204(h) Notification - Is SPD sufficient?

[Gary]

If a Plan changes the benefit formula and it results in a reduction in the Normal Ret. Benefit, clearly a 204(h) Notice is required. Say a Plan doesn't provide such a Notice, but includes the change in a subsequent updated SPD. Is this sufficient or do the old formula benefits continue to accrue until the Notice is provided or any other thoughts?

[Guest Steve C]

A subsequent SPD will not suffice, as the 204(h) notice must be issued at least 15 days before the effective date of the amendment. The old formula benefits will continue to accrue until the notice requirement is met.

[david rigby]

Agreed, subject to the issue of a "significant" reduction in accruals.

But part of your question is whether the SPD can serve as the 204(h) notice, whatever the time of distribution. I'm not sure, but skeptical about that. Perhaps others have experience with this issue.

[KJohnson]

The regs do state that a 204(h) notice "may be enclosed with or combined with other notice provided by the employer or plan administrator."

[pjkoehler]

The 204(h) notice must be given after the reduction in the rate of future accruals has been adopted, but 15 days before it becomes effective. As a practical matter, issuing an amended and restated SPD within such time frames, with the 204(h) notice appended, is not feasible, or if it is, it's going to be much more expensive than a simple written notice that satisfies the content requirements of the regs. The change will not be effective with respect to any affected participant until the 16th day after the plan furnishes him a complete 204(h) notice.

[This message has been edited by PJK (edited 04-19-2000).]

[Wessex]

The original message asked whether the old formula benefits will continue to accrue until the notice is given. Giving the notice now would not make the amendment effective. A new amendment should be signed and an appropriately timed 204(h) notice given. (Of course, that may have been what the poster meant.)

I have previously provided 204(h) notices within an SPD, but in the format of a stand alone letter at the front of the SPD, not just buried in the SPD provisions. Obviously, this takes greater preparation and is subject to the applicable time constraints, but with a very complicated change it may be desirable because the SPD can contain examples that fully illustrate the changes.

[This message has been edited by Wessex (edited 04-21-2000).]

[Guest cbvictim]

As a participant in a pension plan converted

from a traditional defined benefit plan to

cash balance plan several years ago, I am

curious what exactly an ERISA 204(h) notice

looks like. Is it just a notice the plan is

being amended or would it specifically state

that future plan accrual's would be reduced?