THIS AMENDMENT IS FOR DEFINED BENEFIT PLANS …
THIS AMENDMENT IS FOR DEFINED BENEFIT PLANS ADOPTING PPA 2006 417(e)(3) APPLICABLE INTEREST RATE AND APPLICABLE MORTALITY TABLE CHANGES
This amendment is designed to work with the DATAIR prototype and volume submitter documents and it may not be appropriate for use with the documents of another document provider. The definitions of the Applicable Interest Rate and Applicable Mortality Table should be reviewed with legal counsel before using this amendment.
This amendment is effective for distributions with annuity starting dates occurring during Plan Years beginning on or after January 1, 2008.
Without changes to the look back or stability periods.
The retroactive adoption of this amendment means that the plan must pay the larger of lump sum distributions based on pre- and post-PPA 417(e) assumptions between the first day of the 2008 Plan Year and ending on the adoption date of this amendment.
With changes to the look back or stability periods.
Changing the look back period and or the stability period is optional in this amendment. Most plans will not be changing these periods, however, if they do, the following applies:
If the employer adopts this amendment retroactively and changes the look back period or stability period then the Plan must compare the results using the Plan provisions before the Amendment and the Amendment provisions and provide the larger distribution for the period beginning with the effective date of the amendment and ending one year after the adoption date.
Without adopting this amendment.
The Plan will have to provide the greater of lump sum distributions based on pre- and post-PPA 417(e) assumptions until the Plan is amended to adopt the PPA 2006 changes to the definition of the Applicable Interest Rate and the Applicable Mortality Table.
{PLAN NAME}
AMENDMENT #___
Section 1. General Rules
1.1. Adoption and Effective Date. The purpose of this Amendment is to adopt the Pension Protection Act of 2006 (PPA) changes to the definition of “Applicable Mortality Table” and the “Applicable Interest Rate” contained in Internal Revenue Code (IRC) section 417(e)(3). The following Amendment to the Plan is effective for Plan Years beginning on or after {EFFECTIVE DATE}.
1.2. Precedence. The requirements of this Article 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 Treasury Regulations sections 1.417(e)(3)-1(d), 1.411(a)-11 and proposed Treasury Regulation 1.430(f)-1, unless superseded by later guidance.
Section 2. IRC 417(e)(3) Interest and Mortality
2.1. The “Applicable Interest Rate.” The “Applicable Interest Rate” is the adjusted first, second, and third segment rates applied under rules similar to the rules of IRC section 430(h)(2)(C) for the month before the date of the distribution or such other time as the Secretary of the Treasury may by regulations prescribe. For this purpose, the adjusted first, second, and third segment rates are determined without regard to the 24-month averaging provided under IRC section 430(h)(2)(D)(i), and section 417(e)(3)(D)(ii) provides a transition rule that phases in the use of the segment rates over five years.
2.2. The “Applicable Mortality Table.” The “Applicable Mortality Table” is a mortality table, modified as appropriate by the Secretary of the Treasury, based on the mortality table specified for the Plan Year under subparagraph (A) of IRC section 430(h)(3) (without regard to subparagraph (C) or (D) of such section). There is no phase in or transition rule for the “Applicable Mortality Table.”
NOTE: Section 3 contains optional provisions for those who wish to adjust the look-back period or stability period. Such changes are not required but if elected require the application of a transition rule.
Section 3. “Look-back” and “Stability Period.”
3.1. IRC 411(d)(6). The following provisions are intended to amend the “Look-back” and the “Stability Period” used in IRC 417(e)(3) calculations. The use of these options require the application of a transition rule. Under the transition rule, if the Plan amendment is effective on or after the adoption date, any distribution for which the Annuity Starting Date occurs in the one-year period commencing at the time the amendment is effective must be determined using the interest rate provided under the Plan determined at either the date for determining the interest rate before the amendment or the date for determining the interest rate after the amendment, whichever results in the larger distribution. If the Plan amendment is adopted retroactively (that is, the amendment is effective prior to the adoption date), the Plan must use the interest rate determination date resulting in the larger distribution for the period beginning with the effective date and ending one year after the adoption date of the amendment.
3.2 The “Look-back Period.”
The Look Back Month under the Plan is the:
( ) a. first calendar month preceding the Stability Period
( ) b. second calendar month preceding the Stability Period
( ) c. third calendar month preceding the Stability Period
( ) e. fourth calendar month preceding the Stability Period
( ) f. fifth calendar month preceding the Stability Period
( ) g. An average interest rate that is computed by averaging two or more consecutive months from among the first, second, third, fourth, and fifth calendar months preceding the Stability Period.
