Amending Standardized Plan

[austin3515]

PS Plan which indicates no allocation requirements for actives, but a 500 hour requirement for terms. The client wants to add a straight last day rule. When must this be amended to avoid a cut-back?

I think that as long as no one has worked 500 hours it would be OK. I see it like a "modified last day rule." IF it was a regular last day rule, we all agree the plan could be amended now to change the allocations. So if no one has worked 500 hours, and no one has worked on the last day, then no one has accrued a right to the allocation yet.

Thoughts?

[PensionPro]

Is this permissible in a standardized plan? I thought a standardized plan must benefit all participants except terminees with less than 501 hours.

[austin3515]

We will restate it to a non-standardized plan, of course.

[12AX7]

This is where you need Tom. I seem to recall that this question came up in a IRS Q & A during an ASPPA conference. I believe the answer was that the plan could be amended before the allocation requirement had passed. At least that is what I would do.

[austin3515]

What it must be like to be "Tom" on a public message board, and we all know who you mean

[PensionPro]

If no benefits accrued there is no cutback. You can amend if no one has attained rights to a benefit/contribution. Watch out for plan language that waives allocation conditions for deceased, disabled, retired participants, etc.

[austin3515]

Thank you Pension Pro, but the question is, has a benefit accrued in my example?

[PensionPro]

If no one worked 500 hrs then a benefit has not accrued in your example.

[austin3515]

Thanks!