Ineffective Amendment due to Sec 436; Anti-Cutback

[Guest BCR]

DB Plan was amended in 2011 to allow in-service distributions after attaining age 62; prior to the amendment in-service distribution after attaining 65 were permitted. As a result of the amendment, the plan would not meet the Sec 436 adjusted funding target attainment percentage, and because employer did not make make a contribution to attain the required percentage, the amendment did not take effect in 2011 in accordance with Sec 436. Does the amendment automatically come into effect the next plan year if the adjusted funding target is attained or is the amendment dead unless readopted? See Regs: 1.436-1(a)(4)(iv) "If the plan amendment cannot take effect during the plan year, then it must be treated as if it were never adopted, unless the plan amendment provides otherwise."

Can the plan be amended in 2012 to delete the reference to the age 62 in-service distributions without violating the anti-cutback rule on the ground that the amendment never became effective?

BCR

[SoCalActuary]

I suspect there is more involved here. Inservice distribution is not usually that important in aftap determination. Do you also have unreduced retirement benefits at 62?

[Guest BCR]

I suspect there is more involved here. Inservice distribution is not usually that important in aftap determination. Do you also have unreduced retirement benefits at 62?

[Guest BCR]

No. We were surprised it resulted in a funding problem, but it did per the actuary.