<< WARNING to the preparer!
These materials MUST be edited based on the Employer’s selections. Search for “<” and “>” to be certain that you have properly customized these materials.>>
2012 INTERIM AMENDMENT
FOR DEFINED BENEFIT PLANS
<<PLAN NAME>>
AMENDMENT # <<___>>
Section 1. General Rules.
1.1. Purpose and Adoption. The purpose of this Amendment is to incorporate required changes from the 2011 Cumulative List of Changes in Plan Qualification Requirements described in section 4 of Revenue Procedure 2005-66 as modified by Revenue Procedure 2007-44, it includes certain provisions from the Pension Protection Act of 2006 (“PPA “), the Worker, Retiree, and Employer Recovery Act of 2008 (“WRERA”) and the Preservation of Access to Care for Medicare Beneficiaries and Pension Relief Act of 2010 (PRA 2010), as they relate to section 436 of the Code with respect to the limitations on distributions before and after a cessation period and benefit accruals after the cessation period as required by the Pension Protection Act of 2006.
<<EMPLOYER NAME>> (“the Employer”) adopts the following Amendment to its <<PLAN NAME>> (the “Plan”). This Amendment reflects Benefit Limitations for Defined Benefit plans pursuant to IRS Notice 2011-96 and section 436 of the Internal Revenue Code (the ”Code”).
1.2. Precedence. The requirements of this Amendment will take precedence over any inconsistent provisions of the Plan, including any previous amendments adopted by the Employer. Where appropriate, the term “Plan” shall mean the Plan and Trust.
1.3. Requirements of Treasury Regulations Incorporated. All matters addressed under this Article will be determined and made in accordance with the Internal Revenue Code (“Code”) and the Treasury Regulations.
1.4. Effective Date. Unless otherwise stated by the regulations, or the Adoption Section of this Amendment, this Amendment is effective for Plan Years beginning on or after January 1, 2008. Plans are required to operate according to these provisions as of that date. The deadline to incorporate these provisions in the Plan is the last day of the Plan Year beginning on or after January 1, 2011. This deadline has been extended to the last day of the first Plan Year beginning on or after January 1, 2012 or for a newly established plan, the last day of the first Plan Year or the Employer’s tax filing date with extensions in which provisions required by section 436 were first effective for the Plan.
Section 2. Funding Based Limits on Benefits and Benefit Accruals.
A Plan that adopted the 2009 Interim Amendment without Section 5 (Funding Based Limits on Benefits and Benefit Accruals) of that Amendment hereby adopts this Section 2 (Funding Based Limits on Benefits and Benefit Accruals) in its entirety. If the Plan adopted the 2009 or 2010 Interim Amendment including the above referenced Section it hereby adopts the changes enumerated below:
2.1. Generally, for purposes of section 401(a)(29) of the Code, the Plan shall be treated as meeting the requirements of this section if the Plan meets the requirements of Subsections 2.2, 2.3, 2.4, and 2.5.
2.2. Funding-Based Limitation on Shutdown Benefits and Other Unpredictable Contingent Event Benefits.
Section 5.2 of the 2009 Interim Amendment is amended to add a new Paragraph (d) below. The Provisions of Section 5.2 of the 2009 Interim Amendment or Section 2.2 of the 2010 Interim Amendment prior to the adoption of this Amendment shall continue to apply unless a new option under Section 2.2 is selected in the Adoption Section of this Amendment.
(a) Generally, if a Participant is entitled to an unpredictable contingent event benefit payable with respect to any event occurring during any Plan Year, the Plan shall provide that such benefit may not be provided if the Adjusted Funding Target Attainment Percentage (AFTAP) for such Plan Year:
(1) is less than 60 percent, or
(2) would be less than 60 percent taking into account such occurrence by redetermining the AFTAP applying an actuarial assumption that the likelihood of occurrence of the unpredictable contingent event during the Plan Year is 100 percent.
