Nicholas Pension Consultants
Compensation Strategies Group, Ltd.
Nova 401(k) Associates
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|Reducing Future Accruals Under a DB Plan|
BenefitsLink Message Boards
Oct. 27, 2021
"A DB plan had a benefit formula of 6% per year of participation for the first year of the plan. For the second year (takeover for second year), we want to use 3% for each year of participation (of course with a 204(h) notice). However, we want the accrual for this second year to be 3% of comp for this year of participation, without reducing the current accrual due to the benefits earned for the first year -- meaning the total benefit at the end of the second year will be the 6% of comp accrual for the first year plus the 3% of comp accrual for the second year. Based on this, would the following be an appropriate language for the plan document as the plan benefit formula? 'For 12/31/2021 year 6% of average comp, and for 12/31/2022 and future years, 3% of average compensation, WITHOUT WEARAWAY.'"
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