Post-DOPT Amendment question

[TheBoxMan]

Hypothetical Scenario

A cash balance plan has a provision that states participant and spouse must consent to distributions over $1,000. The plan terminates and the plan thought the spousal consent was the standard IRC $5,000. Lump sum benefits between $1,000 and $5,000 were paid out with participant consent, but not spousal consent. 

The plan realizes the mistake and wants to do a post-Date of Plan Termination amendment to change the provision to state a participant and spouse must consent to a distribution over $5,000.  

Reviewing CFR 4041.8 Post-termination amendments, it seems like an amendment is allowed that does not 1) decrease the value of the participant or beneficiary benefit and 2) does not eliminate or restrict any form of benefit.

To me, this post-DOPT amendment only limits a spouse's right to consent to the distribution. It does not decrease the value or eliminate or restrict any form of benefit. Would this type of amendment be prohibited? I would love to hear thoughts and opinions on this.

[Bri]

I think I recall being at a seminar where the speaker (respected and known on these forums) mentioned it's okay for a plan to change its under-5000 rules without it being a cutback.  (DC setting, though.) 

I'd think this is similar - but that guy was the attorney, not me.

[David Schultz]

The unnamed and esteemed attorney was, of course, correct.  Under Treas. Reg. §1.411(d)-4, Q&A-2(b)(2)(v), involuntary distributions (or the absence of such) is a protected-benefits that may be reduced or eliminated, by consent of the IRS.  

"A plan may be amended to provide for the involuntary distribution of an employee's benefit to the extent such involuntary distribution is permitted under sections 411(a)(11) and 417(e). Thus, for example, an involuntary distribution provision may be amended to require that an employee who terminates from employment with the employer receive a single sum distribution in the event that the present value of the employee's benefit is not more than $[5,000/$7,000]..."