66. Amendments affecting accrued benefits

Document Provision: _____

Statement of Requirement: IRC 411(d)(6); Treas. Regs. 1.411(d)-3, 1.411(d)-4; Rev. Rul. 81-12; Rev. Proc. 2023-37, 9.02(2) and 9.05(1)

Document Provision: _____

Sample Plan Language:

No amendment to the plan (including a change in the actuarial basis for determining optional or early retirement benefits) shall be effective to the extent that it has the effect of decreasing a participant's accrued benefit. For purposes of this paragraph, a plan amendment that has the effect of (1) eliminating or reducing an early retirement benefit or a retirement-type subsidy, or (2) eliminating an optional form of benefit, with respect to benefits attributable to service before the amendment shall be treated as reducing accrued benefits. In the case of a retirement-type subsidy, the preceding sentence shall apply only with respect to a participant who satisfies (either before or after the amendment) the pre-amendment conditions for the subsidy. Notwithstanding the preceding sentences, a participant's accrued benefit, early retirement benefit, retirement-type subsidy, or optional form of benefit may be reduced to the extent permitted under IRC 412(d)(2) or Treas. Regs. 1.411(d)-3 and 1.411(d)-4.

(Note to reviewer: A retirement-type subsidy is the excess, if any, of the actuarial present value of a retirement-type benefit over the actuarial present value of the accrued benefit commencing at normal retirement age or at actual commencement date, if later, with both such actuarial present values determined as of the date the retirement-type benefit commences. Examples of retirement-type subsidies include a subsidized early retirement benefit and a subsidized qualified joint and survivor annuity. See Treas. Reg. 1.411(d)3(g) (6)(iv).)

(Note to reviewer: Plans may provide for an exception from the general prohibition against the elimination or restriction of optional forms for certain elective transfers. If a plan provides for the elimination or restriction of optional forms for elective transfers made on or after January 1, 2002, the plan must also provide that where the participant is eligible to receive an immediate distribution of the participant’s entire nonforfeitable accrued benefit in a single-sum distribution that would consist entirely of an eligible rollover distribution under IRC 401(a)(31), such transfer will be accomplished as a direct rollover under IRC 401(a)(31). See LRM #54 and Treas. Reg. 1.411(d)-4, Q&A3(a)(4) and

150 | Defined Benefit Plan LRM Package 06/2026

Q&A-3(c)(1)(ii).)

(Note to reviewer: For benefits based on a Cash Balance Formula, the right to interest credits in the future that are not conditioned on future service constitutes a IRC 411(d)(6) protected benefit. Unless otherwise specifically provided by law, an amendment to the plan to change the Interest Crediting Rate must satisfy IRC 411(d)(6) with respect to a participant’s hypothetical account balance accrued as of the date of the amendment, if the revised rate could result in interest credits that are smaller as of any date after the applicable amendment date. See Treas. Reg. 1.411(b)(5)-1(e)(3).)