(b) Exemption. Paragraph (a) shall cease to apply with respect to any Plan Year, effective as of the first day of the Plan Year, upon payment by the Plan Sponsor of a contribution (in addition to any minimum required contribution under section 303 of the Employee Retirement Income Security Act of 1974 (ERISA)) equal to:
(1) in the case of Paragraph (a)(1), the amount of the increase in the funding target of the Plan (under section 430 of the Code) for the Plan Year attributable to the occurrence referred to in Paragraph (a), and
(2) in the case of Paragraph (a)(2), the amount sufficient to result in an AFTAP of 60 percent.
(c) Unpredictable Contingent Event Benefit. For purposes of this Section, the term "Unpredictable Contingent Event Benefit" means any benefit payable solely by reason of:
(1) a plant shutdown (or similar event, as determined by the Secretary of the Treasury), or
(2) an event other than the attainment of any age, performance of any service, receipt or derivation of any compensation, or occurrence of death or disability.
(d) Limitation Continuation. If elected in the Adoption Section, the limitation in Paragraph (a) shall continue to apply after the Plan Sponsor makes a contribution pursuant to the requirements of Paragraph (b), as if the exemption of Paragraph (b) had not been met.
If no such election is made and an unpredictable contingent event benefit with respect to an unpredictable contingent event that occurs during the Plan Year is not permitted to be paid after the occurrence of the event because of the limitation of Section 2.2(a), but is permitted to be paid later in the same Plan Year (as a result of additional contributions or pursuant to the Plan’s enrolled actuary’s certification of the AFTAP for the Plan Year that meets the requirements of section 1.436-1(g)(5)(ii)(B) of the Treasury Regulations), then that unpredictable contingent event benefit shall be paid, retroactive to the period that benefit would have been payable under the terms of the Plan (determined without regard to Section 2.2(a)). If the unpredictable contingent event benefit does not become payable during the Plan Year in accordance with the preceding sentence, then the Plan is treated as if it does not provide for that benefit unless the Employer elects in the Adoption Section to provide such benefit prospectively or elects to continue to apply the limitation to the plan.
2.3. Limitations on Plan Amendments Increasing Liability for Benefits.
Section 5.3 of the 2009 Interim Amendment is amended to add a new Paragraph (e) below and Section 2.3 of the 2010 Interim Amendment is amended to replace Paragraph (e) with a new Paragraph (e) below. The Provisions of Section 5.3 of the 2009 Interim Amendment and Section 2.3 of the 2010 Interim Amendment prior to the adoption of this Amendment shall continue to apply unless a new option under Section 2.3 is selected in the Adoption Section of this Amendment.
(a) Generally, no amendment to the Plan which has the effect of increasing liabilities of the Plan by reason of increases in benefits, establishment of new benefits, changing the rate of benefit accrual, or changing the rate at which benefits become nonforfeitable may take effect during any Plan Year if the AFTAP for such Plan Year is:
(1) less than 80 percent, or
(2) would be less than 80 percent taking into account such amendment.
(b) Exemption. Paragraph (a) shall cease to apply with respect to any Plan Year, effective as of the first day of the Plan Year (or if later, the effective date of the amendment), upon payment by the Plan Sponsor of a contribution (in addition to any minimum required contribution under section 430 of the Code) equal to:
(1) in the case of Paragraph (a)(1), the amount of the increase in the funding target of the Plan (under section 430 of the Code) for the Plan Year attributable to the amendment, and
(2) in the case of Paragraph (a)(2), the amount sufficient to result in an AFTAP of 80 percent.
Notwithstanding, if the plan amendment is to increase benefits for a future period and no contribution is required under Paragraph (b)(1) or (b)(2), then the amendment is permitted to take affect without regard to the limitation in Paragraph (a, however the amendment may have to be taken into account in determining the funding target and the target normal cost in certain situations pursuant to Treasury Regulation 1.430(d)-1(d)(2)).
(c) Exception For Certain Benefit Increases. Paragraph (a) shall not apply to any amendment which provides for an increase in benefits under a formula which is not based on a Participant's Compensation, but only if the rate of such increase is not in excess of the contemporaneous rate of increase in average wages of Participants covered by the amendment.
