26 U.S.C. § 411 — Minimum vesting standards

Page 1360 TITLE 26—INTERNAL REVENUE CODE § 411 § 411. Minimum vesting standards (a) General rule A trust shall not constitute a qualified trust under section 401(a) unless the plan of which such trust is a part provides that an employee’s right to his normal retirement benefit is non- forfeitable upon the attainment of normal re- tirement age (as defined in paragraph (8)) and in addition satisfies the requirements of para- graphs (1), (2), and (11) of this subsection and the requirements of subsection (b)(3), and also satis- fies, in the case of a defined benefit plan, the re- quirements of subsection (b)(1) and, in the case of a defined contribution plan, the requirements of subsection (b)(2). (1) Employee contributions A plan satisfies the requirements of this paragraph if an employee’s rights in his ac- crued benefit derived from his own contribu- tions are nonforfeitable. (2) Employer contributions (A) Defined benefit plans (i) In general In the case of a defined benefit plan, a plan satisfies the requirements of this paragraph if it satisfies the requirements of clause (ii) or (iii). (ii) 5-year vesting A plan satisfies the requirements of this clause if an employee who has completed at least 5 years of service has a nonforfeit- able right to 100 percent of the employee’s accrued benefit derived from employer contributions. (iii) 3 to 7 year vesting A plan satisfies the requirements of this clause if an employee has a nonforfeitable right to a percentage of the employee’s ac- crued benefit derived from employer con- tributions determined under the following table: Years of service: The nonforfeitable percentage is: 3 ........................................ 20 4 ........................................ 40 5 ........................................ 60 6 ........................................ 80 7 or more ........................... 100. (B) Defined contribution plans (i) In general In the case of a defined contribution plan, a plan satisfies the requirements of this paragraph if it satisfies the require- ments of clause (ii) or (iii). (ii) 3-year vesting A plan satisfies the requirements of this clause if an employee who has completed at least 3 years of service has a nonforfeit- able right to 100 percent of the employee’s accrued benefit derived from employer contributions. (iii) 2 to 6 year vesting A plan satisfies the requirements of this clause if an employee has a nonforfeitable right to a percentage of the employee’s ac- crued benefit derived from employer con- tributions determined under the following table: Years of service: The nonforfeitable percentage is: 2 ........................................ 20 3 ........................................ 40 4 ........................................ 60 5 ........................................ 80 6 or more ........................... 100. (3) Certain permitted forfeitures, suspensions, etc. For purposes of this subsection— (A) Forfeiture on account of death A right to an accrued benefit derived from employer contributions shall not be treated as forfeitable solely because the plan pro- vides that it is not payable if the participant dies (except in the case of a survivor annuity which is payable as provided in section 401(a)(11)). (B) Suspension of benefits upon reemploy- ment of retiree A right to an accrued benefit derived from employer contributions shall not be treated as forfeitable solely because the plan pro- vides that the payment of benefits is sus- pended for such period as the employee is employed, subsequent to the commencement of payment of such benefits— (i) in the case of a plan other than a multi-employer plan, by the employer who maintains the plan under which such bene- fits were being paid; and (ii) in the case of a multiemployer plan, in the same industry, the same trade or craft, and the same geographic area cov- ered by the plan as when such benefits commenced. The Secretary of Labor shall prescribe such regulations as may be necessary to carry out the purposes of this subparagraph, including regulations with respect to the meaning of the term ‘‘employed’’. (C) Effect of retroactive plan amendments A right to an accrued benefit derived from employer contributions shall not be treated as forfeitable solely because plan amend- ments may be given retroactive application as provided in section 412(d)(2). (D) Withdrawal of mandatory contribution (i) A right to an accrued benefit derived from employer contributions shall not be treated as forfeitable solely because the plan provides that, in the case of a partici- pant who does not have a nonforfeitable right to at least 50 percent of his accrued benefit derived from employer contribu- tions, such accrued benefit may be for- feited on account of the withdrawal by the participant of any amount attributable to the benefit derived from mandatory con- tributions (as defined in subsection (c)(2)(C)) made by such participant. (ii) Clause (i) shall not apply to a plan unless the plan provides that any accrued Page 1361 TITLE 26—INTERNAL REVENUE CODE § 411 benefit forfeited under a plan provision de- scribed in such clause shall be restored upon repayment by the participant of the full amount of the withdrawal described in such clause plus, in the case of a defined benefit plan, interest. Such interest shall be computed on such amount at the rate determined for purposes of subsection (c)(2)(C) on the date of such repayment (computed annually from the date of such withdrawal). The plan provision required under this clause may provide that such repayment must be made (I) in the case of a withdrawal on account of separation from service, before the earlier of 5 years after the first date on which the partici- pant is subsequently re-employed by the employer, or the close of the first period of 5 consecutive 1-year breaks in service com- mencing after the withdrawal; or (II) in the case of any other withdrawal, 5 years after the date of the withdrawal. (iii) In the case of accrued benefits de- rived from employer contributions which accrued before September 2, 1974, a right to such accrued benefit derived from em- ployer contributions shall not be treated as forfeitable solely because the plan pro- vides that an amount of such accrued ben- efit may be forfeited on account of the withdrawal by the participant of an amount attributable to the benefit derived from mandatory contributions (as defined in subsection (c)(2)(C)) made by such par- ticipant before September 2, 1974 if such amount forfeited is proportional to such amount withdrawn. This clause shall not apply to any plan to which any mandatory contribution is made after September 2, 1974. The Secretary shall prescribe such regulations as may be necessary to carry out the purposes of this clause. (iv) For purposes of this subparagraph, in the case of any class-year plan, a with- drawal of employee contributions shall be treated as a withdrawal of such contribu- tions on a plan year by plan year basis in succeeding order of time. (v) For nonforfeitability where the em- ployee has a nonforfeitable right to at least 50 percent of his accrued benefit, see section 401(a)(19). (E) Cessation of contributions under a multi- employer plan A right to an accrued benefit derived from employer contributions under a multiem- ployer plan shall not be treated as forfeit- able solely because the plan provides that benefits accrued as a result of service with the participant’s employer before the em- ployer had an obligation to contribute under the plan may not be payable if the employer ceases contributions to the multiemployer plan. (F) Reduction and suspension of benefits by a multiemployer plan A participant’s right to an accrued benefit derived from employer contributions under a multiemployer plan shall not be treated as forfeitable solely because— (i) the plan is amended to reduce benefits under section 4281 of the Employee Retire- ment Income Security Act of 1974, or (ii) benefit payments under the plan may be suspended under section 418E or under section 4281 of the Employee Retirement Income Security Act of 1974. (G) Treatment of matching contributions for- feited by reason of excess deferral or contribution or permissible withdrawal A matching contribution (within the meaning of section 401(m)) shall not be treated as forfeitable merely because such contribution is forfeitable if the contribu- tion to which the matching contribution re- lates is treated as an excess contribution under section 401(k)(8)(B), an excess deferral under section 402(g)(2)(A), a permissible withdrawal under section 414(w), or an ex- cess aggregate contribution under section 401(m)(6)(B). (4) Service included in determination of non- forfeitable percentage In computing the period of service under the plan for purposes of determining the non- forfeitable percentage under paragraph (2), all of an employee’s years of service with the em- ployer or employers maintaining the plan shall be taken into account, except that the following may be disregarded: (A) years of service before age 18; (B) years of service during a period for which the employee declined to contribute to a plan requiring employee contributions; (C) years of service with an employer dur- ing any period for which the employer did not maintain the plan or a predecessor plan (as defined under regulations prescribed by the Secretary); (D) service not required to be taken into account under paragraph (6); (E) years of service before January 1, 1971, unless the employee has had at least 3 years of service after December 31, 1970; (F) years of service before the first plan year to which this section applies, if such service would have been disregarded under the rules of the plan with regard to breaks in service as in effect on the applicable date; and (G) in the case of a multiemployer plan, years of service— (i) with an employer after— (I) a complete withdrawal of that em- ployer from the plan (within the mean- ing of section 4203 of the Employee Re- tirement Income Security Act of 1974), or (II) to the extent permitted in regula- tions prescribed by the Secretary, a par- tial withdrawal described in section 4205(b)(2)(A)(i) of such Act in conjunction with the decertification of the collective bargaining representative, and (ii) with any employer under the plan after the termination date of the plan under section 4048 of such Act. (5) Year of service (A) General rule For purposes of this subsection, except as provided in subparagraph (C), the term Page 1362 TITLE 26—INTERNAL REVENUE CODE § 411 ‘‘year of service’’ means a calendar year, plan year, or other 12-consecutive month pe- riod designated by the plan (and not prohib- ited under regulations prescribed by the Sec- retary of Labor) during which the partici- pant has completed 1,000 hours of service. (B) Hours of service For purposes of this subsection, the term ‘‘hours of service’’ has the meaning provided by section 410(a)(3)(C). (C) Seasonal industries In the case of any seasonal industry where the customary period of employment is less than 1,000 hours during a calendar year, the term ‘‘year of service’’ shall be such period as may be determined under regulations pre- scribed by the Secretary of Labor. (D) Maritime industries For purposes of this subsection, in the case of any maritime industry, 125 days of service shall be treated as 1,000 hours of service. The Secretary of Labor may prescribe regula- tions to carry out the purposes of this sub- paragraph. (6) Breaks in service (A) Definition of 1-year break in service For purposes of this paragraph, the term ‘‘1-year break in service’’ means a calendar year, plan year, or other 12-consecutive- month period designated by the plan (and not prohibited under regulations prescribed by the Secretary of Labor) during which the participant has not completed more than 500 hours of service. (B) 1 year of service after 1-year break in service For purposes of paragraph (4), in the case of any employee who has any 1-year break in service, years of service before such break shall not be required to be taken into ac- count until he has completed a year of serv- ice after his return. (C) 5 consecutive 1-year breaks in service under defined contribution plan For purposes of paragraph (4), in the case of any participant in a defined contribution plan, or an insured defined benefit plan which satisfies the requirements of sub- section (b)(1)(F), who has 5 consecutive 1- year breaks in service, years of service after such 5-year period shall not be required to be taken into account for purposes of deter- mining the nonforfeitable percentage of his accrued benefit derived from employer con- tributions which accrued before such 5-year period. (D) Nonvested participants (i) In general For purposes of paragraph (4), in the case of a nonvested participant, years of service with the employer or employers maintain- ing the plan before any period of consecu- tive 1-year breaks in service shall not be required to be taken into account if the number of consecutive 1-year breaks in service within such period equals or ex- ceeds the greater of— (I) 5, or (II) the aggregate number of years of service before such period. (ii) Years of service not taken into account If any years of service are not required to be taken into account by reason of a pe- riod of breaks in service to which clause (i) applies, such years of service shall not be taken into account in applying clause (i) to a subsequent period of breaks in service. (iii) Nonvested participant defined For purposes of clause (i), the term ‘‘nonvested participant’’ means a partici- pant who does not have any nonforfeitable right under the plan to an accrued benefit derived from employer contributions. (E) Special rule for maternity or paternity absences (i) General rule In the case of each individual who is ab- sent from work for any period— (I) by reason of the pregnancy of the individual, (II) by reason of the birth of a child of the individual, (III) by reason of the placement of a child with the individual in connection with the adoption of such child by such individual, or (IV) for purposes of caring for such child for a period beginning immediately following such birth or placement, the plan shall treat as hours of service, solely for purposes of determining under this paragraph whether a 1-year break in service has occurred, the hours described in clause (ii). (ii) Hours treated as hours of service The hours described in this clause are— (I) the hours of service which otherwise would normally have been credited to such individual but for such absence, or (II) in any case in which the plan is un- able to determine the hours described in subclause (I), 8 hours of service per day of absence, except that the total number of hours treated as hours of service under this clause by reason of any such pregnancy or placement shall not exceed 501 hours. (iii) Year to which hours are credited The hours described in clause (ii) shall be treated as hours of service as provided in this subparagraph— (I) only in the year in which the ab- sence from work begins, if a participant would be prevented from incurring a 1- year break in service in such year solely because the period of absence is treated as hours of service as provided in clause (i); or (II) in any other case, in the imme- diately following