Protected benefit question

[fiona1]

DB plan currently defines NRA as age 65. A participant (either active or terminated) can defer their benefit past NRA. In such case, an active participant will receive a suspension of benefits notice, while a terminated participants benefit will be actuarially increased from his NRA to his annuity starting date.

In addition, the plan allows an active participant the option of taking their benefit (at NRA) and continuing to work. I'm not sure if this would be allowable with the suspension of benefit rules - given that their benefits are supposed to be withheld. But nevertheless, it's allowed in the plan document. When an active participant receives their suspension notice (at NRA), they are typically advised by the employer to just take their benefit - but not everyone does.

The plan is frozen and the employer would like to force all participants (both active and terminated) to take their benefit at NRA. Is the right to defer a benefit past NRA protected?

[david rigby]

While it might be good administrative policy to encourage actives to commence benefit payment at NRA, I think you cannot force the distribution for anyone whose benefit value exceeds $5,000.

[fiona1]

I was struggling with that as well. Found the following in the ERISA outline book:

2.b.2) No delay rights for later distributions. Once the participant reaches normal retirement age (or age 62, if later), the plan is permitted to require that distribution be taken. In that case, only the form of payment might be left to the participant's election. The plan may permit the participant to postpone distribution beyond normal retirement age (or age 62, if later), subject to the minimum distribution requirements of IRC §401(a)(9) (discussed in Section VII of this chapter). Where distribution can no longer be delayed, a written notice is still required, but the notice would explain only the payment options available to the participant, as discussed in 2.a. above, and the direct rollover option, as discussed in 2.c. below.

So take actives out of the equation. Is the right to defer past NRA protected for inactive participants? Assume John terminates at age 40 and (at the time) has the opportunity to defer his benefit past NRA (with an actuarial increase). Can the plan be amended when John is 45 to force him to take his benefit at NRA?