retroactive benefit reduction

[lexi]

can a DB plan, w/ treasury approval, implement a retroactive benefit accrual reduction??

has anyone heard of such a thing and if yes, by what authority?

[Guest b2kates]

years ago, late 1980s, I had a client who did it, but it required a bankruptcy court order and approval of IRS.

[david rigby]

PBGC covered plan?

Other context?

[Mike Preston]

See IRC Section 412©(8). Yes, it can be done.

[SoCalActuary]

Mike, I have no problem with a 412c8 amendment that reduces future accruals, but I do see this

applied to accrued benefits. A timely c8 amendment can reduce projected funding to reflect a lower

expected benefit at NRD. Is that what you mean, or is there another example that actually limited

the accrued benefit?

[Mike Preston]

Have you read it, lately? You can reduce benefits to the level that they WERE as of the first day of the year to which the amendment applies IF and ONLY IF "the plan administrator files a notice with the Secrtary of Labor notifying him of such amendment and the Secretary of Labor has approved such amendment, or within 90 days after the date on which such notice was filed, failed to disapprove such amendment. No amendment described in this subsection shall be approved by the Secretary of Labor unless he determines that such amendment is necessary because of a substantial business hardship (as determined undrer subsection (d)(2)) and that a waiver under subsection (d)(1) is unavailable or inadequate."

It isn't easy to accomplish, but it CAN be done if the circumstances fit.