Money Purchase Plans amending NRA to age 62

[Belgarath]

Remember this? I'm getting some disagreement on something, and I wanted to make sure I'm not crazy.

Money purchase plan had NRA of 59-1/2. Plan provided for an allocation upon termination of employment if you had reached NRA, regardless of hours.

Plan was timely amended to change NRA to age 62.

A participant has now reached age 59-1/2 this year (2016), and is terminating employment. I say that participant is not entitled to an allocation, because participant hasn't reached NRA. I don't see any anti-cutback issues, because participant had not attained previous NRA of 59-1/2 prior to the effective date of the required amendment.

Agree/disagree?

[Trekker]

Agree. I am not an attorney, but I believe you will find your answer in IRS Notice 2007-69:

"Section 1.411(d)-4, Q&A-12, of the 2007 regulations provides an exception to the anti-cutback rules of Section 411(d)(6) for conforming amendments....This relief from the anti-cutback rules is limited to the elimination - as a result of an amendment that raises the plan's NRA from one that is inappropriately low to one that satisfies the requirements of Sec 1.401(a)-1(b)(2) - of a participant's right to an in-service distribution at the earlier age."

Hope this helps.

[My 2 cents]

Agree. I am not an attorney, but I believe you will find your answer in IRS Notice 2007-69:

"Section 1.411(d)-4, Q&A-12, of the 2007 regulations provides an exception to the anti-cutback rules of Section 411(d)(6) for conforming amendments....This relief from the anti-cutback rules is limited to the elimination - as a result of an amendment that raises the plan's NRA from one that is inappropriately low to one that satisfies the requirements of Sec 1.401(a)-1(b)(2) - of a participant's right to an in-service distribution at the earlier age."

Hope this helps.

Was there a time limit on that relief?

[Belgarath]

Thanks, but remember, I'm not talking about a distribution. The question is regarding the right to an allocation.

[Tom Poje]

let's suppose, instead of the NRA getting changed the plan had no hours requirement for a contribution.

they amend the plan to 1000 hours. so three years later would you say the person is entitled to a contribution?

I think any benefit accrued up to that point in time would be eligible for a distribution at age 59 1/2 (but that is protected benefit for distribution) but I don't think that rule applies to a right to a contribution. (unless you changed the nra in the year the person reached NRA) If the person was an hourly employee and you amend to exclude hourly employees would you say "but previously you said I would get a contribution in year of retirement, so I have to get it"

[Belgarath]

Thanks. That's what I thought.