Is this protected because of timing?

[C2C]

I have a DB plan that only allows benefit payments to start at termination for those who continued working beyond NRD. They got the greater of AE and additional accruals. Now the accruals are frozen and the sponsor wants to amend to say the participants must start payments at NRD even if they are still working. I know they can amend to allow participant to begin payments at NRD while still working, but I'm not sure they can take away the option to defer payments (with AE increases) until actual retirement. Would that be a protected benefit that can't be removed?

Thanks for any thoughts/guidance.

[david rigby]

Is the value of the benefit more than $5000? If so, distribution timing is at the option (generally) of the EE.

But, you may be able to accomplish your goal by communicating with EES; in many plans that permit distribution while still employed, the average employee is not aware of that provision.

[Blinky the 3-eyed Fish]

Pax, remember that the right to defer payment ceases when a participant reaches NRA or age 62 if NRA is earlier than 62.

C2C, because the actuarial increase is a prospective increase, I don't see it as a protected benefit. The timing of benefits is a protected benefit. So what could work is if you cease the actuarial increases and issue a suspension of benefits notice. You have then preserved the right for them to keep their money in the plan, yet you have avoided additional actuarial increases.

Note that actuarial increases must occur for those past 70 1/2 who aren't taking RMD's.

[Guest Harry O]

I'm not sure I agree with Blink that the plan's promise of a post-NRA actuarial increase to my accrued benefit is not protected. Where has the IRS come out on whether a post-retirement COLA is protected under 411(d)(6)? I'm on the road with no access to the recently finalized 411(d)(6) regs . . .

[Everett Moreland]

Central Laborers’ Pension Fund v. Heinz, 541 U.S. 739 (2004), and 1.411(d)-3 prevent suspending actuarial increases in benefits accrued before the plan adopts the suspension rules.

[C2C]

Thanks guys. The sponsor is not interested in a suspension of benefits. They just want to go from not allowing in-service post NRA distributions to requiring in-service distributions for those at NRA. Although it hasn't been an "option" to delay benefit payments until actual termination, it seems like taking away the delayed payment date might violate the 411(d)(6) rules. If they do allow the participants to elect to defer payment until actual retirement, they won't provide a suspension of benefits.