Plan Amendment

[Guest mike0355]

Given: 1-owner DB plan

Plan was amended to reduce formula for 2010.

Board of Directors adopted resolution on 1/1/2010.

Effective date is 1/1/2010

Amendment was signed on July 2011.

Question: Is there any problem here?

Thanks for all responses.

[mming]

For the amendment to be effective for 2010, it should have been signed before any participant became eligible for a 2010 accrual, e.g., before the participant worked 1,000 hours during the year if that's what's needed for an accrual. A 2010 BOY val, however, would be unaffected.

[rcline46]

I think there is a huge problem - it is likely that two years of accruals have taken place under the old formula, so that accrued benefit cannot be taken away. THe new formula and accruals are likely to take place until 2012. And since cost is now tied directly to each year's accrued benefit, no cost changes for 10 and 11.