Mergers and Protected Benefits

[Guest Thornton]

A controlled group of companies maintains four separate defined contribution plans. Effective 1/01/06, three of the plans are merging (without termination) into the fourth plan. Most of the provisions of the 4 plans are consistent or not protected. However, I have a question regarding in-service distribution provisions.

The surviving plan permits hardship distributions only. No other in-service is provided for. One of the three merging plans provides for no in-service at all, so I'm ok here. One of the other two merging plans provides for in service at 59 1/2 of employer profit sharing, and the other provides for in-service at NRA (65 for all plans) and for participants in the plan for 5 years and balances allocated for at least 2 years. I call it the 5-2 rule. The employer would like the surviving plan to provide for hardship only, as it now does.

Question: Must the in-service distribution provisions be carried over into the surviving plan to avoid a violation of 411(d)(6), or can they be eliminated much like optional forms of benefits (ie annuity and installments) wilh notice to plan participants?

Thanks.

[Kirk Maldonado]

Do the regulations address this issue?