Employee Plans news - Sample plan amendment on benefit limits for underfunded plans


For defined benefit plan sponsors, Notice 2011-96

  • provides a sample plan amendment to meet the IRC section 4366 limitations on accruing and paying benefits in an underfunded plan,
  • extends the section 436 amendment deadline, and
  • grants relief from anti-cutback requirements.

Sample amendment

The sample amendment has three parts:

  1. Plan language that applies to all single employer plans that are subject to minimum funding requirements under IRC sections 412 and 430. For example, the sample amendment includes benefit and accrual limits for plans whose adjusted funding target attainment percentage is less than 80% for a plan year.
  2. Two alternative provisions for multiple employer plans, one of which must be adopted with the first part of the sample amendment.
  3. Four optional plan provisions covering participant or beneficiary elections of optional benefit distributions and restoring benefit accruals. Sponsors may add these to the appropriate section of the first part of the sample amendment.

The amendment may be used by both individually designed and pre-approved plans.

Extension of amendment deadline

Notice 2011-96 extends the deadline to adopt an interim section 436 amendment to the latest of the:

  • last day of the first plan year beginning on or after January 1, 2012;
  • last day of the plan year for which IRC section 436 is first effective; or
  • due date, including extensions, of the employer's tax return for the tax year (as determined by IRC section 411(d)(6). Protected benefits won't violate the anti-cutback requirements if:
    • the amendment is adopted by the notice's extended deadline, and
    • the amendment eliminates or reduces protected benefits only to the extent needed for the plan to meet IRC section 436 requirements.

Additional resources