# Defined Benefit Listing of Required Modifications and Information Package > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/agency%3Airs%3Afc80cb90455198f2 ## Record - **Collection:** Agency decision - **Document type:** Agency decision ## Text Defined Benefit Listing of Required Modifications and Information Package (LRM) To Providers of Pre-approved Plans: This information package contains samples of plan provisions that have been found to satisfy certain requirements of the Internal Revenue Code, taking into account changes in the plan qualification requirements, regulations, revenue rulings, and other guidance in the 2026 Cumulative List of Changes in Plan Qualification Requirements (Notice 2026-34), including changes enacted by the Coronavirus Aid, Relief, and Economic Security Act, Pub. L. 116-136, the Setting Every Community Up For Retirement Enhancement (“SECURE”) Act of 2019, Pub. L. 116-94, and Division T of the Consolidated Appropriations Act, 2023, known as the SECURE 2.0 Act of 2022, Pub. L. 117-328, where appropriate. Such language may or may not be acceptable in different plans depending on the context in which used. For example, some language may not be required in a nonelecting church plan or government plan. We have prepared this package to assist Providers who are drafting or redrafting plans to conform to applicable law and regulations, and we hope that it will be a key factor in enabling us to process and approve Pre-approved Plans more quickly. Rev. Proc. 2023-37, permits a Pre-approved Plan to use either of two formats: a single plan document or a basic plan document with an adoption agreement. See sections 4.01(14), 4.01(19), and 4.01(2) therein. This LRM reflects the latter format but recognizes that the former is also acceptable. Plan provisions contained in this information package are arranged in three parts. Part I contains provisions generally applicable to all plans, Part II contains those provisions applicable to Standardized Plans and Part III contains those applicable to Nonstandardized Plans. In addition to the provisions listed in Part II, certain provisions of the LRMs must be used for Standardized Plans. See generally section 9.03 of Rev. Proc. 2023-37 and Plan Benefit Provisions (before LRM # 23). These provisions are in LRMs #6 and #7 (requiring that a Standardized Plan use total compensation for benefits accrual purposes); LRM #29 (requiring a Standardized Plan to count all years of participation for accrual purposes, unless a participant terminates service with not more than 500 hours); LRM #43 (a Standardized Plan must make all optional benefit forms currently available to nonhighly compensated employees); and LRMs #27C, #36, #39 and #102 (prohibition on employee contributions for Standardized Plans). In addition to the provisions listed in Part III, certain provisions of the LRMs may be modified for Nonstandarized Plans. See generally section 9.03 of Rev. Proc. 2023-37 and Plan Benefit Provisions (before LRM # 23). These provisions are in LRM #6 (a Nonstandardized Plan may provide the Adopting Employer the option to select total compensation); LRMs # 8, #12 and #13 (these sections contain sample plan language that may be omitted in a Nonstandardized Plan that precludes participation by self-employed individuals); LRM #21 (a Nonstandardized Plan can utilize the one-year holdout rule of IRC 410(a)(5)(C)); LRM #29 (permitting a Nonstandardized Plan to require a participant 1 | Defined Benefit Plan LRM Package 06/2026 to complete a specified number of hours in order to earn a year of participation); and LRMs #27C, ##36-39 (employee contributions). In addition to the provisions noted above and extant in Parts II and III, provisions applicable to Cash Balance Formulas are contained in LRM #26A (requiring that a Preapproved Cash Balance Plan must provide that, at all times, any benefits accrued prior to adoption (and other benefits protected under IRC 411(d)(6)(B)) are protected). Note that although LRM #26A is itemized within provisions applicable to all plans, Standardized Plans are not permitted to contain a Cash Balance Formula. Certain capitalized terms used throughout this document have meanings defined in section 4 of Rev. Proc. 2023-37. 06/01/2026 2 | Defined Benefit Plan LRM Package 06/2026 TABLE OF CONTENTS PART I - ALL PLANS ��������������������������������������������������������������������������������������� 7 DEFINITION PROVISIONS ����������������������������������������������������������������������������������������������������7 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. Definition of year of service�������������������������������������������������������������������������������������������7 Definition of break in service �����������������������������������������������������������������������������������������7 Definition of hour of service�������������������������������������������������������������������������������������������7 Elapsed time�������������������������������������������������������������������������������������������������������������������9 Definition of plan year��������������������������������������������������������������������������������������������������10 Definition of compensation ������������������������������������������������������������������������������������������10 Compensation formulas������������������������������������������������������������������������������������������������12 Definition of earned income �����������������������������������������������������������������������������������������13 Definition of employee��������������������������������������������������������������������������������������������������13 Definition of leased employee ��������������������������������������������������������������������������������������14 Definition of highly compensated employee�����������������������������������������������������������������14 Definition of owner-employee��������������������������������������������������������������������������������������15 Definition of self-employed individual��������������������������������������������������������������������������16 Definition of normal retirement age �����������������������������������������������������������������������������16 Definition of straight life annuity ���������������������������������������������������������������������������������17 MINIMUM PARTICIPATION PROVISIONS��������������������������������������������������������������������������17 16. 