411(d)6 rules and a plan merger

[Guest ethompson]

We have a multiemployer plan that is merging into another multiemployer plan. The other plan, which will be the surviving plan, has less generous accrual and benefit terms. Do we run into 411(d)(6) problems for the participants in the merging plan?

[Ron Snyder]

It depends on your definition of "problems". The surviving plan must preserve the benefits, rights and features to which the participants in the terminating plan are entitled. This is not a "problem" per se, simply a fact of life. Of course, those can be done under wearaway provisions, if the plan documents so provide; BRFs need not apply to new benefits accruing after the merger, only to those accrued under the prior plan.

[Guest ethompson]

Thank you for your reply. If I understand correctly, the existing participants in the plan would need to maintain their same benefits, rights and features on all accrued benefits. So, we can change the rate of benefit accruel, amount etc. on a forward looking basis as long as we preserve the benefits earned under the original plan and the form of benefits available to those participants. However, from the date of the merger, the participants can be subjected to the new plan scheme, including benefit accrual which will be less beneficial? For example, we currently have a supercredit option in the plan which will disappear in the new plan.

[Effen]

If the future accrual rate will be lower, don't forget about the 204(h) notices.