Section 4. — Publication 6165 — Defined Benefit Listing

IRC 401(a)(17) participants will be adjusted in accordance with one the following methods, as elected by the employer in the adoption agreement:

(a) Old compensation fraction

The frozen accrued benefit of each participant in the freshstart group, as adjusted in sections 2.1 through 2.3 above, as applicable, will be multiplied by a fraction (not less than 1), the numerator of which is the participant's compensation for the current plan year, using the same definition and compensation formula used in determining the participant's frozen accrued benefit, and the denominator of which is the participant's compensation as of the fresh-start date, determined in the same manner as the numerator.

(b) New compensation fraction

The frozen accrued benefit of each participant in the freshstart group, as adjusted in sections 2.1 through 2.3 above, as applicable, will be multiplied by a fraction (not less than 1), the numerator of which is the participant's average annual compensation, as defined in section _____ of the plan, for the current plan year, and the denominator is the participant's average annual compensation as of the fresh-start date, determined in the same manner as the numerator.

The frozen accrued benefit of each participant in the freshstart group, as adjusted in sections 2.1 through 2.3 above, as applicable, will be multiplied by a fraction (not less than 1), the numerator of which is the participant's average annual compensation, as defined in section of the plan, for the current plan year, and the denominator of which is the participant's reconstructed average annual compensation as of the fresh-start date.

(Note to reviewer: The blank should be filled in with the adoption agreement section number corresponding to LRM #7.)

A participant's "reconstructed compensation" will be equal to the participant's average annual compensation, as defined in section ____ of the plan, for the plan year elected by the employer in the adoption agreement multiplied by a fraction, the numerator of which is the participant's compensation for the plan year ending on the latest fresh-start date determined using the same compensation definition and compensation formula used to determine the participant's frozen accrued benefit, and the denominator of which is the participant's compensation for the selected year, determined in the same manner as the numerator.

27 | Defined Benefit Plan LRM Package 06/2026

For purposes of calculating a participant's "reconstructed compensation," the selected year will be the plan year elected by the employer in the adoption agreement.

(Note to reviewer: The blank should be filled in with the adoption agreement section number corresponding to LRM #7.)

(d) Alternative adjustment

In lieu of applying the fractions in paragraphs 4(a) and 4(b) above, if the employer elects the Alternative Adjustment in the adoption agreement, a participant's adjusted accrued benefit will be determined by substituting the participant's compensation (as defined in section _____ of the plan) for the current plan year determined under the same compensation formula and underlying definition of compensation used to determine the frozen accrued benefit of each participant in the fresh-start group.