

Thanks,

Ronnie

[MGB]

See Regulation 1.411(d)-4(d) "Benefits that are not section 411(d)(6) protected benefits": ...(4) the availability of loans...

[Guest RONNIE WASEL]

Thanks, I've read the reg but it brings up another question:

If you are amending a one person plan onto a super simplified document and the new document doesn't allow for hardships or pre retirement distributions and the former did, will this constitute anticutbacks?

[Blinky the 3-eyed Fish]

The hardship option can be eliminated, 1.411(d)-4, Q&A 2(b)(2)(x).

The pre-retirement distribution option cannot be eliminated for accrued benefits.

[chris]

As for taking out loans, I'm assuming there are no loans outstanding. If so, you may want to add special language in plan doc right before the loans section to the effect that "... loans are not available as of date x, but that outstanding loans will be maintained in accordance with the following provisions....."??? Of course, the special language will require you to submit the document to the IRS for review.