412 Amendment Base

[LIBOR]

A plan that uses the EAN method for funding is amended to enhance everyone's accrued benefit to date by giving an extra year of servce - this type of amendment is utilized frequently with "window" programs for a targeted subset.

Question : we are accustomed to defining the amendment base as the difference of a "before" vs "after" EAN Accrued Liability where the Accrued Liability is defined in terms of the projected benefit ; but where the amendment deals with an accrued benefit, I'm not sure how the base should be defined ?

Any thoughts are appreciated !!

[david rigby]

Not sure that this should alter the correct procedure. The amendment base is the change in Unfunded Accrued Liability.

Not sure that increasing a benefit via this type of amendment is a good idea.

[LIBOR]

So, would you say that the AL after amendment is based on the projected benefit using (total service to retirement + 1) ?

[david rigby]

Maybe. Probably important to review the plan amendment, and other plan provisions. For example, does the plan use "fractional rule"? Again, I have reservations about an amendment that changes PS to PS+1.

However, what really is happening? Did the plan previously define credited svc from DOP (for example, DOH plus one year) and the amendment is to redefine credited service from DOH? If so, I suggest your original description of the amendment is misleading. If that is not what happened, but it could apply, then that definition will be much "cleaner". Consider it.