________________________________________
(Indicate months in average)
3.3 The “Stability Period.”
The Stability Period under the Plan is:
( ) a. one month
( ) b. one Plan quarter
( ) c. one calendar quarter
( ) d. one Plan Year
( ) e. one calendar year
* *
The Employer hereby adopts this Amendment this _____ day of _________, ____.
| Employer: |Trustee: |
| | |
| ________________________________ |________________________________ |
| | |
| Adopting Employer: | |
| | |
| | |
| ________________________________ | |
| | |
| ________________________________ | |
| Date | |
SUMMARY OF MATERIAL MODIFICATIONS
| To: |Participants of |
| From: | |
| Date: | |
This is a summary of a recent Amendment making changes to your Plan.
This Amendment adopts changes to the definition of the Applicable Interest Rate and Applicable Mortality Table that were contained in the Pension Protection Act of 2006. Pursuant to this amendment the Plan must use the Applicable Mortality Table and Applicable interest Rate published from time to time by the Secretary of the Treasury. This interest rate and mortality table is used in calculating minimum lump sum benefits under the Plan.
The “Applicable Interest Rate” is the adjusted first, second, and third segment rates applied under rules similar to the rules of IRC section 430(h)(2)(C) for the month before the date of the distribution or such other time as the Secretary of the Treasury may by regulations prescribe. For this purpose, the adjusted first, second, and third segment rates are determined without regard to the 24-month averaging provided under IRC section 430(h)(2)(D)(i), and section 417(e)(3)(D)(ii) provides a transition rule that phases in the use of the segment rates over five years.
The “Applicable Mortality Table” is a mortality table, modified as appropriate by the Secretary of the Treasury, based on the mortality table specified for the Plan Year under subparagraph (A) of IRC section 430(h)(3) (without regard to subparagraph (C) or (D) of such section). There is no phase in or transition rule for the “Applicable Mortality Table.”
..IF 3.2 a-g
Your Employer has amended the period for which the definition of the “Applicable Interest Rate” under your plan is used to
..IF 3.2a. a one month period.
..ELSEIF 3.2b. one Plan quarter.
..ELSEIF 3.2c. one calendar quarter.
..ELSEIF 3.2d. one Plan Year.
..ELSEIF 3.2e. one calendar year.
..ENDIF
..ENDIF
..IF 3.3a-g
Your Employer has amended the definition of the “Look-back” period from which the Applicable Interest Rate is taken as
..IF 3.3a first calendar month preceding the Stability Period.
..ELSEIF 3.3b. second calendar month preceding the Stability Period
.. ELSEIF 3.3c. third calendar month preceding the Stability Period
.. ELSEIF 3.3e. fourth calendar month preceding the Stability Period
.. ELSEIF 3.3f. fifth calendar month preceding the Stability Period
.. ELSEIF 3.3g. an average interest rate that is computed by averaging two or more consecutive months from among the first, second, third, fourth, and fifth calendar months preceding the Stability Period.
________________________________________
(Indicate months in average)
..ENDIF
>>ENDIF
Your plan has been amended effective ___________________________.
RESOLUTIONS OF
THE BOARD OF DIRECTORS
PLAN NAME
FOR THE AMENDING THE DEFINITION OF THE APPLICABLE INTEREST RATE AND THE APPLICABLE MORTALITY
On , the following resolutions to amend the were duly adopted by a majority of the Board of Directors of , and that such resolutions have not been modified or rescinded as of the date hereof:
RESOLVED that the form of the Amendment presented to this meeting is to adopt the required changes to the definition of the Applicable Interest Rate and the Applicable Mortality Table required by the Pension Protection Act of 2006. Such Amendment will be effective: .
RESOLVED, that the proper Officers of the Employer shall act as soon as possible to notify employees of the Employer of the adoption of this Amendment.
RESOLVED, that the proper Officers of the Employer be, and hereby are, authorized and directed to execute any and all such documents and to perform any and all such acts as may be necessary and proper to effect the foregoing; and
THE UNDERSIGNED, does hereby certify that the foregoing is a full, true and correct copy of the Resolutions duly and regularly adopted by the Board of Directors of said Employer.
_____________________________
Secretary
_____________________________
Date
................
................
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