year. (iv) Year defined For purposes of this subparagraph, the term ‘‘year’’ means the period used in computations pursuant to paragraph (5). Page 1363 TITLE 26—INTERNAL REVENUE CODE § 411 (v) Information required to be filed A plan shall not fail to satisfy the re- quirements of this subparagraph solely be- cause it provides that no credit will be given pursuant to this subparagraph unless the individual furnishes to the plan admin- istrator such timely information as the plan may reasonably require to establish— (I) that the absence from work is for reasons referred to in clause (i), and (II) the number of days for which there was such an absence. (7) Accrued benefit (A) In general For purposes of this section, the term ‘‘ac- crued benefit’’ means— (i) in the case of a defined benefit plan, the employee’s accrued benefit determined under the plan and, except as provided in subsection (c)(3), expressed in the form of an annual benefit commencing at normal retirement age, or (ii) in the case of a plan which is not a defined benefit plan, the balance of the employee’s account. (B) Effect of certain distributions Notwithstanding paragraph (4), for pur- poses of determining the employee’s accrued benefit under the plan, the plan may dis- regard service performed by the employee with respect to which he has received— (i) a distribution of the present value of his entire nonforfeitable benefit if such distribution was in an amount (not more than the dollar limit under section 411(a)(11)(A)) permitted under regulations prescribed by the Secretary, or (ii) a distribution of the present value of his nonforfeitable benefit attributable to such service which he elected to receive. Clause (i) of this subparagraph shall apply only if such distribution was made on termi- nation of the employee’s participation in the plan. Clause (ii) of this subparagraph shall apply only if such distribution was made on termination of the employee’s participation in the plan or under such other cir- cumstances as may be provided under regu- lations prescribed by the Secretary. (C) Repayment of subparagraph (B) distribu- tions For purposes of determining the employ- ee’s accrued benefit under a plan, the plan may not disregard service as provided in subparagraph (B) unless the plan provides an opportunity for the participant to repay the full amount of the distribution described in such subparagraph (B) with, in the case of a defined benefit plan, interest at the rate de- termined for purposes of subsection (c)(2)(C) and provides that upon such repayment the employee’s accrued benefit shall be recom- puted by taking into account service so dis- regarded. This subparagraph shall apply only in the case of a participant who— (i) received such a distribution in any plan year to which this section applies, which distribution was less than the present value of his accrued benefit, (ii) resumes employment covered under the plan, and (iii) repays the full amount of such dis- tribution with, in the case of a defined benefit plan, interest at the rate deter- mined for purposes of subsection (c)(2)(C). The plan provision required under this sub- paragraph may provide that such repayment must be made (I) in the case of a withdrawal on account of separation from service, before the earlier of 5 years after the first date on which the participant is subsequently re-em- ployed by the employer, or the close of the first period of 5 consecutive 1-year breaks in service commencing after the withdrawal; or (II) in the case of any other withdrawal, 5 years after the date of the withdrawal. (D) Accrued benefit attributable to employee contributions The accrued benefit of an employee shall not be less than the amount determined under subsection (c)(2)(B) with respect to the employee’s accumulated contributions. (8) Normal retirement age For purposes of this section, the term ‘‘nor- mal retirement age’’ means the earlier of— (A) the time a plan participant attains normal retirement age under the plan, or (B) the later of— (i) the time a plan participant attains age 65, or (ii) the 5th anniversary of the time a plan participant commenced participation in the plan. (9) Normal retirement benefit For purposes of this section, the term ‘‘nor- mal retirement benefit’’ means the greater of the early retirement benefit under the plan, or the benefit under the plan commencing at nor- mal retirement age. The normal retirement benefit shall be determined without regard to— (A) medical benefits, and (B) disability benefits not in excess of the qualified disability benefit. For purposes of this paragraph, a qualified dis- ability benefit is a disability benefit provided by a plan which does not exceed the benefit which would be provided for the participant if he separated from the service at normal re- tirement age. For purposes of this paragraph, the early retirement benefit under a plan shall be determined without regard to any benefits commencing before benefits payable under title II of the Social Security Act become pay- able which— (i) do not exceed such social security bene- fits, and (ii) terminate when such social security benefits commence. (10) Changes in vesting schedule (A) General rule A plan amendment changing any vesting schedule under the plan shall be treated as not satisfying the requirements of paragraph (2) if the nonforfeitable percentage of the ac- crued benefit derived from employer con- Page 1364 TITLE 26—INTERNAL REVENUE CODE § 411 tributions (determined as of the later of the date such amendment is adopted, or the date such amendment becomes effective) of any employee who is a participant in the plan is less than such nonforfeitable percentage computed under the plan without regard to such amendment. (B) Election of former schedule A plan amendment changing any vesting schedule under the plan shall be treated as not satisfying the requirements of paragraph (2) unless each participant having not less than 3 years of service is permitted to elect, within a reasonable period after the adop- tion of such amendment, to have his non- forfeitable percentage computed under the plan without regard to such amendment. (11) Restrictions on certain mandatory dis- tributions (A) In general If the present value of any nonforfeitable accrued benefit exceeds $7,000, a plan meets the requirements of this paragraph only if such plan provides that such benefit may not be immediately distributed without the con- sent of the participant. (B) Determination of present value For purposes of subparagraph (A), the present value shall be calculated in accord- ance with section 417(e)(3). (C) Dividend distributions of ESOPS ar- rangement This paragraph shall not apply to any dis- tribution of dividends to which section 404(k) applies. (D) Special rule for rollover contributions A plan shall not fail to meet the require- ments of this paragraph if, under the terms of the plan, the present value of the non- forfeitable accrued benefit is determined without regard to that portion of such ben- efit which is attributable to rollover con- tributions (and earnings allocable thereto). For purposes of this subparagraph, the term ‘‘rollover contributions’’ means any rollover contribution under sections 402(c), 403(a)(4), 403(b)(8), 408(d)(3)(A)(ii), and 457(e)(16). [(12) Repealed. Pub. L. 109–280, title IX, § 904(a)(2), Aug. 17, 2006, 120 Stat. 1049] (13) Special rules for plans computing accrued benefits by reference to hypothetical ac- count balance or equivalent amounts (A) In general An applicable defined benefit plan shall not be treated as failing to meet— (i) subject to subparagraph (B), the re- quirements of subsection (a)(2), or (ii) the requirements of subsection (a)(11) or (c), or the requirements of section 417(e), with respect to accrued benefits de- rived from employer contributions, solely because the present value of the ac- crued benefit (or any portion thereof) of any participant is, under the terms of the plan, equal to the amount expressed as the bal- ance in the hypothetical account described in subparagraph (C) or as an accumulated percentage of the participant’s final average compensation. (B) 3-year vesting In the case of an applicable defined benefit plan, such plan shall be treated as meeting the requirements of subsection (a)(2) only if an employee who has completed at least 3 years of service has a nonforfeitable right to 100 percent of the employee’s accrued benefit derived from employer contributions. (C) Applicable defined benefit plan and re- lated rules For purposes of this subsection— (i) In general The term ‘‘applicable defined benefit plan’’ means a defined benefit plan under which the accrued benefit (or any portion thereof) is calculated as the balance of a hypothetical account maintained for the participant or as an accumulated percent- age of the participant’s final average com- pensation. (ii) Regulations to include similar plans The Secretary shall issue regulations which include in the definition of an appli- cable defined benefit plan any defined ben- efit plan (or any portion of such a plan) which has an effect similar to an applica- ble defined benefit plan. (b) Accrued benefit requirements (1) Defined benefit plans (A) 3-percent method A defined benefit plan satisfies the re- quirements of this paragraph if the accrued benefit to which each participant is entitled upon his separation from the service is not less than— (i) 3 percent of the normal retirement benefit to which he would be entitled if he commenced participation at the earliest possible entry age under the plan and served continuously until the earlier of age 65 or the normal retirement age speci- fied under the plan, multiplied by (ii) the number of years (not in excess of 331⁄3) of his participation in the plan. In the case of a plan providing retirement benefits based on compensation during any period, the normal retirement benefit to which a participant would be entitled shall be determined as if he continued to earn an- nually the average rate of compensation which he earned during consecutive years of service, not in excess of 10, for which his compensation was the highest. For purposes of this subparagraph, social security benefits and all other relevant factors used to com- pute benefits shall be treated as remaining constant as of the current year for all years after such current year. (B) 1331⁄3 percent rule A defined benefit plan satisfies the re- quirements of this paragraph for a par- ticular plan year if under the plan the ac- Page 1365 TITLE 26—INTERNAL REVENUE CODE § 411 crued benefit payable at the normal retire- ment age is equal to the normal retirement benefit and the annual rate at which any in- dividual who is or could be a participant can accrue the retirement benefits payable at normal retirement age under the plan for any later plan year is not more than 1331⁄3 percent of the annual rate at which he can accrue benefits for any plan year beginning on or after such particular plan year and be- fore such later plan year. For purposes of this subparagraph— (i) any amendment to the plan which is in effect for the current year shall be treated as in effect for all other plan years; (ii) any change in an accrual rate which does not apply to any individual who is or could be a participant in the current year shall be disregarded; (iii) the fact that benefits under the plan may be payable to certain employees be- fore normal retirement age shall be dis- regarded; and (iv) social security benefits and all other relevant factors used to compute benefits shall be treated as remaining constant as of the current year for all years after the current year. (C) Fractional rule A defined benefits plan satisfies the re- quirements of this paragraph if the accrued benefit to which any participant is entitled upon his separation from the service is not less than a fraction of the annual benefit commencing at normal retirement age to which he would be entitled under the plan as in effect on the date of his separation if he continued to earn annually until normal re- tirement age the same rate of compensation upon which his normal retirement benefit would be computed under the plan, deter- mined as if he had attained normal retire- ment age on the date on which any such de- termination is made (but taking into ac- count no more than the 10 years of service immediately preceding his separation from service). Such fraction shall be a fraction, not exceeding 1, the numerator of which is the total number of his years of participa- tion in the plan (as of the date of his separa- tion from the service) and the denominator of which is the total number of years he would have participated in the plan if he separated from the service at the normal re- tirement age. For purposes of this subpara- graph, social security benefits and all other relevant factors used to compute benefits shall be treated as remaining constant as of the current year for all years after such cur- rent year. (D) Accrual for service before effective date Subparagraphs (A), (B), and (C) shall not apply with respect to years of participation before the first plan year to which this sec- tion applies, but a defined benefit plan satis- fies the requirements of this subparagraph with respect to such years of participation only if the accrued benefit of any partici- pant with respect to such years of participa- tion is not less than the greater of— (i) his accrued benefit determined under the plan, as in effect from time to time prior to September 2, 1974, or (ii) an accrued benefit which is not less than one-half of the accrued benefit to which such participant would have been entitled if subparagraph (A), (B), or (C) ap- plied with respect to such years of partici- pation. (E) First two years of service Notwithstanding subparagraphs (A), (B), and (C) of this paragraph, a plan shall not be treated as not satisfying the requirements of this paragraph solely because the accrual of benefits under the plan does not become ef- fective until the employee has two contin- uous years of service. For purposes of this subparagraph, the term ‘‘years of service’’ has the meaning provided by section 410(a)(3)(A). (F) Certain insured defined benefit plans Notwithstanding subparagraphs (A), (B), and (C), a defined benefit plan satisfies the requirements of this paragraph if such plan— (i) is funded exclusively by the purchase of insurance contracts, and (ii) satisfies the requirements of sub- paragraphs (B) and (C) of section 412(e)(3) (relating to certain insurance contract plans), but only if an employee’s accrued benefit as of any applicable date is not less than the cash surrender value his insurance contracts would have on such applicable date if the re- quirements of subparagraphs (D), (E), and (F) of section 412(e)(3) were satisfied. (G) Accrued benefit may not decrease on ac- count of increasing age or service Notwithstanding the preceding subpara- graphs, a defined benefit plan shall be treat- ed as not satisfying the requirements of this paragraph if the participant’s accrued ben- efit is reduced on account of any increase in his age or service. The preceding sentence shall not apply to benefits under the plan commencing before entitlement to benefits payable under title II of the Social Security Act which benefits under the plan— (i) do not exceed such social security benefits, and (ii) terminate when such social security benefits commence. (H) Continued accrual beyond normal retire- ment age (i) In general Notwithstanding the preceding subpara- graphs, a defined benefit plan shall be treated as not satisfying the requirements of this paragraph if, under the plan, an em- ployee’s benefit accrual is ceased, or the rate of an employee’s benefit accrual is re- duced, because of the attainment of any age. (ii) Certain limitations permitted A plan shall not be treated as failing to meet the requirements of this subpara- Page 1366 TITLE 26—INTERNAL REVENUE CODE § 411 graph solely because the plan imposes (without regard to age) a limitation on the amount of benefits that the plan provides or a limitation on the number of years of service or years of participation which are taken into account for purposes of deter- mining benefit accrual under the plan. (iii) Adjustments under plan for delayed re- tirement taken into account In the case of any employee who, as of the end of any plan year under a defined benefit plan, has attained normal retire- ment age under such plan— (I) if distribution of benefits under such plan with respect to such employee has commenced as of the end of such plan year, then any requirement of this subparagraph for continued accrual of benefits under such plan with respect to such employee during such plan year shall be treated as satisfied to the extent of the actuarial equivalent of inservice distribution of benefits, and (II) if distribution of benefits under such plan with respect to such employee has not commenced as of the end of such year in accordance with section 401(a)(14)(C), and the payment of benefits under such plan with respect to such em- ployee is not suspended during such plan year pursuant to subsection (a)(3)(B), then any requirement of this subpara- graph for continued accrual of benefits under such plan with respect to such em- ployee during such plan year shall be treated as satisfied to the extent of any adjustment in the benefit payable under the plan during such plan year attrib- utable to the delay in the distribution of benefits after the attainment of normal retirement age. The preceding provisions of this clause shall apply in accordance with regulations of the Secretary. Such regulations may provide for the application of the pre- ceding provisions of this clause, in the case of any such employee, with respect to any period of time within a plan year. (iv) Disregard of subsidized portion of early retirement benefit A plan shall not be treated as failing to meet the requirements of clause (i) solely because the subsidized portion of any early retirement benefit is disregarded in deter- mining benefit accruals. (v) Coordination with other requirements The Secretary shall provide by regula- tion for the coordination of the require- ments of this subparagraph with the re- quirements of subsection (a), sections 404, 410, and 415, and the provisions of this sub- chapter precluding discrimination in favor of highly compensated employees. (2) Defined contribution plans (A) In general A defined contribution plan satisfies the requirements of this paragraph if, under the plan, allocations to the employee’s account are not ceased, and the rate at which amounts are allocated to the employee’s ac- count is not reduced, because of the attain- ment of any age. (B) Application to target benefit plans The Secretary shall provide by regulation for the application of the requirements of this paragraph to target benefit plans. (C) Coordination with other requirements The Secretary may provide by regulation for the coordination of the requirements of this paragraph with the requirements of sub- section (a), sections 404, 410, and 415, and the provisions of this subchapter precluding dis- crimination in favor of highly compensated employees. (3) Separate accounting required in certain cases A plan satisfies the requirements of this paragraph if— (A) in the case of the defined benefit plan, the plan requires separate accounting for the portion of each employee’s accrued ben- efit derived from any voluntary employee contributions permitted under the plan; and (B) in the case of any plan which is not a defined benefit plan, the plan requires sepa- rate accounting for each employee’s accrued benefit. (4) Year of participation (A) Definition For purposes of determining an employee’s accrued benefit, the term ‘‘year of participa- tion’’ means a period of service (beginning at the earliest date on which the employee is a participant in the plan and which is included in a period of service required to be taken into account under section 410(a)(5), deter- mined without regard to section 410(a)(5)(E)) as determined under regulations prescribed by the Secretary of Labor which provide for the calculation of such period on any reason- able and consistent basis. (B) Less than full time service For purposes of this paragraph, except as provided in subparagraph (C), in the case of any employee whose customary employment is less than full time, the calculation of such employee’s service on any basis which pro- vides less than a ratable portion of the ac- crued benefit to which he would be entitled under the plan if his customary employment were full time shall not be treated as made on a reasonable and consistent basis. (C) Less than 1,000 hours of service during year For purposes of this paragraph, in the case of any employee whose service is less than 1,000 hours during any calendar year, plan year or other 12-consecutive month period designated by the plan (and not prohibited under regulations prescribed by the Sec- retary of Labor) the calculation of his period of service shall not be treated as not made on a reasonable and consistent basis solely because such service is not taken into ac- count. Page 1367 TITLE 26—INTERNAL REVENUE CODE § 411 1 So in original. Probably should be ‘‘similar account’’. (D) Seasonal industries In the case of any seasonal industry where the customary period of employment is less than 1,000 hours during a calendar year, the term ‘‘year of participation’’ shall be such period as determined under regulations pre- scribed by the Secretary of Labor. (E) Maritime industries For purposes of this subsection, in the case of any maritime industry, 125 days of service shall be treated as a year of participation. The Secretary of Labor may prescribe regu- lations to carry out the purposes of this sub- paragraph. (5) Special rules relating to age (A) Comparison to similarly situated younger individual (i) In general A plan shall not be treated as failing to meet the requirements of paragraph (1)(H)(i) if a participant’s accrued benefit, as determined as of any date under the terms of the plan, would be equal to or greater than that of any similarly situ- ated, younger individual who is or could be a participant. (ii) Similarly situated For purposes of this subparagraph, a par- ticipant is similarly situated to any other individual if such participant is identical to such other individual in every respect (including period of service, compensation, position, date of hire, work history, and any other respect) except for age. (iii) Disregard of subsidized early retire- ment benefits In determining the accrued benefit as of any date for purposes of this subparagraph, the subsidized portion of any early retire- ment benefit or retirement-type subsidy shall be disregarded. (iv) Accrued benefit For purposes of this subparagraph, the accrued benefit may, under the terms of the plan, be expressed as an annuity pay- able at normal retirement age, the balance of a hypothetical account, or the current value of the accumulated percentage of the employee’s final average compensation. (B) Applicable defined benefit plans (i) Interest credits (I) In general An applicable defined benefit plan shall be treated as failing to meet the re- quirements of paragraph (1)(H) unless the terms of the plan provide that any interest credit (or an equivalent amount) for any plan year shall be at a rate which is not greater than a market rate of re- turn. A plan shall not be treated as fail- ing to meet the requirements of this sub- clause merely because the plan provides for a reasonable minimum guaranteed rate of return or for a rate of return that is equal to the greater of a fixed or vari- able rate of return. (II) Preservation of capital An applicable defined benefit plan shall be treated as failing to meet the re- quirements of paragraph (1)(H) unless the plan provides that an interest credit (or equivalent amount) of less than zero shall in no event result in the account balance or similar amount being less than the aggregate amount of contribu- tions credited to the account. (III) Market rate of return The Secretary may provide by regula- tion for rules governing the calculation of a market rate of return for purposes of subclause (I) and for permissible meth- ods of crediting interest to the account (including fixed or variable interest rates) resulting in effective rates of re- turn meeting the requirements of sub- clause (I). (ii) Special rule for plan conversions If, after June 29, 2005, an applicable plan amendment is adopted, the plan shall be treated as failing to meet the require- ments of paragraph (1)(H) unless the re- quirements of clause (iii) are met with re- spect to each individual who was a partici- pant in the plan immediately before the adoption of the amendment. (iii) Rate of benefit accrual Subject to clause (iv), the requirements of this clause are met with respect to any participant if the accrued benefit of the participant under the terms of the plan as in effect after the amendment is not less than the sum of— (I) the participant’s accrued benefit for years of service before the effective date of the amendment, determined under the terms of the plan as in effect before the amendment, plus (II) the participant’s accrued benefit for years of service after the effective date of the amendment, determined under the terms of the plan as in effect after the amendment. (iv) Special rules for early retirement sub- sidies For purposes of clause (iii)(I), the plan shall credit the accumulation account or similar amount 1 with the amount of any early retirement benefit or retirement- type subsidy for the plan year in which the participant retires if, as of such time, the participant has met the age, years of serv- ice, and other requirements under the plan for entitlement to such benefit or subsidy. (v) Applicable plan amendment For purposes of this subparagraph— (I) In general The term ‘‘applicable plan amend- ment’’ means an amendment to a defined benefit plan which has the effect of con- verting the plan to an applicable defined benefit plan. Page 1368 TITLE 26—INTERNAL REVENUE CODE § 411 (II) Special rule for coordinated benefits If the benefits of 2 or more defined ben- efit plans established or maintained by an employer are coordinated in such a manner as to have the effect of the adop- tion of an amendment described in sub- clause (I), the sponsor of the defined ben- efit plan or plans providing for such co- ordination shall be treated as having adopted such a plan amendment as of the date such coordination begins. (III) Multiple amendments The Secretary shall issue regulations to prevent the avoidance of the purposes of this subparagraph through the use of 2 or more plan amendments rather than a single amendment. (IV) Applicable defined benefit plan For purposes of this subparagraph, the term ‘‘applicable defined benefit plan’’ has the meaning given such term by sec- tion 411(a)(13). (vi) Termination requirements An applicable defined benefit plan shall not be treated as meeting the require- ments of clause (i) unless the plan provides that, upon the termination of the plan— (I) if the interest credit rate (or an equivalent amount) under the plan is a variable rate, the rate of interest used to determine accrued benefits under the plan shall be equal to the average of the rates of interest used under the plan dur- ing the 5-year period ending on the ter- mination date, and (II) the interest rate and mortality table used to determine the amount of any benefit under the plan payable in the form of an annuity payable at normal re- tirement age shall be the rate and table specified under the plan for such purpose as of the termination date, except that if such interest rate is a variable rate, the interest rate shall be determined under the rules of subclause (I). (C) Certain offsets permitted A plan shall not be treated as failing to meet the requirements of paragraph (1)(H)(i) solely because the plan provides offsets against benefits under the plan to the extent such offsets are otherwise allowable in ap- plying the requirements of section 401(a). (D) Permitted disparities in plan contribu- tions or benefits A plan shall not be treated as failing to meet the requirements of paragraph (1)(H) solely because the plan provides a disparity in contributions or benefits with respect to which the requirements of section 401(l) are met. (E) Indexing permitted (i) In general A plan shall not be treated as failing to meet the requirements of paragraph (1)(H) solely because the plan provides for index- ing of accrued benefits under the plan. (ii) Protection against loss Except in the case of any benefit pro- vided in the form of a variable annuity, clause (i) shall not apply with respect to any indexing which results in an accrued benefit less than the accrued benefit deter- mined without regard to such indexing. (iii) Indexing For purposes of this subparagraph, the term ‘‘indexing’’ means, in connection with an accrued benefit, the periodic ad- justment of the accrued benefit by means of the application of a recognized invest- ment index or methodology. (F) Early retirement benefit or retirement- type subsidy For purposes of this paragraph, the terms ‘‘early retirement benefit’’ and ‘‘retirement- type subsidy’’ have the meaning given such terms in subsection (d)(6)(B)(i). (G) Benefit accrued to date For purposes of this paragraph, any ref- erence to the accrued benefit shall be a ref- erence to such benefit accrued to date. (6) Projected interest crediting rate For purposes of subparagraphs (A), (B), and (C) of paragraph (1), in the case of an applica- ble defined benefit plan (as defined in sub- section (a)(13)(C)) which provides variable in- terest crediting rates, the interest crediting rate which is treated as in effect and as the projected interest crediting rate shall be a rea- sonable projection of such variable interest crediting rate, not to exceed 6 percent. (c) Allocation of accrued benefits between em- ployer and employee contributions (1) Accrued benefit derived from employer con- tributions For purposes of this section, an employee’s accrued benefit derived from employer con- tributions as of any applicable date is the ex- cess, if any, of the accrued benefit for such employee as of such applicable date over the accrued benefit derived from contributions made by such employee as of such date. (2) Accrued benefit derived from employee contributions (A) Plans other than defined benefit plans In the case of a plan other than a defined benefit plan, the accrued benefit derived from contributions made by an employee as of any applicable date is— (i) except as provided in clause (ii), the balance of the employee’s separate