Plan Merger that results in reduction of future accruals

[Gary]

A company merges into another company. The new plan formula is lower than prior to the merger for future service for employees of company being merged in. Is a 204(h) Notice required by the new company, just like when a plan amendment reduces future accruals?

[KJohnson]

It might depend on whether the "merger" was an asset deal or a stock deal. In certain circumstances under an asset deal 204(h) would not be triggered even if the Plans are merged. 1.411(d)-6 Q&A 15, Example 4.

However, typically you think of mergers as stock "deals." In those cases, since the "employer" arguably remains the same, I do think you would have a 204(h) requirement. See examples 2 and 3 in the same Q&A.

[Guest JAREL]

Note that a 204(h) notice is not required unless there is a "significant" reduction in the rate of future accrual. I don't think all (or even most) plan amendments (or merged formulas) fit into this catagory, but when it doubt, provide the notice.

[david rigby]

I think the 204(h) notice is relevant only when there is a plan amendment that creates the "significant" reduction in the rate of future accruals. The original question discussed a company merger. That does not sound like a plan amendment, or a plan merger. In fact, a company merger does not necessarily change anything about the plan, except posssibly the name of the plan sponsor or its parent company. Perhaps a bit of clarification is needed.