Hi,
Can a DB plan be amended before the end of the plan year to decrease the accrual rate under the plan for the plan year and future plan years? From reading the instructions to the Schedule R it seems to say such an amendment under IRC 412©(8) and ERISA 302©(8) must receive approval and must relate to a business hardship.

I have been out of the DB world for a while. Any help is greatly appreciated.

Thanks!

I think that 412©(8) applies to retroactive amendments adopted after the close of the plan year.

You need a plan amendment. Don't forget the notice requirements under ERISA section 204(h). The practical impact of the amendment will be the later of the adoption date or it stated effective date. Thus, you can amend the plan with a retroactive effective date, but not so that it reduces accrued benefits that have been earned as of the amendment's adoption date.

Thanks both.
The actuary did confirm that the amendment will not reduce the accrued benefits for 2003 (since employees have already worked 1k hours) but will decrease future plan year accruals. So, we need to send the 204(h) notice out (I presume at least 15 days before the amendment is adopted) and it is NOT a 412©(8) election since there is no retroactive reduction. Got it!

Thanks!