ac- count consisting only of his contributions and the income, expenses, gains, and losses attributable thereto, or (ii) if a separate account is not main- tained with respect to an employee’s con- tributions under such a plan, the amount which bears the same ratio to his total ac- crued benefit as the total amount of the employee’s contributions (less with- drawals) bears to the sum of such con- tributions and the contributions made on his behalf by the employer (less with- drawals). Page 1369 TITLE 26—INTERNAL REVENUE CODE § 411 (B) Defined benefit plans In the case of a defined benefit plan, the accrued benefit derived from contributions made by an employee as of any applicable date is the amount equal to the employee’s accumulated contributions expressed as an annual benefit commencing at normal re- tirement age, using an interest rate which would be used under the plan under section 417(e)(3) (as of the determination date). (C) Definition of accumulated contributions For purposes of this subsection, the term ‘‘accumulated contribution’’ means the total of— (i) all mandatory contributions made by the employee, (ii) interest (if any) under the plan to the end of the last plan year to which sub- section (a)(2) does not apply (by reason of the applicable effective date), and (iii) interest on the sum of the amounts determined under clauses (i) and (ii) com- pounded annually— (I) at the rate of 120 percent of the Fed- eral mid-term rate (as in effect under section 1274 for the 1st month of a plan year) for the period beginning with the 1st plan year to which subsection (a)(2) applies (by reason of the applicable effec- tive date) and ending with the date on which the determination is being made, and (II) at the interest rate which would be used under the plan under section 417(e)(3) (as of the determination date) for the period beginning with the deter- mination date and ending on the date on which the employee attains normal re- tirement age. For purposes of this subparagraph, the term ‘‘mandatory contributions’’ means amounts contributed to the plan by the employee which are required as a condition of employ- ment, as a condition of participation in such plan, or as a condition of obtaining benefits under the plan attributable to employer con- tributions. (D) Adjustments The Secretary is authorized to adjust by regulation the conversion factor described in subparagraph (B) from time to time as he may deem necessary. No such adjustment shall be effective for a plan year beginning before the expiration of 1 year after such ad- justment is determined and published. (3) Actuarial adjustment For purposes of this section, in the case of any defined benefit plan, if an employee’s ac- crued benefit is to be determined as an amount other than an annual benefit com- mencing at normal retirement age, or if the accrued benefit derived from contributions made by an employee is to be determined with respect to a benefit other than an annual ben- efit in the form of a single life annuity (with- out ancillary benefits) commencing at normal retirement age, the employee’s accrued ben- efit, or the accrued benefits derived from con- tributions made by an employee, as the case may be, shall be the actuarial equivalent of such benefit or amount determined under paragraph (1) or (2). (d) Special rules (1) Coordination with section 401(a)(4) A plan which satisfies the requirements of this section shall be treated as satisfying any vesting requirements resulting from the appli- cation of section 401(a)(4) unless— (A) there has been a pattern of abuse under the plan (such as a dismissal of employees before their accrued benefits become non- forfeitable) tending to discriminate in favor of employees who are highly compensated employees (within the meaning of section 414(q)), or (B) there have been, or there is reason to believe there will be, an accrual of benefits or forfeitures tending to discriminate in favor of employees who are highly com- pensated employees (within the meaning of section 414(q)). (2) Prohibited discrimination Subsection (a) shall not apply to benefits which may not be provided for designated em- ployees in the event of early termination of the plan under provisions of the plan adopted pursuant to regulations prescribed by the Sec- retary to preclude the discrimination prohib- ited by section 401(a)(4). (3) Termination or partial termination; dis- continuance of contributions Notwithstanding the provisions of sub- section (a), a trust shall not constitute a qualified trust under section 401(a) unless the plan of which such trust is a part provides that— (A) upon its termination or partial termi- nation, or (B) in the case of a plan to which section 412 does not apply, upon complete dis- continuance of contributions under the plan, the rights of all affected employees to benefits accrued to the date of such termination, par- tial termination, or discontinuance, to the ex- tent funded as of such date, or the amounts credited to the employees’ accounts, are non- forfeitable. This paragraph shall not apply to benefits or contributions which, under provi- sions of the plan adopted pursuant to regula- tions prescribed by the Secretary to preclude the discrimination prohibited by section 401(a)(4), may not be used for designated em- ployees in the event of early termination of the plan. For purposes of this paragraph, in the case of the complete discontinuance of contributions under a profit-sharing or stock bonus plan, such plan shall be treated as hav- ing terminated on the day on which the plan administrator notifies the Secretary (in ac- cordance with regulations) of the discontinu- ance. [(4) Repealed. Pub. L. 99–514, title XI, § 1113(b), Oct. 22, 1986, 100 Stat. 2447] (5) Treatment of voluntary employee contribu- tions In the case of a defined benefit plan which permits voluntary employee contributions, Page 1370 TITLE 26—INTERNAL REVENUE CODE § 411 the portion of an employee’s accrued benefit derived from such contributions shall be treat- ed as an accrued benefit derived from em- ployee contributions under a plan other than a defined benefit plan. (6) Accrued benefit not to be decreased by amendment (A) In general A plan shall be treated as not satisfying the requirements of this section if the ac- crued benefit of a participant is decreased by an amendment of the plan, other than an amendment described in section 412(d)(2), or section 4281 of the Employee Retirement In- come Security Act of 1974. (B) Treatment of certain plan amendments For purposes of subparagraph (A), a plan amendment which has the effect of— (i) eliminating or reducing an early re- tirement benefit or a retirement-type sub- sidy (as defined in regulations), or (ii) eliminating an optional form of ben- efit, with respect to benefits attributable to serv- ice before the amendment shall be treated as reducing accrued benefits. In the case of a retirement-type subsidy, the preceding sen- tence shall apply only with respect to a par- ticipant who satisfies (either before or after the amendment) the preamendment condi- tions for the subsidy. The Secretary shall by regulations provide that this subparagraph shall not apply to any plan amendment which reduces or eliminates benefits or sub- sidies which create significant burdens or complexities for the plan and plan partici- pants, unless such amendment adversely af- fects the rights of any participant in a more than de minimis manner. The Secretary may by regulations provide that this subpara- graph shall not apply to a plan amendment described in clause (ii) (other than a plan amendment having an effect described in clause (i)). (C) Special rule for ESOPS For purposes of this paragraph, any— (i) tax credit employee stock ownership plan (as defined in section 409(a)), or (ii) employee stock ownership plan (as defined in section 4975(e)(7)), shall not be treated as failing to meet the requirements of this paragraph merely be- cause it modifies distribution options in a nondiscriminatory manner. (D) Plan transfers (i) In general A defined contribution plan (in this sub- paragraph referred to as the ‘‘transferee plan’’) shall not be treated as failing to meet the requirements of this subsection merely because the transferee plan does not provide some or all of the forms of dis- tribution previously available under an- other defined contribution plan (in this subparagraph referred to as the ‘‘trans- feror plan’’) to the extent that— (I) the forms of distribution previously available under the transferor plan ap- plied to the account of a participant or beneficiary under the transferor plan that was transferred from the transferor plan to the transferee plan pursuant to a direct transfer rather than pursuant to a distribution from the transferor plan, (II) the terms of both the transferor plan and the transferee plan authorize the transfer described in subclause (I), (III) the transfer described in subclause (I) was made pursuant to a voluntary election by the participant or bene- ficiary whose account was transferred to the transferee plan, (IV) the election described in subclause (III) was made after the participant or beneficiary received a notice describing the consequences of making the election, and (V) the transferee plan allows the par- ticipant or beneficiary described in sub- clause (III) to receive any distribution to which the participant or beneficiary is entitled under the transferee plan in the form of a single sum distribution. (ii) Special rule for mergers, etc. Clause (i) shall apply to plan mergers and other transactions having the effect of a direct transfer, including consolidations of benefits attributable to different em- ployers within a multiple employer plan. (E) Elimination of form of distribution Except to the extent provided in regula- tions, a defined contribution plan shall not be treated as failing to meet the require- ments of this section merely because of the elimination of a form of distribution pre- viously available thereunder. This subpara- graph shall not apply to the elimination of a form of distribution with respect to any par- ticipant unless— (i) a single sum payment is available to such participant at the same time or times as the form of distribution being elimi- nated, and (ii) such single sum payment is based on the same or greater portion of the partici- pant’s account as the form of distribution being eliminated. (e) Application of vesting standards to certain plans (1) The provisions of this section (other than paragraph (2)) shall not apply to— (A) a governmental plan (within the mean- ing of section 414(d)), (B) a church plan (within the meaning of section 414(e)) with respect to which the elec- tion provided by section 410(d) has not been made, (C) a plan which has not, at any time after September 2, 1974, provided for employer con- tributions, and (D) a plan established and maintained by a society, order, or association described in sec- tion 501(c)(8) or (9), if no part of the contribu- tions to or under such plan are made by em- ployers of participants in such plan. (2) A plan described in paragraph (1) shall be treated as meeting the requirements of this sec- Page 1371 TITLE 26—INTERNAL REVENUE CODE § 411 tion, for purposes of section 401(a), if such plan meets the vesting requirements resulting from the application of sections 401(a)(4) and 401(a)(7) as in effect on September 1, 1974. (f) Special rule for determining normal retire- ment age for certain existing defined benefit plans (1) In general Notwithstanding subsection (a)(8), an appli- cable plan shall not be treated as failing to meet any requirement of this subchapter, or as failing to have a uniform normal retirement age for purposes of this subchapter, solely be- cause the plan provides for a normal retire- ment age described in paragraph (2). (2) Applicable plan For purposes of this subsection— (A) In general The term ‘‘applicable plan’’ means a de- fined benefit plan the terms of which, on or before December 8, 2014, provided for a nor- mal retirement age which is the earlier of— (i) an age otherwise permitted under sub- section (a)(8), or (ii) the age at which a participant com- pletes the number of years (not less than 30 years) of benefit accrual service speci- fied by the plan. A plan shall not fail to be treated as an ap- plicable plan solely because the normal re- tirement age described in the preceding sen- tence only applied to certain participants or only applied to employees of certain employ- ers in the case of a plan maintained by more than 1 employer. (B) Expanded application Subject to subparagraph (C), if, after De- cember 8, 2014, an applicable plan is amended to expand the application of the normal re- tirement age described in subparagraph (A) to additional participants or to employees of additional employers maintaining the plan, such plan shall also be treated as an applica- ble plan with respect to such participants or employees. (C) Limitation on expanded application A defined benefit plan shall be an applica- ble plan only with respect to an individual who— (i) is a participant in the plan on or be- fore January 1, 2017, or (ii) is an employee at any time on or be- fore January 1, 2017, of any employer maintaining the plan, and who becomes a participant in such plan after such date. (Added Pub. L. 93–406, title II, § 1012(a), Sept. 2, 1974, 88 Stat. 901; amended Pub. L. 94–455, title XIX, §§ 1901(a)(62), 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1774, 1834; Pub. L. 96–364, title II, § 206, Sept. 26, 1980, 94 Stat. 1287; Pub. L. 98–397, title II, § 202(b), (c), (d)(2), (e)(2), (3), (f), 205, title III, § 301(a)(1), Aug. 23, 1984, 98 Stat. 1437, 1439, 1440, 1449, 1450; Pub. L. 99–509, title IX, §§ 9202(b), 9203(b)(2), Oct. 21, 1986, 100 Stat. 1977, 1979; Pub. L. 99–514, title XI, §§ 1113(a), (b), (d)(B), 1114(b)(10), 1139(a), title XVIII, § 1898(a)(1)(A), (4)(A), (d)(1)(A), (2)(A), (f)(1)(A), Oct. 22, 1986, 100 Stat. 2446, 2447, 2451, 2487, 2941, 2943, 2955, 2956; Pub. L. 100–203, title IX, § 9346(b), Dec. 22, 1987, 101 Stat. 1330–374; Pub. L. 100–647, title I, § 1018(t)(8)(B), Nov. 10, 1988, 102 Stat. 3589; Pub. L. 101–239, title VII, §§ 7861(a)(5)(A), (6)(A), 7871(a)(1), (2), (b)(1), 7881(m)(1), Dec. 19, 1989, 103 Stat. 2430, 2435, 2443; Pub. L. 102–318, title V, § 521(b)(44), July 3, 1992, 106 Stat. 313; Pub. L. 103–465, title VII, § 767(a)(1), Dec. 8, 1994, 108 Stat. 5037; Pub. L. 104–188, title I, § 1442(a), Aug. 20, 1996, 110 Stat. 1808; Pub. L. 105–34, title X, § 1071(a)(1), (2)(A), Aug. 5, 1997, 111 Stat. 948; Pub. L. 107–16, title VI, §§ 633(a), 645(a)(1), (b)(1), 648(a)(1), June 7, 2001, 115 Stat. 115, 123, 125, 127; Pub. L. 108–311, title IV, § 408(a)(14), Oct. 4, 2004, 118 Stat. 1192; Pub. L. 109–280, title I, § 114(b), title VII, 701(b), title IX, §§ 902(d)(2)(A), (B), 904(a), Aug. 17, 2006, 120 Stat. 853, 984, 1038, 1048; Pub. L. 110–458, title I, §§ 101(d)(2)(D), 107(b), 109(b)(2), Dec. 23, 2008, 122 Stat. 5099, 5107, 5111; Pub. L. 113–235, div. P, § 2(b), Dec. 16, 2014, 128 Stat. 2828; Pub. L. 115–141, div. U, title IV, § 401(a)(82), (b)(19), Mar. 23, 2018, 132 Stat. 1188, 1202; Pub. L. 117–328, div. T, title III, §§ 304(a), 348(a), Dec. 29, 2022, 136 Stat. 5341, 5385.) Editorial Notes REFERENCES IN TEXT Section 4281 of the Employee Retirement Income Se- curity Act of 1974, referred to in subsecs. (a)(3)(F)(i), (ii) and (d)(6)(A), is classified to section 1441 of Title 29, Labor. Section 4203 of the Employee Retirement Income Se- curity Act of 1974, referred to in subsec. (a)(4)(G)(i)(I), is classified to section 1383 of Title 29, Labor. Section 4205(b)(2)(A)(i) of such Act, referred to in sub- sec. (a)(4)(G)(i)(II), is classified to section 1385(b)(2)(A)(i) of Title 29, Labor. Section 4048 of such Act, referred to in subsec. (a)(4)(G)(ii), is classified to section 1348 of Title 29, Labor. The Social Security Act, referred to in subsecs. (a)(9) and (b)(1)(G), is act Aug. 14, 1935, ch. 531, 49 Stat. 620. Title II of the Social Security Act is classified gen- erally to subchapter II (§ 401 et seq.) of Title 42, The Public Health and Welfare. For complete classification of this Act to the Code, see section 1305 of Title 42 and Tables. AMENDMENTS 2022—Subsec. (a)(11)(A). Pub. L. 117–328, § 304(a), sub- stituted ‘‘$7,000’’ for ‘‘$5,000’’. Subsec. (b)(6). Pub. L. 117–328, § 348(a), added par. (6). 