Qualified Plans

Plan administrators are now required by the Internal Revenue Code to provide to employees written notice of plan amendments that significantly reduce the rate of future benefit accrual. For plan amendments taking effect after June 6, 2001, the employer or the plan will have to pay an excise tax if both of the following occur.

• A defined benefit plan or money purchase pension plan is amended to provide for a significant reduction in the rate of future benefit accrual.
• The plan administrator fails to notify the affected individuals and the employee organizations representing them of the reduction.

For more information, see chapter 4 in Publication 560, Retirement Plans for Small Business.

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