Amend Normal Retirement Age From 55 to 62

[Guest notapensiongeek]

We have a 6/30 PYE MPPP whose NRA is (was) age 55 & 5 YOS. We just amended the plan's NRA to age 62 effective for the 6/30/2009 PYE. In order to receive an allocation of the employer contribution the participant must work at least 1,000 hours during the plan year or have attained NRA. We have two participants that had attained NRA (age 55 & 5 YOS) several years ago that consistently do not work 1,000 hours during the plan year, so in the past they've received an allocation. But for PYE 6/30/2009 since they have not attained age 62 would they not receive the allocation? Is this correct or do they receive the allocation anyway because it would be a cutback issue?

Any thoughts would be greatly appreciated.

Thanks!!

[Guest Sieve]

As to an annual allocation, the protection occurs if the allocation has accrued. So, if the amendment with regard to the 2008-2009 year occurred before the allocation for that year accrued (i.e., before the plan year began), then the new NRA would apply for allocation purposes for the 2008-2009 year--assuming, of course, you have properly and timely given a 204(h) notice (since this is a MPPP). (204(h) notice: See Treas. Reg. Sections 54.4980F-1, Q&A-5© and Q&A-6(b)(2) and Q&A-7(a)(1).) But, if the amendment occurred after the beginning of the plan year--which it apperars in the OP--and after the individual already attained 55/5, then the accrual for that year would be protected for that individual. But, then, future accurals would follow the new NRA (age 62).

Of course, you cannot eliminate other NRA-triggered events in the Plan which resulted from attaining 55/5 with respect to benefits (account balances) accrued to the date of the change to age 62--such as, e.g., full vesting, or in-service distribution capability (if the plan allows it at NRA).

[Guest notapensiongeek]

Thanks Larry!

[Blinky the 3-eyed Fish]

You can eliminate the in-service distributions for a penson plan. After all that is the whole reason of Notice 2007-69 and the increased retirement age for pension plans.

By the way, what a strange document provision. I have seen the allocation requirements eliminated at NRA if the person actually retires, but not for an active participant.