2018—Subsec. (a)(3)(F)(i). Pub. L. 115–141, § 401(b)(19), struck out ‘‘under section 418D or’’ before ‘‘under sec- tion 4281’’. Subsec. (a)(4)(A). Pub. L. 115–141, § 401(a)(82), sub- stituted semicolon for comma at end. 2014—Subsec. (f). Pub. L. 113–235 added subsec. (f). 2008—Subsec. (a)(3)(C). Pub. L. 110–458, § 101(d)(2)(D)(i), substituted ‘‘section 412(d)(2)’’ for ‘‘section 412(c)(2)’’. Subsec. (a)(3)(G). Pub. L. 110–458, § 109(b)(2), sub- stituted ‘‘permissible withdrawal’’ for ‘‘erroneous auto- matic contribution’’ in heading and ‘‘a permissible withdrawal’’ for ‘‘an erroneous automatic contribu- tion’’ in text. Subsec. (a)(13)(A). Pub. L. 110–458, § 107(b)(2), sub- stituted ‘‘subparagraph (B)’’ for ‘‘paragraph (2)’’ in cl. (i) and ‘‘subparagraph (C)’’ for paragraph (3) in con- cluding provisions, added cl. (ii), and struck out former cl. (ii) which read as follows: ‘‘the requirements of sub- section (c) or section 417(e) with respect to contribu- tions other than employee contributions,’’. Subsec. (b)(5)(A)(iii). Pub. L. 110–458, § 107(b)(1)(A), substituted ‘‘subparagraph’’ for ‘‘clause’’. Page 1372 TITLE 26—INTERNAL REVENUE CODE § 411 Subsec. (b)(5)(B)(i)(II). Pub. L. 110–458, § 107(b)(3), amended subcl. (II) generally. Prior to amendment, text read as follows: ‘‘An interest credit (or an equiva- lent amount) of less than zero shall in no event result in the account balance or similar amount being less than the aggregate amount of contributions credited to the account.’’ Subsec. (b)(5)(C). Pub. L. 110–458, § 107(b)(1)(B), in- serted ‘‘otherwise’’ before ‘‘allowable’’. Subsec. (d)(6)(A). Pub. L. 110–458, § 101(d)(2)(D)(ii), sub- stituted ‘‘section 412(d)(2)’’ for ‘‘section 412(e)(2)’’. 2006—Subsec. (a)(2). Pub. L. 109–280, § 904(a)(1), reen- acted heading without change and amended text of par. (2) generally, substituting provisions relating to vest- ing requirements under defined benefit plans and de- fined contribution plans for provisions relating to 5- year vesting and 3 to 7 year vesting under all plans. Subsec. (a)(3)(C). Pub. L. 109–280, § 114(b)(1), sub- stituted ‘‘412(c)(2)’’ for ‘‘412(c)(8)’’. Subsec. (a)(3)(G). Pub. L. 109–280, § 902(d)(2)(A), (B), in- serted ‘‘or erroneous automatic contribution’’ after ‘‘or contribution’’ in heading and ‘‘an erroneous automatic contribution under section 414(w),’’ after ‘‘402(g)(2)(A),’’ in text. Subsec. (a)(12). Pub. L. 109–280, § 904(a)(2), struck out par. (12), which related to faster vesting for matching contributions by employers. Subsec. (a)(13). Pub. L. 109–280, § 701(b)(2), added par. (13). Subsec. (b)(1)(F). Pub. L. 109–280, § 114(b)(2), sub- stituted ‘‘subparagraphs (B) and (C) of section 412(e)(3)’’ for ‘‘paragraphs (2) and (3) of section 412(i)’’ in cl. (ii) and ‘‘subparagraphs (D), (E), and (F) of section 412(e)(3)’’ for ‘‘paragraphs (4), (5), and (6) of section 412(i)’’ in concluding provisions. Subsec. (b)(5). Pub. L. 109–280, § 701(b)(1), added par. (5). Subsec. (d)(6)(A). Pub. L. 109–280, § 114(b)(3), sub- stituted ‘‘412(e)(2)’’ for ‘‘412(c)(8)’’. 2004—Subsec. (a)(12)(B). Pub. L. 108–311 substituted ‘‘6 or more’’ for ‘‘6’’ in table. 2001—Subsec. (a)(2). Pub. L. 107–16, § 633(a)(1), sub- stituted ‘‘Except as provided in paragraph (12), a plan’’ for ‘‘A plan’’ in introductory provisions. Subsec. (a)(11)(D). Pub. L. 107–16, § 648(a)(1), added subpar. (D). Subsec. (a)(12). Pub. L. 107–16, § 633(a)(2), added par. (12). Subsec. (d)(6)(B). Pub. L. 107–16, § 645(b)(1), inserted after second sentence ‘‘The Secretary shall by regula- tions provide that this subparagraph shall not apply to any plan amendment which reduces or eliminates bene- fits or subsidies which create significant burdens or complexities for the plan and plan participants, unless such amendment adversely affects the rights of any participant in a more than de minimis manner.’’ Subsec. (d)(6)(D), (E). Pub. L. 107–16, § 645(a)(1), added subpars. (D) and (E). 1997—Subsec. (a)(7)(B)(i). Pub. L. 105–34, § 1071(a)(2)(A), substituted ‘‘the dollar limit under section 411(a)(11)(A)’’ for ‘‘$3,500’’. Subsec. (a)(11)(A). Pub. L. 105–34, § 1071(a)(1), sub- stituted ‘‘$5,000’’ for ‘‘$3,500’’. 1996—Subsec. (a)(2). Pub. L. 104–188 substituted ‘‘sub- paragraph (A) or (B)’’ for ‘‘subparagraph (A), (B), or (C)’’ in introductory provisions and struck out subpar. (C) which read as follows: ‘‘MULTIEMPLOYER PLANS.—A plan satisfies the requirements of this subparagraph if— ‘‘(i) the plan is a multiemployer plan (within the meaning of section 414(f)), and ‘‘(ii) under the plan— ‘‘(I) an employee who is covered pursuant to a collective bargaining agreement described in sec- tion 414(f)(1)(B) and who has completed at least 10 years of service has a nonforfeitable right to 100 percent of the employee’s accrued benefit derived from employer contributions, and ‘‘(II) the requirements of subparagraph (A) or (B) are met with respect to employees not described in subclause (I).’’ 1994—Subsec. (a)(11)(B). Pub. L. 103–465 reenacted sub- par. (B) heading without change and amended text gen- erally. Prior to amendment, text read as follows: ‘‘(i) IN GENERAL.—For purposes of subparagraph (A), the present value shall be calculated— ‘‘(I) by using an interest rate no greater than the applicable interest rate if the vested accrued benefit (using such rate) is not in excess of $25,000, and ‘‘(II) by using an interest rate no greater than 120 percent of the applicable interest rate if the vested accrued benefit exceeds $25,000 (as determined under subclause (I)). In no event shall the present value determined under subclause (II) be less than $25,000. ‘‘(ii) APPLICABLE INTEREST RATE.—For purposes of clause (i), the term ‘applicable interest rate’ means the interest rate which would be used (as of the date of the distribution) by the Pension Benefit Guaranty Corpora- tion for purposes of determining the present value of a lump sum distribution on plan termination.’’ 1992—Subsec. (d)(3). Pub. L. 102–318 inserted at end ‘‘For purposes of this paragraph, in the case of the com- plete discontinuance of contributions under a profit- sharing or stock bonus plan, such plan shall be treated as having terminated on the day on which the plan ad- ministrator notifies the Secretary (in accordance with regulations) of the discontinuance.’’ 1989—Subsec. (a)(3)(G). Pub. L. 101–239, § 7861(a)(5)(A), added subpar. (G). Subsec. (a)(4)(A). Pub. L. 101–239, § 7861(a)(6)(A), amended subpar. (A) generally. Prior to amendment, subpar. (A) read as follows: ‘‘years of service before age 18, except that in the case of a plan which does not sat- isfy subparagraph (A) or (B) of paragraph (2), the plan may not disregard any such year of service during which the employee was a participant;’’. Subsec. (a)(7)(D). Pub. L. 101–239, § 7881(m)(1)(D), added subpar. (D). Subsec. (a)(8)(B). Pub. L. 101–239, § 7871(b)(1), amended subpar. (B) generally. Prior to amendment, subpar. (B) read as follows: ‘‘the latest of— ‘‘(i) the time a plan participant attains age 65, ‘‘(ii) in the case of a plan participant who com- mences participation in the plan within 5 years be- fore attaining normal retirement age under the plan, the 5th anniversary of the time the plan participant commences participation in the plan, or ‘‘(iii) in the case of a plan participant not described in clause (ii), the 10th anniversary of the time the plan participant commences participation in the plan.’’ Subsec. (b)(2)(B). Pub. L. 101–239, § 7871(a)(1), redesig- nated subpar. (C) as (B) and struck out former subpar. (B) which read as follows: ‘‘DISREGARD OF SUBSIDIZED PORTION OF EARLY RETIREMENT BENEFIT.—A plan shall not be treated as failing to meet the requirements of subparagraph (A) solely because the subsidized portion of any early retirement benefit is disregarded in deter- mining benefit accruals.’’ Subsec. (b)(2)(C), (D). Pub. L. 101–239, § 7871(a)(1), (2), redesignated subpar. (D) as (C) and substituted ‘‘this paragraph’’ for ‘‘this subparagraph’’. Former subpar. (C) redesignated (B). Subsec. (c)(2)(B). Pub. L. 101–239, § 7881(m)(1)(B), amended subpar. (B) generally. Prior to amendment, subpar. (B) read as follows: ‘‘(i) IN GENERAL.—In the case of a defined benefit plan providing an annual benefit in the form of a single life annuity (without ancillary benefits) commencing at normal retirement age, the accrued benefit derived from contributions made by an employee as of any ap- plicable date is the annual benefit equal to the employ- ee’s accumulated contributions multiplied by the ap- propriate conversion factor. ‘‘(ii) APPROPRIATE CONVERSION FACTOR.—For purposes of clause (i), the term ‘appropriate conversion factor’ means the factor necessary to convert an amount equal to the accumulated contributions to a single life annu- ity (without ancillary benefits) commencing at normal retirement age and shall be 10 percent for a normal re- Page 1373 TITLE 26—INTERNAL REVENUE CODE § 411 tirement age of 65 years. For other normal retirement ages the conversion factor shall be determined in ac- cordance with regulations prescribed by the Sec- retary.’’ Subsec. (c)(2)(C)(iii). Pub. L. 101–239, § 7881(m)(1)(A), amended cl. (iii) generally. Prior to amendment, cl. (iii) read as follows: ‘‘interest on the sum of the amounts determined under clauses (i) and (ii) com- pounded annually at the rate of 120 percent of the Fed- eral mid-term rate (as in effect under section 1274 for the 1st month of a plan year) from the beginning of the first plan year to which subsection (a)(2) applies (by reason of the applicable effective date) to the date upon which the employee would attain normal retirement age.’’ Subsec. (c)(2)(E). Pub. L. 101–239, § 7881(m)(1)(C), struck out subpar. (E) which read as follows: ‘‘LIMITA- TION.—The accrued benefit derived from employee con- tributions shall not exceed the greater of— ‘‘(i) the employee’s accrued benefit under the plan, or ‘‘(ii) the accrued benefit derived from employee contributions determined as though the amounts cal- culated under clauses (ii) and (iii) of subparagraph (C) were zero.’’ 1988—Subsec. (a)(11)(A). Pub. L. 100–647 substituted ‘‘nonforfeitable’’ for ‘‘vested’’. 1987—Subsec. (c)(2)(C)(iii). Pub. L. 100–203, § 9346(b)(1), substituted ‘‘120 percent of the Federal mid-term rate (as in effect under section 1274 for the 1st month of a plan year)’’ for ‘‘5 percent per annum’’. Subsec. (c)(2)(D). Pub. L. 100–203, § 9346(b)(2), struck out ‘‘, the rate of interest described in clause (iii) of subparagraph (C), or both’’ before ‘‘from time to time’’ in first sentence and struck out second sentence which read as follows: ‘‘The rate of interest described in clause (iii) of subparagraph (C), or both, from time to time as he may deem necessary. The rate of interest shall bear the relationship to 5 percent which the Sec- retary determines to be comparable to the relationship which the long-term money rates and investment yields for the last period of 10 calendar years ending at least 12 months before the beginning of the plan year bear to the long-term money rates and investment yields for the 10-calendar year period 1964 through 1973.’’ 1986—Subsec. (a). Pub. L. 99–514, § 1898(d)(1)(A)(ii), in- serted reference to par. (11) in introductory text. Pub. L. 99–509, § 9202(b)(3), substituted ‘‘subsection (b)(3), and also satisfies, in the case of a defined benefit plan, the requirements of subsection (b)(1) and, in the case of a defined contribution plan, the requirements of subsection (b)(2)’’ for ‘‘paragraph (2) of subsection (b), and in the case of a defined benefit plan, also satisfies the requirements of paragraph (1) of subsection (b)’’ in first sentence. Subsec. (a)(2). Pub. L. 99–514, § 1113(a), amended par. (2) generally, substituting provisions covering 5-year vesting, 3 to 7 year vesting, and multiemployer plans, for former provisions which had covered 10-year vest- ing, 5- to 15-year vesting, and the ‘‘rule of 45’’. Subsec. (a)(3)(D)(ii). Pub. L. 99–514, § 1898(a)(4)(A)(i), substituted last sentence for former last sentence which read as follows: ‘‘In the case of a defined con- tribution plan, the plan provision required under this clause may provide that such repayment must be made before the participant has any one-year break in serv- ice commencing after the withdrawal.’’ Subsec. (a)(7)(C). Pub. L. 99–514, § 1898(a)(4)(A)(ii), sub- stituted last sentence for former last sentence which read as follows: ‘‘In the case of a defined contribution plan, the plan provision required under this subpara- graph may provide that such repayment must be made before the participant has 5 consecutive 1-year breaks in service commencing after such withdrawal.’’ Subsec. (a)(8)(B). Pub. L. 99–509, § 9203(b)(2), amended subpar. (B) generally. Prior to amendment, subpar. (B) read as follows: ‘‘the latter of— ‘‘(i) the time a plan participant attains age 65, or ‘‘(ii) the 10th anniversary of the time a plan partici- pant commenced participation in the plan.’’ Subsec. (a)(10)(B). Pub. L. 99–514, § 1113(d)(B), sub- stituted ‘‘3 years’’ for ‘‘5 years’’. Subsec. (a)(11)(A). Pub. L. 99–514, § 1898(d)(1)(A)(i), amended subpar. (A) generally. Prior to amendment, subpar. (A) read as follows: ‘‘If the present value of any accrued benefit exceeds $3,500, such benefit shall not be treated as nonforfeitable if the plan provides that the present value of such benefit could be immediately dis- tributed without the consent of the participant.’’ Subsec. (a)(11)(B). Pub. L. 99–514, § 1139(a), amended subpar. (B) generally. Prior to amendment, subpar. (B) read as follows: ‘‘For purposes of subparagraph (A), the present value shall be calculated by using an interest rate not greater than the interest rate which would be used (as of the date of the distribution) by the Pension Benefit Guaranty Corporation for purposes of deter- mining the present value of a lump sum distribution on plan termination.’’ Subsec. (a)(11)(C). Pub. L. 99–514, § 1898(d)(2)(A), added subpar. (C). Subsec. (b)(1). Pub. L. 99–509, § 9202(b)(1), substituted ‘‘Defined benefit plans’’ for ‘‘General rules’’ in heading and added subpar. (H). Subsec. (b)(2) to (4). Pub. L. 99–509, § 9202(b)(2), added par. (2) and redesignated former pars. (2) and (3) as (3) and (4), respectively. Subsec. (d)(1)(A), (B). Pub. L. 99–514, § 1114(b)(10), sub- stituted ‘‘highly compensated employees (within the meaning of section 414(q))’’ for ‘‘officers, shareholders, or highly compensated’’. Subsec. (d)(4). Pub. L. 99–514, § 1113(b), repealed par. (4) which provided that a class year plan satisfied the requirements of subsec. (a)(2) if it provided that 100 per- cent of each employee’s right to or derived from the contributions of the employer on his behalf with re- spect to any plan year were nonforfeitable not later than the end of the 5th plan year following the plan year for which such contributions were made. Pub. L. 99–514, § 1898(a)(1)(A), substituted ‘‘Class- year’’ for ‘‘Class year’’ in heading and amended par. (4) generally. Prior to amendment, par. (4) read as follows: ‘‘The requirements of subsection (a)(2) shall be deemed to be satisfied in the case of a class year plan if such plan provides that 100 percent of each employee’s right to or derived from the contributions of the employer on his behalf with respect to any plan year are nonforfeit- able not later than the end of the 5th plan year fol- lowing the plan year for which such contributions were made. For purposes of this section, the term ‘class year plan’ means a profit-sharing, stock bonus, or money purchase plan which provides for the separate non- forfeitability of employees’ rights to or derived from the contributions for each plan year.’’ Subsec. (d)(6)(C). Pub. L. 99–514, § 1898(f)(1)(A), added subpar. (C). 1984—Subsec. (a)(4)(A). Pub. L. 98–397, § 202(b), sub- stituted ‘‘18’’ for ‘‘22’’. Subsec. (a)(6)(C). Pub. L. 98–397, § 202(c), substituted ‘‘5 consecutive 1-year breaks’’ for ‘‘1-year break’’, in heading, and in text substituted ‘‘5 consecutive 1-year breaks in service’’ for ‘‘any 1-year break in service’’ and ‘‘such 5-year period’’ for ‘‘such break’’ in two places. Subsec. (a)(6)(D). Pub. L. 98–397, § 202(d)(2), amended subpar. (D) generally. Subsec. (a)(6)(E). Pub. L. 98–397, § 202(e)(2), added sub- par. (E). Subsec. (a)(7)(B)(i). Pub. L. 98–397, § 205(b), substituted ‘‘$3,500’’ for ‘‘$1,750’’. Subsec. (a)(7)(C). Pub. L. 98–397, § 202(f), substituted ‘‘5 consecutive 1-year breaks in service’’ for ‘‘any one-year break in service’’. Subsec. (a)(11). Pub. L. 98–397, § 205(a), added par. (11). Subsec. (b)(3)(A). Pub. L. 98–397, § 202(e)(3), inserted ‘‘, determined without regard to section 410(a)(5)(E)’’. Subsec. (d)(6). Pub. L. 98–397, § 301(a)(1), designated ex- isting provisions as subpar. (A) and added subpar. (B). 1980—Subsec. (a). Pub. L. 96–364, § 206(1)–(4), in par. (3) added subpars. (E) and (F), and in par. (4) added subpar. (G). Page 1374 TITLE 26—INTERNAL REVENUE CODE § 411 Subsec. (d)(6). Pub. L. 96–364, § 206(5), inserted ref- erence to section 4281 of the Employee Retirement In- come Security Act of 1974. 1976—Subsec. (a). Pub. L. 94–455, §§ 1901(a)(62)(A)–(C), 1906(b)(13)(A), substituted ‘‘paragraph (8)’’ for ‘‘sub- section (a)(8)’’ in provisions preceding par. (1), sub- stituted references to Sept. 2, 1974, for references to the date of enactment of the Employee Retirement Income Security Act of 1974 in par. (3)(D)(iii), struck out ‘‘or his delegate’’ after ‘‘Secretary’’ in pars. (4)(C) and (7)(B), and substituted ‘‘(B)’’ for ‘‘(b)’’ in heading of par. (7)(C). Subsec. (b)(1)(D)(i). Pub. L. 94–455, § 1901(a)(62)(D), sub- stituted reference to Sept. 2, 1974, for reference to the date of enactment of the Employee Retirement Income Security Act of 1974. Subsecs. (c)(2)(B)(ii), (D), (d)(2), (3). Pub. L. 94–455, § 1906(b)(13)(A), struck out ‘‘or his delegate’’ after ‘‘Sec- retary’’. Subsec. (e)(1)(C). Pub. L. 94–455, § 1901(a)(62)(D), sub- stituted reference to Sept. 2, 1974, for reference to the date of enactment of the Employee Retirement Income Security Act of 1974. Subsec. (e)(2). Pub. L. 94–455, § 1901(a)(62)(E), sub- stituted reference to Sept. 1, 1974, for reference to the date before the date of enactment of the Employee Re- tirement Income Security Act of 1974. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2022 AMENDMENT Amendment by section 304(a) of Pub. L. 117–328 appli- cable to distributions made after Dec. 31, 2023, see sec- tion 304(b) of Pub. L. 117–328, set out as a note under section 401 of this title. Pub. L. 117–328, div. T, title III, § 348(c), Dec. 29, 2022, 136 Stat. 5385, provided that: ‘‘The amendments made by this section [amending this section and section 1054 of Title 29, Labor] shall apply with respect to plan years beginning after the date of enactment of this Act [Dec. 29, 2022].’’ EFFECTIVE DATE OF 2014 AMENDMENT Pub. L. 113–235, div. P, § 2(c), Dec. 16, 2014, 128 Stat. 2829, provided that: ‘‘The amendments made by this section [amending this section and section 1054 of Title 29, Labor] shall apply to all periods before, on, and after the date of enactment of this Act [Dec. 16, 2014].’’ EFFECTIVE DATE OF 2008 AMENDMENT Amendment by Pub. L. 110–458 effective as if included in the provisions of Pub. L. 109–280 to which the amend- ment relates, except as otherwise provided, see section 112 of Pub. L. 110–458, set out as a note under section 72 of this title. EFFECTIVE DATE OF 2006 AMENDMENT Amendment by section 114(b) of Pub. L. 109–280 appli- cable to plan years beginning after 2007, see section 114(g)(1) of Pub. L. 109–280, as added by Pub. L. 110–458, set out as a note under section 401 of this title. Pub. L. 109–280, title VII, § 701(e), Aug. 17, 2006, 120 Stat. 991, as amended by Pub. L. 110–458, title I, § 107(c)(2), Dec. 23, 2008, 122 Stat. 5107, provided that: ‘‘(1) IN GENERAL.—The amendments made by this sec- tion [amending this section and sections 623, 1053, and 1054 of Title 29, Labor] shall apply to periods beginning on or after June 29, 2005. ‘‘(2) PRESENT VALUE OF ACCRUED BENEFIT.—The amendments made by subsections (a)(2) and (b)(2) [amending this section and section 1053 of Title 29] shall apply to distributions made after the date of the enactment of this Act [Aug. 17, 2006]. ‘‘(3) VESTING AND INTEREST CREDIT REQUIREMENTS.—In the case of a plan in existence on June 29, 2005, the re- quirements of clause (i) of section 411(b)(5)(B) of the In- ternal Revenue Code of 1986, clause (i) of section 204(b)(5)(B) of the Employee Retirement Income Secu- rity Act of 1974 [29 U.S.C. 1054(b)(5)(B)], and clause (i) of section 4(i)(10)(B) of the Age Discrimination in Employ- ment Act of 1967 [29 U.S.C. 623(i)(10)(B)] (as added by this Act) and the requirements of 203(f)(2) of the Em- ployee Retirement Income Security Act of 1974 [29 U.S.C. 1053(f)(2)] and section 411(a)(13)(B) of the Internal Revenue Code of 1986 (as so added) shall, for purposes of applying the amendments made by subsections (a) and (b) [amending this section and sections 1053 and 1054 of Title 29], apply to years beginning after December 31, 2007, unless the plan sponsor elects the application of such requirements for any period on or after June 29, 2005, and before the first year beginning after December 31, 2007. ‘‘(4) SPECIAL RULE FOR COLLECTIVELY BARGAINED PLANS.—In the case of a plan maintained pursuant to 1 or more collective bargaining agreements between em- ployee representatives and 1 or more employers ratified on or before the date of the enactment of this Act [Aug. 17, 2006], the requirements described in paragraph (3) shall, for purposes of applying the amendments made by subsections (a) and (b) [amending this section and sections 1053 and 1054 of Title 29], not apply to plan years beginning before the earlier of— ‘‘(A) the later of— ‘‘(i) the date on which the last of such collective bargaining agreements terminates (determined without regard to any extension thereof on or after such date of enactment), or ‘‘(ii) January 1, 2008, or ‘‘(B) January 1, 2010. ‘‘(5) CONVERSIONS.—The requirements of clause (ii) of section 411(b)(5)(B) of the Internal Revenue Code of 1986, clause (ii) of section 204(b)(5)(B) of the Employee Retirement Income Security Act of 1974 [29 U.S.C. 1054(b)(5)(B)], and clause (ii) of section 4(i)(10)(B) of the Age Discrimination in Employment Act of 1967 [29 U.S.C. 623(i)(10)(B)] (as added by this Act), shall apply to plan amendments adopted on or after, and taking ef- fect on or after, June 29, 2005, except that the plan sponsor may elect to have such amendments apply to plan amendments adopted before, and taking effect on or after, such date. ‘‘(6) SPECIAL RULE FOR VESTING REQUIREMENTS.—The requirements of section 203(f)(2) of the Employee Re- tirement Income Security Act of 1974 [29 U.S.C. 1053(f)(2)] and section 411(a)(13)(B) of the Internal Rev- enue Code of 1986 (as added by this Act)— ‘‘(A) shall not apply to a participant who does not have an hour of service after the effective date of such requirements (as otherwise determined under this subsection); and ‘‘(B) in the case of a plan other than a plan de- scribed in paragraph (3) or (4), shall apply to plan years ending on or after June 29, 2005.’’ [Pub. L. 110–458, § 107(c)(2)(B)(i), which directed inser- tion of ‘‘the earlier of’’ after ‘‘before’’ in introductory provisions of section 701(e)(4) of Pub. L. 109–280, set out above, was executed by making the insertion after the second instance of ‘‘before’’ to reflect the probable in- tent of Congress.] Amendment by section 902(d)(2)(A), (B) of Pub. L. 109–280 applicable to plan years beginning after Dec. 31, 2007, see section 902(g) of Pub. L. 109–280, set out as a note under section 401 of this title. Pub. L. 109–280, title IX, § 904(c), Aug. 17, 2006, 120 Stat. 1050, provided that: ‘‘(1) IN GENERAL.—Except as provided in paragraphs (2) and (4), the amendments made by this section [amending this section and section 1053 of Title 29, Labor] shall apply to contributions for plan years be- ginning after December 31, 2006. ‘‘(2) COLLECTIVE BARGAINING AGREEMENTS.—In the case of a plan maintained pursuant to one or more col- lective bargaining agreements between employee rep- resentatives and one or more employers ratified before the date of the enactment of this Act [Aug. 17, 2006], the amendments made by this section shall not apply to contributions on behalf of employees covered by any such agreement for plan years beginning before the ear- lier of— Page 1375 TITLE 26—INTERNAL REVENUE CODE § 411 ‘‘(A) the later of— ‘‘(i) the date on which the last of such collective bargaining agreements terminates (determined without regard to any extension thereof on or after such date of the enactment); or ‘‘(ii) January 1, 2007; or ‘‘(B) January 1, 2009. ‘‘(3) SERVICE REQUIRED.—With respect to any plan, the amendments made by this section shall not apply to any employee before the date that such employee has 1 hour of service under such plan in any plan year to which the amendments made by this section apply. ‘‘(4) SPECIAL RULE FOR STOCK OWNERSHIP PLANS.—Not- withstanding paragraph (1) or (2), in the case of an em- ployee stock ownership plan (as defined in section 4975(e)(7) of the Internal Revenue Code of 1986) which had outstanding on September 26, 2005, a loan incurred for the purpose of acquiring qualifying employer secu- rities (as defined in section 4975(e)(8) of such Code), the amendments made by this section shall not apply to any plan year beginning before the earlier of— ‘‘(A) the date on which the loan is fully repaid, or ‘‘(B) the date on which the loan was, as of Sep- tember 26, 2005, scheduled to be fully repaid.’’ EFFECTIVE DATE OF 2001 AMENDMENT Pub. L. 107–16, title VI, § 633(c), June 7, 2001, 115 Stat. 116, provided that: ‘‘(1) IN GENERAL.—Except as provided in paragraph (2), the amendments made by this section [amending this section and section 1053 of Title 29, Labor] shall apply to contributions for plan years beginning after Decem- ber 31, 2001. ‘‘(2) COLLECTIVE BARGAINING AGREEMENTS.—In the case of a plan maintained pursuant to one or more col- lective bargaining agreements between employee rep- resentatives and one or more employers ratified by the date of the enactment of this Act [June 7, 2001], the amendments made by this section shall not apply to contributions on behalf of employees covered by any such agreement for plan years beginning before the ear- lier of— ‘‘(A) the later of— ‘‘(i) the date on which the last of such collective bargaining agreements terminates (determined without regard to any extension thereof on or after such date of the enactment); or ‘‘(ii) January 1, 2002; or ‘‘(B) January 1, 2006. ‘‘(3) SERVICE REQUIRED.—With respect to any plan, the amendments made by this section shall not apply to any employee before the date that such employee has 1 hour of service under such plan in any plan year to which the amendments made by this section apply.’’ Pub. L. 107–16, title VI, § 645(a)(3), June 7, 2001, 115 Stat. 125, provided that: ‘‘The amendments made by this subsection [amending this section and section 1054 of Title 29, Labor] shall apply to years beginning after December 31, 2001.’’ Pub. L. 107–16, title VI, § 648(c), June 7, 2001, 115 Stat. 128, provided that: ‘‘The amendments made by this sec- tion [amending this section, section 457 of this title, and section 1053 of Title 29, Labor] shall apply to dis- tributions after December 31, 2001.’’ EFFECTIVE DATE OF 1997 AMENDMENT Pub. L. 105–34, title X, § 1071(c), Aug. 5, 1997, 111 Stat. 948, provided that: ‘‘The amendments made by this sec- tion [amending this section, sections 417 and 457 of this title, and sections 1053 to 1055 of Title 29, Labor] shall apply to plan years beginning after the date of the en- actment of this Act [Aug. 5, 1997].’’ EFFECTIVE DATE OF 1996 AMENDMENT Pub. L. 104–188, title I, § 1442(c), Aug. 20, 1996, 110 Stat. 1808, provided that: ‘‘The amendments made by this section [amending this section and section 1053 of Title 29, Labor] shall apply to plan years beginning on or after the earlier of— ‘‘(1) the later of— ‘‘(A) January 1, 1997, or ‘‘(B) the date on which the last of the collective bargaining agreements pursuant to which the plan is maintained terminates (determined without re- gard to any extension thereof after the date of the enactment of this Act [Aug. 20, 1996]), or ‘‘(2) January 1, 1999. Such amendments shall not apply to any individual who does not have more than 1 hour of service under the plan on or after the 1st day of the 1st plan year to which such amendments apply.’’ EFFECTIVE DATE OF 1994 AMENDMENT Pub. L. 103–465, title VII, § 767(d), Dec. 8, 1994, 108 Stat. 5040, as amended by Pub. L. 104–188, title I, § 1449(a), Aug. 20, 1996, 110 Stat. 1813; Pub. L. 105–34, title XVI, § 1604(b)(3), Aug. 5, 1997, 111 Stat. 1097, provided that: ‘‘(1) IN GENERAL.—The amendments made by this sec- tion [amending this section, sections 415 and 417 of this title, and sections 1053 and 1055 of Title 29, Labor] shall apply to plan years and limitation years beginning after December 31, 1994; except that an employer may elect to treat the amendments made by this section as being effective on or after the date of the enactment of this Act [Dec. 8, 1994]. ‘‘(2) NO REDUCTION IN ACCRUED BENEFITS.—A partici- pant’s accrued benefit shall not be considered to be re- duced in violation of section 411(d)(6) of the Internal Revenue Code of 1986 or section 204(g) of the Employee Retirement Income Security Act of 1974 [29 U.S.C. 1054(g)] merely because (A) the benefit is determined in accordance with section 417(e)(3)(A) of such Code, as amended by this Act, or section 205(g)(3) of the Em- ployee Retirement Income Security Act of 1974 [29 U.S.C. 1055(g)(3)], as amended by this Act, or (B) the plan applies section 415(b)(2)(E) of such Code, as amend- ed by this Act. ‘‘(3) SECTION 415.