(d) Delayed Effective Date. In the case of the delayed effective date of an amendment to the Plan described in Paragraph (a), the Employer may elect in the Adoption Section to accrue benefits that would have accrued under the Plan but for Paragraph (a), if the Plan meets the requirements of Paragraph (b) for the period benefit accruals were limited.
(e) Amendment Treated As If It Were Never Adopted. If a plan amendment does not go into effect as of the effective date of the amendment because of the limitations of this Section 2.3, but could go into effect later in the Plan Year as a result of additional contributions that satisfy the requirements of section 436(c)(2) of the Code or an enrolled actuary’s certification of the AFTAP for the Plan Year, then the plan amendment will not take effect. In order to adopt the changes contained in the Amendment, the Employer must readopt the Amendment with an effective date after the end of the cession period.
(f) Amendment with Later Effective Date. If elected in the Adoption Section, a plan amendment that does not go into effect as of the effective date of the amendment because of the limitations of this Section 2.3, but is permitted to go into effect later in the Plan Year as a result of additional contributions that satisfy the requirements of section 436(c)(2) of the Code or the Plan’s enrolled actuary certifies the AFTAP for the Plan Year, then the Plan amendment must automatically take effect as of the first day of the Plan Year (or if later, the original effective date of the amendment). However, if the Plan amendment cannot take effect during the Plan Year, then it must be treated as if it were never adopted.
2.4. Limitations on Accelerated Benefit Distributions.
If the Plan adopted the 2009 Interim Amendment or the 2010 Interim Amendment, it hereby adopts the following changes: Section 5.4 of the 2009 Interim Amendment and Section 2.4 of the 2010 Interim Amendment are amended by adding language after the first sentence in Paragraph (a) below; adding the last two paragraphs of Paragraph (a) below and a new Paragraph (f) below. The Provisions of Section 5.4 of the 2009 Interim Amendment and Section 2.4 fo the 2010 Interim Amendment prior to the adoption of this Amendment shall continue to apply unless directly overridden by this Amendment or a new option under Section 2.4 is selected in the Adoption Section of this Amendment.
(a) Funding Percentage Less Than 60 Percent. If the Plan's AFTAP for a Plan Year is less than 60 percent, the Plan may not pay any prohibited payment after the Valuation Date for the Plan Year and the Plan shall not make any payment for the purchase of an irrevocable commitment from an insurer to pay benefits or any other payment or transfer that is a prohibited payment. If the Plan’s AFTAP for a Plan Year is less than 60 percent, a Participant or Beneficiary is not permitted to elect an optional form of benefit that includes a prohibited payment, and the Plan will not pay any prohibited payment, with an Annuity Starting Date that is on or after the applicable section 436 measurement date.
If a Participant or Beneficiary requests a prohibited payment at a time when that form of payment cannot be made, the Participant or Beneficiary retains the right to delay commencement of benefits only if the right to delay commencement is in accordance with the terms of the Plan and applicable qualification requirements (such as sections 411(a)(11) and 401(a)(9) of the Code). Thus, where payment of an optional form of benefit is restricted pursuant to Section 2 of this Amendment or Section 5 of the 2009 Interim Amendment, the Plan is not required to provide any Participant with deferral rights that would not be otherwise available.
The Employer may elect in the Adoption Section to provide that, in addition, after the section 436 Measurement Date on which the limitation on prohibited payments under this Section 2.4(a) ceases to apply to the Plan, any Participant or Beneficiary who had an Annuity Starting Date within the period during which that limitation applied to the Plan is permitted to make a new election (within 90 days after the section 436 Measurement Date on which the limit ceases to apply or, if later, 30 days after receiving notice of the right to make such election) under which the form of benefit previously elected is modified at a new Annuity Starting Date to be changed to a single sum payment for the remaining value of the Participant’s or Beneficiary’s benefit under the Plan, subject to the other rules in this section of the Plan (including Section 2.4(c)) and applicable requirements of section 401(a) of the Internal Revenue Code, including spousal consent.