change in NRA

[AlbanyConsultant]

We got a call from a client whose profit sharing plan has NRA of 60. They now want to increase it to age 65. Ignoring the fact that they want to do it because the owners are now 65 and they want to make everyone else wait for vesting (or maybe we can't ignore that?), is there anything inherently against anti-cutback rules on this? Pretty much everything we've found on the topic refers to "pension plans" (like 2007-69), so I'm not sure if that is meant to cover profit sharing plans as well. Thanks!

[Trekker]

When we raised Normal Retirement Age, we found nothing that would give us relief from the anti-cutback rules under Section 411(a)(10) - changing vesting rules. So we drafted something like this to preserve full vesting under the prior NRA:

"A Participant's Accrued Benefit derived from Employer contributions shall be fully Vested upon the earlier of: (1) attainment of his Normal Retirement Age, (2) the later of age 65 or the 5th anniversary of the time the Participant commenced participation in the Plan, (3) total and permanent disability of the Participant, or (4) death of the Participant. Due to final Treasury Regulations under Code Section 401(a), any Participant employed on or before December 31, 2008, and who terminates employment on or after attaining age 59-1/2 (the pre-2009 Normal Retirement Age), shall be fully Vested in his Accrued Benefit."

Hope this helps.