Amending Plan's credited hours of service

[lexi]

The Plan Document for a DB plan states that for early retirement purposes, a year of service is 1000 hours. In actuality, the Plan measures service in "elapsed time." Setting aside the operational failure, can the Plan amend the Plan Document to conform with current practice w/o violating 411's anti-cutback provision?

My initial thought is that this would violate 411. Any thoughts?

[Effen]

One way might be through a VCP filing. Explain everything to the IRS, tell them what you would like to do and see what they say. The solution may require you to provide everyone who worked over 1000 hours with a full year of service, but you never know. I have seen the IRS let some things go that I never thought they would.

[jpod]

You may be able to amend to say "either 1,000" or "elapsed time," but just switching to elapsed time seems to be a 411(d)(6) problem for those employees who would have satisfied the criteria using hours counting but not if elapsed time is used. EPCRS says that operational defects can be cured through a plan amendment only if it does not violate 410(b) or 411(d)(6).