17. 18. 19. 20. 21. 22. Maximum age restrictions not permitted�����������������������������������������������������������������������17 Provisions for entry into participation ��������������������������������������������������������������������������18 Eligibility computation periods ������������������������������������������������������������������������������������18 Use of computation periods������������������������������������������������������������������������������������������18 All years of service counted toward eligibility except after certain breaks in service ��19 Eligibility break in service, one-year hold-out rule ������������������������������������������������������19 Participation upon return to eligible class ��������������������������������������������������������������������20 PLAN BENEFIT PROVISIONS ���������������������������������������������������������������������������������������������20 23. 24. 25. 26. Fresh-start rules������������������������������������������������������������������������������������������������������������21 Determination of frozen accrued benefit�����������������������������������������������������������������������23 Adjustments to frozen accrued benefit��������������������������������������������������������������������������24 Current benefit formulas – plans not providing for permitted disparity and using the fractional accrual rule���������������������������������������������������������������������������������������������������30 26A. Current benefit formulas – Cash Balance Plan��������������������������������������������������������������31 27. Current benefit formulas – plans providing for permitted disparity������������������������������43 27A. Definitions – plans providing for permitted disparity���������������������������������������������������54 3 | Defined Benefit Plan LRM Package 06/2026 27B. Adjustments for benefits beginning at a time other than normal retirement age�����������55 27C. Employee contributions – plans providing for permitted disparity��������������������������������59 27D. Permitted disparity with respect to employerprovided benefit - fully insured ��������������59 27E. Integration with Social Security �����������������������������������������������������������������������������������60 28. Benefit increase - fully insured plans, insured preretirement death benefits�����������������61 29. Definition of year of participation (accrual computation period) ���������������������������������62 30. Definition of year of credited service ���������������������������������������������������������������������������63 31. Formula to determine accrued benefit ��������������������������������������������������������������������������64 32. Fully-insured IRC 412(e)(3) plan rules ������������������������������������������������������������������������67 33. Pre-ERISA accrued benefits �����������������������������������������������������������������������������������������69 34. Definition of normal retirement benefit ������������������������������������������������������������������������69 35. Accrual limitations based upon age not permitted��������������������������������������������������������70 EMPLOYEE CONTRIBUTION PROVISIONS ���������������������������������������������������������������������70 36. 37. 38. 39. 40. 41. 42. 43. 44. 45. 46. 47. 48. 49. 50. 51. 52. 53. 54. 55. 56. 57. Nondeductible voluntary employee contributions ��������������������������������������������������������70 Separate account for nondeductible voluntary employee contributions������������������������71 Nonforfeitability of employee contributions�����������������������������������������������������������������71 Deductible voluntary employee contributions ��������������������������������������������������������������71 Limitation on benefits���������������������������������������������������������������������������������������������������72 Defined benefit plans must state the normal form of benefits to be definitely determinable�����������������������������������������������������������������������������������������������������������������92 Definite benefit��������������������������������������������������������������������������������������������������������������92 Optional forms of benefit must be stated in the plan�����������������������������������������������������98 Cash-outs and plan repayment provisions ��������������������������������������������������������������������99 Restrictions on immediate distributions ���������������������������������������������������������������������100 Joint and Survivor Annuity, Qualified Optional Survivor Annuity, and Preretirement Survivor Annuity requirements ����������������������������������������������������������������������������������102 Commencement of benefits ����������������������������������������������������������������������������������������110 Early retirement with age and service requirement ���������������������������������������������������� 111 Conflicts with annuity contracts ��������������������������������������������������������������������������������� 111 Nontransferability of annuities������������������������������������������������������������������������������������ 111 Timing and modes of distribution������������������������������������������������������������������������������� 111 Incidental insurance provisions and definitely determinable retirement benefits���������123 Payment of benefits ����������������������������������������������������������������������������������������������������125 Direct rollovers ����������������������������������������������������������������������������������������������������������125 Suspension of benefits ������������������������������������������������������������������������������������������������130 Bifurcated distribution