415 limit - frozen plans

[M_2015]

If a plan is hard frozen (i.e., no additional accruals on account of continued service or increases in pay), can terminated vested participants whose benefits currently exceed the 415 limit increase with the future increases to the 415 limit up to the time when benefits commence?  Or is their benefit amount as limited by the current 415 limit locked into place?  I believe it's the former  

[david rigby]

The answer will be found in the amendment that froze the Plan.  If it is silent, the answer is probably "no".

[M_2015]

Thanks.  I believe this means that future increases to the 415 limit can apply to increase accrued benefits that exceed the current limit.     

[david rigby]

I do not.  But then, I don't have access to the applicable amendment(s) and/or plan document.

[AndyH]

The benefit would be frozen at the 415 limit at the time of termination.   

I think there is an exception which rarely (if ever) applies to small plans that allows increases as part of a general COLA provision for retirees.   I'd have to research it to double check, but I believe that may be possible.

But from what you describe, it is almost certainly frozen at the limit in effect at termination of employment.

[CuseFan]

Also, if you allow new benefits to accrue based on COLA limit increases, does that create a 401(a)(26) issue in that you don't truly have a frozen plan?

[Audrey]

On 12/26/2023 at 12:45 PM, AndyH said:

The benefit would be frozen at the 415 limit at the time of termination.   

I think there is an exception which rarely (if ever) applies to small plans that allows increases as part of a general COLA provision for retirees.   I'd have to research it to double check, but I believe that may be possible.

But from what you describe, it is almost certainly frozen at the limit in effect at termination of employment.

hi Andy, what if the participant didn't terminate, so is his accrued benefit still be limited/capped by the 415 limit at the time of frozen? or he can get the increase as he is still employed? thanks!