— ‘‘(A) EXCEPTION.—A plan that was adopted and in effect before December 8, 1994, shall not be required to apply the amendments made by subsection (b) [amending section 415 of this title] with respect to benefits accrued before the earlier of— ‘‘(i) the later of the date a plan amendment apply- ing the amendments made by subsection (b) is adopted or made effective, or ‘‘(ii) the first day of the first limitation year be- ginning after December 31, 1999. Determinations under section 415(b)(2)(E) of the In- ternal Revenue Code of 1986 before such earlier date shall be made with respect to such benefits on the basis of such section as in effect on December 7, 1994, and the provisions of the plan as in effect on Decem- ber 7, 1994, but only if such provisions of the plan meet the requirements of such section (as so in ef- fect). ‘‘(B) TIMING OF PLAN AMENDMENT.—A plan that op- erates in accordance with the amendments made by subsection (b) shall not be treated as failing to sat- isfy section 401(a) of the Internal Revenue Code of 1986 or as not being operated in accordance with the provisions of the plan until such date as the Sec- retary of the Treasury provides merely because the plan has not been amended to include the amend- ments made by subsection (b).’’ EFFECTIVE DATE OF 1992 AMENDMENT Amendment by Pub. L. 102–318 applicable to distribu- tions after Dec. 31, 1992, see section 521(e) of Pub. L. 102–318, set out as a note under section 402 of this title. EFFECTIVE DATE OF 1989 AMENDMENT Amendment by section 7861(a)(5)(A), (6)(A) of Pub. L. 101–239 effective as if included in the provision of the Tax Reform Act of 1986, Pub. L. 99–514, to which such amendment relates, see section 7863 of Pub. L. 101–239, set out as a note under section 106 of this title. Pub. L. 101–239, title VII, § 7871(a)(4), Dec. 19, 1989, 103 Stat. 2435, provided that: ‘‘The amendments made by Page 1376 TITLE 26—INTERNAL REVENUE CODE § 411 this subsection [amending this section and section 1054 of Title 29, Labor] shall take effect as if included in the amendments made by section 9202 of the Omnibus Budget Reconciliation Act of 1986 [Pub. L. 99–509].’’ Pub. L. 101–239, title VII, § 7871(b)(3), Dec. 19, 1989, 103 Stat. 2435, provided that: ‘‘The amendments made by this subsection [amending this section and section 1002 of Title 29, Labor] shall take effect as if included in the amendments made by section 9203 of the Omnibus Budget Reconciliation Act of 1986 [Pub. L. 99–509].’’ Amendment by section 7881(m)(1) of Pub. L. 101–239 effective, except as otherwise provided, as if included in the provision of the Pension Protection Act, Pub. L. 100–203, §§ 9302–9346, to which such amendment relates, see section 7882 of Pub. L. 101–239, set out as a note under section 401 of this title. EFFECTIVE DATE OF 1988 AMENDMENT Amendment by Pub. L. 100–647 effective, except as otherwise provided, as if included in the provision of the Tax Reform Act of 1986, Pub. L. 99–514, to which such amendment relates, see section 1019(a) of Pub. L. 100–647, set out as a note under section 1 of this title. EFFECTIVE DATE OF 1987 AMENDMENT Amendment by Pub. L. 100–203 applicable to plan years beginning after Dec. 31, 1987, with plan amend- ments not required to be made before first plan year be- ginning on or after Jan. 1, 1989, if certain conditions are met, see section 9346(c) of Pub. L. 100–203, set out as a note under section 1054 of Title 29, Labor. EFFECTIVE DATE OF 1986 AMENDMENT Pub. L. 99–514, title XI, § 1113(f), formerly § 1113(e), Oct. 22, 1986, 100 Stat. 2447, as redesignated and amend- ed by Pub. L. 101–239, title VII, § 7861(a)(3), (4), Dec. 19, 1989, 103 Stat. 2430, provided that: ‘‘(1) IN GENERAL.—Except as provided in paragraph (2), the amendments made by this section [amending this section and section 410 of this title and sections 1052 to 1054 of Title 29, Labor] shall apply to plan years begin- ning after December 31, 1988. ‘‘(2) SPECIAL RULE FOR COLLECTIVE BARGAINING AGREE- MENTS.—In the case of a plan maintained pursuant to 1 or more collective bargaining agreements between em- ployee representatives and 1 or more employers ratified before March 1, 1986, the amendments made by this sec- tion shall not apply to employees covered by any such agreement in plan years beginning before the earlier of— ‘‘(A) the later of— ‘‘(i) January 1, 1989, or ‘‘(ii) the date on which the last of such collective bargaining agreements terminates (determined without regard to any extension thereof after Feb- ruary 28, 1986), or ‘‘(B) January 1, 1991. ‘‘(3) PARTICIPATION REQUIRED.—The amendments made by this section shall not apply to any employee who does not have 1 hour of service in any plan year to which the amendments made by this section apply. ‘‘(4) REPEAL OF CLASS YEAR VESTING.—If a plan amendment repealing class year vesting is adopted after October 22, 1986, such amendment shall not apply to any employee for the 1st plan year to which the amendments made by subsections (b) and (e)(2) [amend- ing this section and section 1053 of Title 29] apply (and any subsequent plan year) if— ‘‘(A) such plan amendment would reduce the non- forfeitable right of such employee for such year, and ‘‘(B) such employee has at least 1 hour of service before the adoption of such plan amendment and after the beginning of such 1st plan year. This paragraph shall not apply to an employee who has 5 consecutive 1-year breaks in service (as defined in section 411(a)(6)(A) of the Internal Revenue Code of 1986) which include the 1st day of the 1st plan year to which the amendments made by subsection (b) and (e)(2) apply. A plan shall not be treated as failing to meet the requirements of section 401(a)(26) of such Code by reason of complying with the provisions of this paragraph.’’ Amendment by section 1114(b)(10) of Pub. L. 99–514 ap- plicable to years beginning after Dec. 31, 1988, see sec- tion 1114(c)(3) of Pub. L. 99–514, set out as a note under section 414 of this title. Pub. L. 99–514, title XI, § 1139(d), Oct. 22, 1986, 100 Stat. 2488, as amended by Pub. L. 100–647, title I, § 1011A(k), Nov. 10, 1988, 102 Stat. 3483, provided that: ‘‘(1) IN GENERAL.—The amendments made by this sec- tion [amending this section and section 417 of this title and sections 1053 and 1055 of Title 29, Labor] shall apply to distributions in plan years beginning after December 31, 1984, except that such amendments shall not apply to any distributions in plan years beginning after De- cember 31, 1984, and before January 1, 1987, if such dis- tributions were made in accordance with the require- ments of the regulations issued under the Retirement Equity Act of 1984 [Pub. L. 98–397, see Short Title of 1984 Amendment note set out under section 1001 of Title 29]. ‘‘(2) REDUCTION IN ACCRUED BENEFITS.— ‘‘(A) IN GENERAL.—If a plan— ‘‘(i) adopts a plan amendment before the close of the first plan year beginning on or after January 1, 1989, which provides for the calculation of the present value of the accrued benefits in the manner provided by the amendments made by this section, and ‘‘(ii) the plan reduces the accrued benefits for any plan year to which such plan amendment applies in accordance with such plan amendment, such reduction shall not be treated as a violation of section 411(d)(6) of the Internal Revenue Code of 1986 or section 204(g) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1054(g)). ‘‘(B) SPECIAL RULE.—In the case of a plan main- tained by a corporation incorporated on April 11, 1934, which is headquartered in Tarrant County, Texas— ‘‘(i) such plan may be amended to remove the op- tion of an employee to receive a lump sum distribu- tion (within the meaning of section 402(e)(5) of such Code) if such amendment— ‘‘(I) is adopted within 1 year of the date of the enactment of this Act [Oct. 22, 1986], and ‘‘(II) is not effective until 2 years after the em- ployees are notified of such amendment, and ‘‘(ii) the present value of any vested accrued ben- efit of such plan determined during the 3-year pe- riod beginning on the date of the enactment of this Act shall be determined under the applicable inter- est rate (within the meaning of section 411(a)(11)(B)(ii) of such Code), except that if such value (as so determined) exceeds $50,000, then the value of any excess over $50,000 shall be determined by using the interest rate specified in the plan as of August 16, 1986.’’ Pub. L. 99–514, title XVIII, § 1898(a)(1)(C), Oct. 22, 1986, 100 Stat. 2942, provided that: ‘‘The amendments made by this paragraph [amending this section and section 1053 of Title 29, Labor] shall apply to contributions made for plan years beginning after the date of the en- actment of this Act [Oct. 22, 1986]; except that, in the case of a plan described in section 302(b) of the Retire- ment Equity Act of 1984 [section 302(b) of Pub. L. 98–397, set out as a note under section 1001 of Title 29], such amendments shall not apply to any plan year to which the amendments made by such Act [see Short Title of 1984 Amendment note set out under section 1001 of Title 29] do not apply by reason of such section 302(b).’’ Amendment by section 1898(a)(4)(A), (d)(1)(A), (2)(A), (f)(1)(A) of Pub. L. 99–514 effective as if included in the provision of the Retirement Equity Act of 1984, Pub. L. 98–397, to which such amendment relates, except as oth- erwise provided, see section 1898(j) of Pub. L. 99–514, set out as a note under section 401 of this title. Amendment by section 9202(b) of Pub. L. 99–509 appli- cable only with respect to plan years beginning on or after Jan. 1, 1988, and only to employees who have 1 Page 1377 TITLE 26—INTERNAL REVENUE CODE § 411 hour of service in any plan year to which amendment applies, with special rule for collectively bargained plans, and amendment by section 9203(b)(2) of Pub. L. 99–509 applicable only with respect to plan years begin- ning on or after Jan. 1, 1988, and only with respect to service performed on or after such date, see section 9204(a), (b) of Pub. L. 99–509, set out as an Effective and Termination Dates of 1986 Amendments note under sec- tion 623 of Title 29, Labor. EFFECTIVE DATE OF 1984 AMENDMENT Amendment by Pub. L. 98–397 applicable to plan years beginning after Dec. 31, 1984, except as otherwise pro- vided, see sections 302 and 303 of Pub. L. 98–397, set out as a note under section 1001 of Title 29, Labor. EFFECTIVE DATE OF 1980 AMENDMENT Amendment by Pub. L. 96–364 effective Sept. 26, 1980, see section 210(a) of Pub. L. 96–364, set out as an Effec- tive Date note under section 194A of this title. EFFECTIVE DATE OF 1976 AMENDMENT Amendment by section 1901(a)(62) of Pub. L. 94–455 ef- fective for taxable years beginning after Dec. 31, 1976, see section 1901(d) of Pub. L. 94–455, set out as a note under section 2 of this title. EFFECTIVE DATE Section applicable, except as otherwise provided in section 1017(c) through (i) of Pub. L. 93–406, for plan years beginning after Sept. 2, 1974, and, in the case of plans in existence on Jan. 1, 1974, for plan years begin- ning after Dec. 31, 1975, see section 1017 of Pub. L. 93–406, set out as an Effective Date; Transitional Rules note under section 410 of this title. REGULATIONS Pub. L. 109–280, title VII, § 702, Aug. 17, 2006, 120 Stat. 992, provided that: ‘‘The Secretary of the Treasury or his delegate shall, not later than 12 months after the date of the enactment of this Act [Aug. 17, 2006], pre- scribe regulations for the application of the amend- ments made by, and the provisions of, this title [amending this section and sections 623, 1053, and 1054 of Title 29, Labor, and enacting provisions set out as notes under this section] in cases where the conversion of a plan to an applicable defined benefit plan is made with respect to a group of employees who become em- ployees by reason of a merger, acquisition, or similar transaction.’’ Pub. L. 109–280, title XI, § 1102(b), Aug. 17, 2006, 120 Stat. 1056, provided that: ‘‘(1) IN GENERAL.—The Secretary of the Treasury shall modify the regulations under section 411(a)(11) of the Internal Revenue Code of 1986 and under section 205 of the Employee Retirement Income Security Act of 1974 [29 U.S.C. 1055] to provide that the description of a par- ticipant’s right, if any, to defer receipt of a distribution shall also describe the consequences of failing to defer such receipt. ‘‘(2) EFFECTIVE DATE.— ‘‘(A) IN GENERAL.—The modifications required by paragraph (1) shall apply to years beginning after De- cember 31, 2006. ‘‘(B) REASONABLE NOTICE.—A plan shall not be treated as failing to meet the requirements of section 411(a)(11) of such Code or section 205 of such Act with respect to any description of consequences described in paragraph (1) made within 90 days after the Sec- retary of the Treasury issues the modifications re- quired by paragraph (1) if the plan administrator makes a reasonable attempt to comply with such re- quirements.’’ Pub. L. 107–16, title VI, § 645(b)(3), June 7, 2001, 115 Stat. 126, provided that: ‘‘Not later than December 31, 2003, the Secretary of the Treasury is directed to issue regulations under section 411(d)(6) of the Internal Rev- enue Code of 1986 and section 204(g) of the Employee Retirement Income Security Act of 1974 [29 U.S.C. 1054(g)], including the regulations required by the amendment made by this subsection [amending this section and section 1054 of Title 29, Labor]. Such regu- lations shall apply to plan years beginning after De- cember 31, 2003, or such earlier date as is specified by the Secretary of the Treasury.’’ Secretary of the Treasury or his delegate to issue be- fore Feb. 1, 1988, final regulations to carry out amend- ments made by sections 1113 and 1114 of Pub. L. 99–514, see section 1141 of Pub. L. 99–514, set out as a note under section 401 of this title. Secretary of Labor, Secretary of the Treasury, and Equal Employment Opportunity Commission shall each issue before Feb. 1, 1988, final regulations to carry out amendments made by sections 9202 and 9203 of Pub. L. 99–509, see section 9204 of Pub. L. 99–509, set out as a note under section 623 of Title 29, Labor. SAVINGS PROVISION For provisions that nothing in amendment by Pub. L. 115–141 be construed to affect treatment of certain transactions occurring, property acquired, or items of income, loss, deduction, or credit taken into account prior to Mar. 23, 2018, for purposes of determining li- ability for tax for periods ending after Mar. 23, 2018, see section 401(e) of Pub. L. 115–141, set out as a note under section 23 of this title. CONSTRUCTION OF 2006 AMENDMENT Pub. L. 109–280, title VII, § 701(d), Aug. 17, 2006, 120 Stat. 991, as amended by Pub. L. 110–458, title I, § 107(c)(1), Dec. 23, 2008, 122 Stat. 5107, provided that: ‘‘Nothing in the amendments made by this section [amending this section and sections 623, 1053, and 1054 of Title 29, Labor] shall be construed to create an infer- ence with respect to— ‘‘(1) the treatment of applicable defined benefit plans or conversions to applicable defined benefit plans under sections 204(b)(1)(H) of the Employee Re- tirement Income Security Act of 1974 [29 U.S.C. 1054(b)(1)(H)], 4(i)(1) of the Age Discrimination in Em- ployment Act of 1967 [29 U.S.C. 623(i)(1)], and 411(b)(1)(H) of the Internal Revenue Code of 1986, as in effect before such amendments, or ‘‘(2) the determination of whether an applicable de- fined benefit plan fails to meet the requirements of sections 203(a)(2), 204(c), or 205(g) of the Employee Re- tirement Income Security Act of 1974 [29 U.S.C. 1053(a)(2), 1054(c), 1055(g)] or sections 411(a)(2), 411(c), or 417(e) of such Code, as in effect before such amend- ments, solely because the present value of the ac- crued benefit (or any portion thereof) of any partici- pant is, under the terms of the plan, equal to the amount expressed as the balance in a hypothetical account or as an accumulated percentage of the par- ticipant’s final average compensation. For purposes of this subsection, the term ‘applicable defined benefit plan’ has the meaning given such term by section 203(f)(3) of the Employee Retirement Income Security Act of 1974 [29 U.S.C. 1053(f)(3)] and section 411(a)(13)(C) of such Code, as in effect after such amend- ments.’’ TEMPORARY RULE PREVENTING PARTIAL PLAN TERMINATION Pub. L. 116–260, div. EE, title II, § 209, Dec. 27, 2020, 134 Stat. 3066, provided that: ‘‘A plan shall not be treated as having a partial termination (within the meaning of 411(d)(3) of the Internal Revenue Code of 1986) during any plan year which includes the period beginning on March 13, 2020, and ending on March 31, 2021, if the number of active participants covered by the plan on March 31, 2021 is at least 80 percent of the number of ac- tive participants covered by the plan on March 13, 2020.’’ APPLICABILITY OF AMENDMENTS BY SUBTITLES A AND B OF TITLE I OF PUB. L. 109–280 For special rules on applicability of amendments by subtitles A (§§ 101–108) and B (§§ 111–116) of title I of Pub. Page 1378 TITLE 26—INTERNAL REVENUE CODE § 411 L. 109–280 to certain eligible cooperative plans, PBGC settlement plans, and eligible government contractor plans, see sections 104, 105, and 106 of Pub. L. 109–280, set out as notes under section 401 of this title. PROVISIONS RELATING TO PLAN AMENDMENTS Pub. L. 109–280, title XI, § 1107, Aug. 17, 2006, 120 Stat. 1063, provided that: ‘‘(a) IN GENERAL.—If this section applies to any pen- sion plan or contract amendment— ‘‘(1) such pension plan or contract shall be treated as being operated in accordance with the terms of the plan during the period described in subsection (b)(2)(A), and ‘‘(2) except as provided by the Secretary of the Treasury, such pension plan shall not fail to meet the requirements of section 411(d)(6) of the Internal Rev- enue Code of 1986 and section 204(g) of the Employee Retirement Income Security Act of 1974 [29 U.S.C. 1054(g)] by reason of such amendment. ‘‘(b) AMENDMENTS TO WHICH SECTION APPLIES.— ‘‘(1) IN GENERAL.—This section shall apply to any amendment to any pension plan or annuity contract which is made— ‘‘(A) pursuant to any amendment made by this Act [see Tables for classification] or pursuant to any regulation issued by the Secretary of the Treasury or the Secretary of Labor under this Act, and ‘‘(B) on or before the last day of the first plan year beginning on or after January 1, 2009. In the case of a governmental plan (as defined in sec- tion 414(d) of the Internal Revenue Code of 1986), this paragraph shall be applied by substituting ‘2011’ for ‘2009’. ‘‘(2) CONDITIONS.—This section shall not apply to any amendment unless— ‘‘(A) during the period— ‘‘(i) beginning on the date the legislative or reg- ulatory amendment described in paragraph (1)(A) takes effect (or in the case of a plan or contract amendment not required by such legislative or regulatory amendment, the effective date speci- fied by the plan), and ‘‘(ii) ending on the date described in paragraph (1)(B) (or, if earlier, the date the plan or contract amendment is adopted), the plan or contract is operated as if such plan or contract amendment were in effect; and ‘‘(B) such plan or contract amendment applies retroactively for such period.’’ Pub. L. 108–218, title I, § 101(c), Apr. 10, 2004, 118 Stat. 598, as amended by Pub. L. 109–280, title III, § 301(c), Aug. 17, 2006, 120 Stat. 920; Pub. L. 110–458, title I, § 103(a), Dec. 23, 2008, 122 Stat. 5103, provided that: ‘‘(1) IN GENERAL.—If this subsection applies to any plan or annuity contract amendment— ‘‘(A) such plan or contract shall be treated as being operated in accordance with the terms of the plan or contract during the period described in paragraph (2)(B)(i), and ‘‘(B) except as provided by the Secretary of the Treasury, such plan shall not fail to meet the re- quirements of section 411(d)(6) of the Internal Rev- enue Code of 1986 and section 204(g) of the Employee Retirement Income Security Act of 1974 [29 U.S.C. 1054(g)] by reason of such amendment. ‘‘(2) AMENDMENTS TO WHICH SECTION APPLIES.— ‘‘(A) IN GENERAL.—This subsection shall apply to any amendment to any plan or annuity contract which is made— ‘‘(i) pursuant to any amendment made by this section [amending sections 404, 412, and 415 of this title and sections 1082 and 1306 of Title 29, Labor], and ‘‘(ii) on or before the last day of the first plan year beginning on or after January 1, 2009. ‘‘(B) CONDITIONS.—This subsection shall not apply to any plan or annuity contract amendment unless— ‘‘(i) during the period beginning on the date the amendment described in subparagraph (A)(i) takes effect and ending on the date described in subpara- graph (A)(ii) (or, if earlier, the date the plan or con- tract amendment is adopted), the plan or contract is operated as if such plan or contract amendment were in effect; and ‘‘(ii) such plan or contract amendment applies retroactively for such period.’’ Pub. L. 105–34, title XV, § 1541, Aug. 5, 1997, 111 Stat. 1085, provided that: ‘‘(a) IN GENERAL.—If this section applies to any plan or contract amendment— ‘‘(1) such plan or contract shall be treated as being operated in accordance with the terms of the plan during the period described in subsection (b)(2)(A), and ‘‘(2) such plan shall not fail to meet the require- ments of section 411(d)(6) of the Internal Revenue Code of 1986 or section 204(g) of the Employee Retire- ment Income Security Act of 1974 [29 U.S.C. 1054(g)] by reason of such amendment. ‘‘(b) AMENDMENTS TO WHICH SECTION APPLIES.— ‘‘(1) IN GENERAL.—This section shall apply to any amendment to any plan or annuity contract which is made— ‘‘(A) pursuant to any amendment made by this title [enacting sections 9811 and 9812 of this title, amending sections 101, 401 to 404, 408, 409, 410, 412, 414, 415, 512, 664, 674, 2055, 2056, 4947, 4972, 4975, 4978, 4979A, 4980D, 9801, 9802, and 9831 of this title, sec- tions 1021, 1022, 1024, 1026 to 1028, 1056, 1082, 1107, 1108, and 1132 of Title 29, Labor, and section 1320b–14 of Title 42, The Public Health and Welfare, renum- bering sections 9804 to 9806 of this title as sections 9831 to 9833, respectively, of this title, and amend- ing provisions set out as a note under section 412 of this title] or subtitle H of title X [§§ 1071–1075, amending this section, sections 72, 132, 417, 457, 691, 2013, 2053, 4975, and 6018 of this title, and sections 1053 to 1055 of Title 29 and repealing section 4980A of this title], and ‘‘(B) before the first day of the first plan year be- ginning on or after January 1, 1999. In the case of a governmental plan (as defined in sec- tion 414(d) of the Internal Revenue Code of 1986), this paragraph shall be applied by substituting ‘2001’ for ‘1999’. ‘‘(2) CONDITIONS.—This section shall not apply to any amendment unless— ‘‘(A) during the period— ‘‘(i) beginning on the date the legislative amendment described in paragraph (1)(A) takes effect (or in the case of a plan or contract amend- ment not required by such legislative amend- ment, the effective date specified by the plan), and ‘‘(ii) ending on the date described in paragraph (1)(B) (or, if earlier, the date the plan or contract amendment is adopted), the plan or contract is operated as if such plan or contract amendment were in effect, and ‘‘(B) such plan or contract amendment applies retroactively for such period.’’ TRANSITIONAL RULE: CERTAIN PLAN AMENDMENTS ADOPTED OR EFFECTIVE ON OR BEFORE AUGUST 20, 1996 Pub. L. 104–188, title I, § 1449(d), Aug. 20, 1996, 110 Stat. 1814, provided that: ‘‘In the case of a plan that was adopted and in effect before December 8, 1994, if— ‘‘(1) a plan amendment was adopted or made effec- tive on or before the date of the enactment of this Act [Aug. 20, 1996] applying the amendments made by section 767 of the Uruguay Round Agreements Act [Pub. L. 103–465, see Effective Date of 1994 Amend- ment note set out above], and ‘‘(2) within 1 year after the date of the enactment of this Act [Aug. 20, 1996], a plan amendment is adopt- ed which repeals the amendment referred to in para- graph (1), the amendment referred to in paragraph (1) shall not be taken into account in applying section 767(d)(3)(A) of Page 1379 TITLE 26—INTERNAL REVENUE CODE § 412 the Uruguay Round Agreements Act, as amended by subsection (a).’’ PLAN AMENDMENTS REFLECTING AMENDMENTS BY SEC- TION 7881(m) OF PUB. L. 101–239 NOT TREATED AS REDUCING ACCRUED BENEFITS For provisions directing that if during the period be- ginning Dec. 22, 1987, and ending June 21, 1988, a plan was amended to reflect the amendments by section 9346 of Pub. L. 100–203 and such plan is amended to reflect the amendments by section 7881(m) of Pub. L. 101–239, any plan amendments made to reflect the amendments by section 7881(m) of Pub. L. 101–239 shall not be treated as reducing accrued benefits for purposes of subsection (d)(6) of this section or section 1054(g) of Title 29, Labor, see section 7881(m)(3) of Pub. L. 101–239, set out as a note under section 1054 of Title 29. PLAN AMENDMENTS NOT REQUIRED UNTIL JANUARY 1, 1998 For provisions directing that if any amendments made by subtitle D [§§ 1401–1465] of title I of Pub. L. 104–188 require an amendment to any plan or annuity contract, such amendment shall not be required to be made before the first day of the first plan year begin- ning on or after Jan. 1, 1998, see section 1465 of Pub. L. 104–188, set out as a note under section 401 of this title. PLAN AMENDMENTS NOT REQUIRED UNTIL JANUARY 1, 1994 For provisions directing that if any amendments made by subtitle B [§§ 521–523] of title V of Pub. L. 102–318 require an amendment to any plan, such plan amendment shall not be required to be made before the first plan year beginning on or after Jan. 1, 1994, see section 523 of Pub. L. 102–318, set out as a note under section 401 of this title. PLAN AMENDMENTS NOT REQUIRED UNTIL JANUARY 1, 1989 For provisions directing that if any amendments made by subtitle A or subtitle C of title XI [§§ 1101–1147 and 1171–1177] or title XVIII [§§ 1800–1899A] of Pub. L. 99–514 require an amendment to any plan, such plan amendment shall not be required to be made before the first plan year beginning on or after Jan. 1, 1989, see section 1140 of Pub. L. 99–514, as amended, set out as a note under section 401 of this title. For provisions directing that if any amendments made by sections 9202(b) and 9203(b)(2) of Pub. L. 99–509 require an amendment to any plan, such plan amend- ment shall not be required to be made before the first plan year beginning on or after Jan. 1, 1989, see section 9204 of Pub. L. 99–509, set out as a note under section 623 of Title 29, Labor. ALTERNATE METHODS OF SATISFYING REQUIREMENTS FOR VESTING AND ACCRUED BENEFITS Pub. L. 93–406, title II, § 1012(c), Sept. 2, 1974, 88 Stat. 913, as amended by Pub. L. 99–514, § 2, Oct. 22, 1986, 100 Stat. 2095, provided that: ‘‘In the case of any plan main- tained on January 1, 1974, if, not later than 2 years after the date of the enactment of this Act [Sept. 2, 1974], the plan administrator petitions the Secretary of Labor, the Secretary of Labor may prescribe an alter- nate method which shall be treated as satisfying the re- quirements of subsection (a)(2) of section 411 of the In- ternal Revenue Code of 1986 [formerly I.R.C. 1954], or of subsection (b)(1) (other than subparagraph (D) thereof) of such section 411, or of both such provisions for a pe- riod of not more than 4 years. The Secretary may pre- scribe such alternate method only when he finds that— ‘‘(1) the application of such requirements would in- crease the costs of the plan to such an extent that there would result a substantial risk to the voluntary continuation of the plan or a substantial curtailment of benefit levels or the levels of employees’ com- pensation, ‘‘(2) the application of such requirements or dis- continuance of the plan would be adverse to the in- terests of plan participants in the aggregate, and ‘‘(3) a waiver or extension of time granted under [former] section 412(d) or (e) would be inadequate. In the case of any plan with respect to which an alter- nate method has been prescribed under the preceding provisions of this subsection for a period of not more than 4 years, if, not later than 1 year before the expira- tion of such period, the plan administrator petitions the Secretary of Labor for an extension of such alter- nate method, and the Secretary makes the findings re- quired by the preceding sentence, such alternate meth- od may be extended for not more than 3 years.’’ § 412. Minimum funding standards (a) Requirement to meet minimum funding standard (1) In general A plan to which this section applies shall satisfy the minimum funding standard appli- cable to the plan for any plan year. (2) Minimum funding standard For purposes of paragraph (1), a plan shall be treated as satisfying the minimum funding standard for a plan year if— (A) in the case of a defined benefit plan which is not a multiemployer plan or a CSEC plan, the employer makes contribu- tions to or under the plan for the plan year which, in the aggregate, are not less than the minimum required contribution deter- mined under section 430 for the plan for the plan year, (B) in the case of a money purchase plan which is not a multiemployer plan, the em- ployer makes contributions to or under the plan for the plan year which are required under the terms of the plan, (C) in the case of a multiemployer plan, the employers make contributions to or under the plan for any plan year which, in the aggregate, are sufficient to ensure that the plan does not have an accumulated fund- ing deficiency under section 431 as of the end of the plan year, and (D) in the case of a CSEC plan, the employ- ers make contributions to or under the plan for any plan year which, in the aggregate, are sufficient to ensure that the plan does not have an accumulated funding deficiency under section 433 as of the end of the plan year. (b) Liability for contributions (1) In general Except as provided in paragraph (2), the amount of any contribution required by this section (including any required installments under paragraphs (3) and (4) of section 430(j) or under section 433(f)) shall be paid by the em- ployer responsible for making contributions to or under the plan. (2) Joint and several liability where employer member of controlled group If the employer referred to in paragraph (1) is a member of a controlled group, each mem- ber of such group shall be jointly and severally liable for payment of such contributions. (3) Multiemployer plans in critical status Paragraph (1) shall not apply in the case of a multiemployer plan for any plan year in