options������������������������������������������������������������������������������������132 Pre-termination restrictions ����������������������������������������������������������������������������������������134 4 | Defined Benefit Plan LRM Package 06/2026 57A. Limitations on the accrual and payment of benefits under certain underfunded single employer defined benefit plans������������������������������������������������������������������������������������136 VESTING PROVISIONS������������������������������������������������������������������������������������������������������146 58. Designation of vesting computation period ����������������������������������������������������������������146 59. Breaks in service and years of service must be measured on the same computation period �������������������������������������������������������������������������������������������������������������������������147 60. Full vesting upon attainment of normal retirement age ����������������������������������������������147 61. Optional vesting schedules must be at least as favorable as the applicable minimum vesting schedules���������������������������������������������������������������������������������������������������������147 62. Crediting years of service - vesting ����������������������������������������������������������������������������148 63. Vesting break in service - one year holdout����������������������������������������������������������������148 64. Vesting break in service - rule of parity����������������������������������������������������������������������149 65. Amendment of vesting schedule���������������������������������������������������������������������������������149 66. Amendments affecting accrued benefits ���������������������������������������������������������������������150 67. Forfeitures - withdrawal of employee contributions���������������������������������������������������151 68. Reinstatement of benefit���������������������������������������������������������������������������������������������151 TOP-HEAVY PROVISIONS�������������������������������������������������������������������������������������������������151 69. 70. 71. 72. 73. Top-heavy definitions �������������������������������������������������������������������������������������������������151 Minimum accrued benefit�������������������������������������������������������������������������������������������154 Adjustment for benefit form other than life annuity at normal retirement age������������156 Nonforfeitability of minimum accrued benefit������������������������������������������������������������156 Minimum vesting schedules ���������������������������������������������������������������������������������������156 AMENDMENT AND TERMINATION PROVISIONS���������������������������������������������������������157 74. 75. 76. 77. Provider power to amend �������������������������������������������������������������������������������������������157 Amendment by Adopting Employer ���������������������������������������������������������������������������158 Vesting - plan termination ������������������������������������������������������������������������������������������159 Plan merger - maintenance of benefit �������������������������������������������������������������������������159 MISCELLANEOUS PLAN PROVISIONS���������������������������������������������������������������������������159 78. Inalienability of benefits���������������������������������������������������������������������������������������������159 79. Loans to participants���������������������������������������������������������������������������������������������������160 80. Exclusive benefit���������������������������������������������������������������������������������������������������������162 81. Failure of qualification������������������������������������������������������������������������������������������������162 82. RESERVED ���������������������������������������������������������������������������������������������������������������163 83. RESERVED ���������������������������������������������������������������������������������������������������������������163 84. Crediting service with predecessor employer�������������������������������������������������������������163 85. Conflicting trust provisions ����������������������������������������������������������������������������������������163 5 | Defined Benefit Plan LRM Package 06/2026 86. Conflict with insurance contracts �������������������������������������������������������������������������������163 87. Treatment of insurance dividends and other credits, fully-insured plans���������������������164 88. Additional adoption agreement requirements�������������������������������������������������������������165 89. USERRA – military service credit������������������������������������������������������������������������������165 89A. Multiple employer plans���������������������������������������������������������������������������������������������166 PART II - STANDARDIZED PLANS ��������������������������������������������������������� 168 90. Coverage���������������������������������������������������������������������������������������������������������������������168 91. Eligibility requirements not more favorable for highly compensated�������������������������169 92. Reliance on Opinion Letter ����������������������������������������������������������������������������������������169 93. - 101. [RESERVED] �������������������������������������������������������������������������������������������������170 PART III - NONSTANDARDIZED PLAN PROVISIONS ������������������������ 170 102. Employee mandatory contributions����������������������������������������������������������������������������171 103. Accrued benefit derived from mandatory employee contributions������������������������������171 104. Nonforfeitability of mandatory employee contributions���������������������������������������������172 105. Minimum age and service ������������������������������������������������������������������������������������������173 106. Reliance on Opinion Letter ����������������������������������������������������������������������������������������173 107. Election of total compensation������������������������������������������������������������������������������������174 108. Repetitive amendment������������������������������������������������������������������������������������������������174 APPENDIX – REDLINED VERSION SHOWING CHANGES ��������������� 176 6 | Defined Benefit Plan LRM Package 06/2026 PART I - ALL PLANS DEFINITION PROVISIONS 1. Definition of year of service Statement of Requirement: IRC 410(a)(3)(A) and IRC 411(a)(5)(A) Document Provision: _____ Sample Plan Language: A year of service is a 12-consecutive month period (computation period) during which the employee completes at least 1,000 hours of service. (Note to reviewer: Computation periods may vary for eligibility and vesting purposes. See LRMs #18, #19, and #58.) 