ERISA § 204(h) Notice of Benefit Accrual Reduction or Cessation

Summary

Use this ERISA § 204(h) Notice of Benefit Accrual Reduction or Cessation to notify participants and beneficiaries of a defined benefit pension plan or money purchase/target benefit pension plan that the plan in which they participate has been amended to reduce significantly the rate of future benefit accruals. The template includes practical guidance, drafting notes, alternate clauses, and optional clauses. The notice is required to be provided in advance of the amendment's effective date. ERISA § 204(h) (29 U.S.C. § 1054(h)); I.R.C. 4980F(e). This template has been drafted for a plan amended to cease completely future benefit accruals (e.g., implementing a "hard freeze" amendment). You must modify this template to reflect the particular event requiring 204(h) notice. For example, some freezes only curtail the plan to new employees (soft freeze). Others may implement a hard freeze but allow accruals for active participants to grow with compensation increases. Special rules apply for notice content that you should follow. This is especially true if the plan is amended to allow employees to choose whether to continue to participate in the pension plan or give up participation in favor of an enhanced benefit in a defined contribution plan. See ERISA 204(h) Notice Requirements—Contents of a 204(h) Notice. For a discussion regarding Section 204(h) rules, including discussion of notice delivery methods and the consequences of notice failures, see ERISA 204(h) Notice Requirements. For a full listing of key content covering retirement plan notification requirements, see ERISA Retirement Plan Notices Resource Kit.