Code Section 4980F

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Code section 4980F (and parallel ERISA section 204(h)) requires plans to provide plan participants with a notice of significant reductions in the rate of future benefit accrual. Code Section 4980F notices (more commonly called 204(h) notices) must be provided under a variety of circumstances that reduce benefit accruals, most notable when a defined benefit pension plan is frozen ot terminated.

See the final regulations for details and examples.

Applicable Pension Plans

A 204(h) notice must only be provided to "applicable pension plans." An applicable pension plan is a defined benefit plan and any individual account plan that is subject to the funding requirements of Code section 412.


Timing of Notice

Generally, the notice must be provided 45 days in advance of the amendment. See the proposed regulations for clarification on the timing of notices for retroactive amendments.

Content of Notice

  • In the case of an amendment reducing the rate of future benefit accrual, the notice must include a description of the benefit or allocation formula prior to the amendment, a description of the benefit or allocation formula under the plan as amended, and the effective date of the amendment.
  • In the case of an amendment that reduces an early retirement benefit or retirement-type subsidy (other than as a result of an amendment reducing the rate of future benefit accrual), the notice must describe how the early retirement benefit or retirement-type subsidy is calculated from the accrued benefit before the amendment, how the early retirement benefit or retirement-type subsidy is calculated from the accrued benefit after the amendment, and the effective date of the amendment.
  • The notice must include sufficient information for each applicable individual to determine the approximate magnitude of the expected reduction for that individual.
  • To the extent any expected reduction is not uniformly applicable to all participants, the notice must either identify the general classes of participants to whom the reduction is expected to apply, or by some other method include sufficient information to allow each applicable individual receiving the notice to determine which reductions are expected to apply to that individual.
  • The regulations encourage the use of examples, including separate examples for classes of participants who are differently affected.

Guidance