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Freezing A Cash Balance Plan


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If someone wanted to freeze a Cash Balance Plan, what is the deadline to do it?  Like if they wanted to freeze the Plan for 2025, when do they have to make that decision by?

Thanks in advance!

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Depends. You can freeze a DBP, including a CBP, before accruals/credits are earned. If the plan has a 1000-hour requirement then you need to freeze before anyone is credited with 1000 hours. If there is no hours requirement, accruals are earned from day 1 of the plan year but you could freeze further accruals and limit to the portion of the year earned (for example, freeze effective 2/1 after a month's worth of credits have been earned).

Unless it's an owner-only plan, you need to provide an advance 204(h) notice at least 45 days (large plans >100) or 15 days (small plans <100) prior to the effective date of the amendment. Such amendment needs to be adopted on or before the stated effective date or the adoption date becomes the effective date (i.e., cannot be adopted retroactively).

Those are the relevant timing issues for executing the plan freeze, the employer's decision deadline is a function of these timing concerns and it's actuary's/TPA's lead time requirements for providing the necessary items (resolution, amendment, 204(h) notices).

Kenneth M. Prell, CEBS, ERPA

Vice President, BPAS Actuarial & Pension Services

kprell@bpas.com

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