New Flexibility For Defined Benefit Plan Sponsors

Law360, New York (February 21, 2013, 12:32 PM EST) -- Tax-qualification requirements generally prohibit plan sponsors from eliminating optional methods of distribution under a retirement plan. This “anti-cutback” requirement is subject to only a limited number of exceptions. A recent modification to this rule adds a new exception for single-employer defined benefit plans maintained by employers in bankruptcy. Such employers may amend their plans to eliminate lump-sum distribution options if certain conditions are met.

The Anti-Cutback Rule

The anti-cutback rule prohibits a plan from being amended in a manner that eliminates or reduces a participant’s accrued...
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