2. Definition of break in service Statement of Requirement: DOL Reg. 2530.200b-4(a)(1) Document Provision: _____ Sample Plan Language: Break in service means a 12- consecutive month period (computation period) during which the participant does not complete more than 500 hours of service with the employer. (Note to reviewer: Computation periods may vary for eligibility and vesting purposes. See LRMs #18, #19 and #58.) 3. Definition of hour of service Statement of Requirement: DOL Regs. 2530.200b-2, 2530.200b-3; IRC 410(a)(5)(E), 411(a)(6)(E); Rev. Proc. 2023-37, 9.02 Document Provision: _____ Sample Plan Language: Hour of service means: (1) Each hour for which an employee is paid, or entitled to payment, for the performance of duties for the employer. These hours will be credited to the employee for the computation period in which the duties are performed; and (2) Each hour for which an employee is paid, or entitled to payment, by the employer on account of a period of time during which no duties are performed (irrespective of whether the employment relationship has terminated) due to vacation, holiday, illness, incapacity (including disability), layoff, jury duty, military duty or leave of absence. No more than 501 hours of service will be credited under this paragraph for 7 | Defined Benefit Plan LRM Package 06/2026 any single continuous period (whether or not such period occurs in a single computation period). Hours under this paragraph will be calculated and credited pursuant to DOL Reg. 2530.200b-2 which is incorporated herein by this reference; and (3) Each hour for which back pay, irrespective of mitigation of damages, is either awarded or agreed to by the employer. The same hours of service will not be credited both under paragraph (l) or paragraph (2), as the case may be, and under this paragraph (3). These hours will be credited to the employee for the computation period or periods to which the award or agreement pertains rather than the computation period in which the award, agreement or payment is made. Hours of service will be credited for employment with other members of an affiliated service group (under IRC 414(m)), a controlled group of corporations (under IRC 414(b)), or a group of trades or businesses under common control (under IRC 414(c)), of which the Adopting Employer is a member, and any other entity required to be aggregated with the employer pursuant to IRC 414(o). Hours of service will also be credited for any individual considered an employee for purposes of this plan under IRC 414(n) or IRC 414(o). Solely for purposes of determining whether a break in service, as defined in section _____, for participation and vesting purposes has occurred in a computation period, an individual who is absent from work for maternity or paternity reasons shall receive credit for the hours of service which would otherwise have been credited to such individual but for such absence, or in any case in which such hours cannot be determined, 8 hours of service per day of such absence. For purposes of this paragraph, an absence from work for maternity or paternity reasons means an absence (1) by reason of the pregnancy of the individual, (2) by reason of a birth of a child of the individual, (3) by reason of the placement of a child with the individual in connection with the adoption of such child by such individual, or (4) for purposes of caring for such child for a period beginning immediately following such birth or placement. The hours of service credited under this paragraph shall be credited (1) in the computation period in which the absence begins if the crediting is necessary to prevent a break in service in that period, or (2) in all other cases, in the following computation period. (Note to reviewer: The blank should be filled in with the plan section number corresponding to LRM #2.) (Optional): Service will be determined on the basis of the method selected in the adoption agreement. Sample Adoption Agreement Language: (If preceding paragraph is used in the plan language) Service will be determined on the basis of the method selected below. Only one method may be selected. The method selected will be applied to all employees covered under the plan. ( ) On the basis of actual hours for which an employee is paid or entitled to payment. ( ) On the basis of days worked. An employee will be credited with ten (10) hours of service if under section _____ of the plan such employee would be credited with at least one (1) hour of service during the day. 8 | Defined Benefit Plan LRM Package 06/2026 ( ) On the basis of weeks worked. An employee will be credited with forty-five (45) hours of service if under section _____ of the plan such employee would be credited with at least one (1) hour of service during the week. ( ) On the basis of semi-monthly payroll periods. An employee will be credited with ninety-five (95) hours of service if under section_____ of the plan such employee would be credited with at least one (1) hour of service during the semi-monthly payroll period. ( ) On the basis of months worked. An employee will be credited with one hundred ninety (190) hours of service if under section _____ of the plan such employee would be credited with at least one (l) hour of service during the month. (Note to reviewer: The blanks should be filled in with the plan section number that contains the definition of hour of service.) ( ) On the basis of elapsed time, as provided for in section ____of the plan. (Note to reviewer: The blank should be filled in with the plan section number corresponding to LRM #4.) 