Pension Plan Freeze

A pension plan, subject to IRC 412 provided a timely 204(h) notice in January 2018 stating the plan will be frozen, no more benefit accruals, effective March 31, 2018. The amendment was provided to the employer at the same time with a March 31, 2018 effective date. We just received the signed amendment back, and it was not executed until May 10, 2018.

How is this amendment treated? As freezing the plan on its date of execution, May 10, 2018? Or is the amendment treated as not in effect? What additional action should be taken?

It's been a long time since I've dealt with 204(h), but let's see if we can get a discussion going.

The only thing I see that addresses the timing of the amendment is

Quote

204(h)(5) A plan shall not be treated as failing to meet the requirements of paragraph (1) merely because notice is provided before the adoption of the plan amendment if no material modification of the amendment occurs before the amendment is adopted.

I think I would consider the amendment being signed on May 10 instead of March 31 as being a modification of the amendment even though I doubt the amendment language actually changed. Is changing the effective date of the amendment from March 31 to May 10 a "material change"?  I think probably not.   Bottom line is the accruals are stopping, the only difference is the date they stop.  

But with the considerable difference between outcomes of the two possibilities, I think this would be a good one to get an opinion from an ERISA attorney.  

Anyone else?

Possibly, a May 10 effective date could be relevant, assuming use of the 1000-hour rule for accruals.  Sure, most people won't have 1000+ hours on May 10, but it's more likely than if measured at March 31 (assuming a CY plan year).