4. Elapsed time Statement of Requirement: Treas. Reg. 1.410(a)-7; Rev. Proc. 2023-37, 9.02 Document Provision: _____ (Note to reviewer: Use of elapsed time eliminates or simplifies several plan provisions that would otherwise be required if hours of service are counted. The following definitions should replace the otherwise required year of service, break in service, and hour of service definitions.) For purposes of determining an employee's initial or continued eligibility to participate in the plan or the nonforfeitable interest in the participant's account balance derived from employer contributions, (except for periods of service which may be disregarded on account of the "rule of parity" described in section ____) an employee will receive credit for the aggregate of all time period(s) commencing with the employee's first day of employment or reemployment and ending on the date a break in service begins. The first day of employment or reemployment is the first day the employee performs an hour of service. An employee will also receive credit for any period of severance of less than 12 consecutive months. Fractional periods of a year will be expressed in terms of days. (Wording in parenthesis applies only in plans that utilize the rule of parity. See LRMs #20 and #64.) For purposes of this section, hour of service shall mean each hour for which an employee is paid or entitled to payment for the performance of duties for the employer. Break in service is a period of severance of at least 12 consecutive months. Period of severance is a continuous period of time during which the employee is not employed by the employer. Such period begins on the date the employee retires, quits or is discharged, or 9 | Defined Benefit Plan LRM Package 06/2026 if earlier, the 12-month anniversary of the date on which the employee was otherwise first absent from service. In the case of an individual who is absent from work for maternity or paternity reasons, the 12-consecutive month period beginning on the first anniversary of the first date of such absence shall not constitute a break in service. For purposes of this paragraph, an absence from work for maternity or paternity reasons means an absence (1) by reason of the pregnancy of the individual, (2) by reason of the birth of a child of the individual, (3) by reason of the placement of a child with the individual in connection with the adoption of such child by such individual, or (4) for purposes of caring for such child for a period beginning immediately following such birth or placement. Each employee will share in employer contributions for the period beginning on the date the employee commences participation under the plan and ending on the date on which such employee severs employment with the employer or is no longer a member of an eligible class of employees. If the employer is a member of an affiliated service group (under IRC 414(m)), a controlled group of corporations (under IRC 414(b)), or a group of trades or businesses under common control (under IRC 414(c)), or any other entity required to be aggregated with the employer pursuant to IRC 414(o), service will be credited for any employment for any period of time for any other member of such group. Service will also be credited for any individual required under IRC 414(n) or IRC 414(o) to be considered an employee of any employer aggregated under IRC 414(b), 414(c), or 414(m). 5. Definition of plan year Document Provision: _____ Sample Plan Language: Plan year is the 12-consecutive month period designated by the employer in the adoption agreement. Sample Adoption Agreement Language: Plan year means: ( ) the 12-consecutive month period which coincides with the limitation year. ( ) the 12-consecutive month period commencing on _____ and each anniversary thereof. 6. Definition of compensation Statement of Requirement: IRC 401(a)(17), 414(s), and 415(c)(3); Treas. Regs. 1.401(a)(4)-12, 1.401(a)(17)-1, 1.414(s)-1, and 1.415(c)-2; Notice 2001-37; Notice 2001-56; Rev Rul. 2003-11; Notice 2010-15; Rev. Proc. 2023-37, 12.02(4), 9.03(3) Document Provision: _____ 10 | Defined Benefit Plan LRM Package 06/2026 Sample Plan Language: Compensation means compensation as that term is defined in section _____ of the plan and related elections in the adoption agreement. For any self-employed individual covered under the plan, compensation will mean earned income. Except as provided elsewhere in this plan, compensation shall include only that compensation which is actually paid to the participant during the determination period, and the determination period shall be the period elected by the employer in the adoption agreement. If the employer makes no election, the determination period shall be the plan year. (Note to reviewer: The blank should be filled in with the plan section number that corresponds to section 6.2 of LRM #40.) (Note to reviewer: Under certain circumstances, other definitions of compensation may be used. However, compensation used in determining top-heavy minimums and compensation in Standardized Plans must be one of the definitions provided in section 6.2 of LRM #40. For purposes of the preceding sentence, the safe harbor alternative definition of compensation contained in Treas. Reg. 1.414(s)-1(c)(3) may also be used. A plan will not fail to be a Standardized Plan if it uses a plan definition of compensation approved for Standardized Plans but excludes from that definition differential wage payments under IRC 3401(h). Standardized Plans must permit the employer to elect one of the definitions of compensation provided in section 6.2 of LRM #40 in the adoption agreement.) Notwithstanding the above, if elected by the employer in the adoption agreement, compensation shall not include any amount which is contributed by the employer pursuant to a salary reduction agreement and which is not includible in the gross income of the employee under IRC 125, 132(f)(4), 402(e)(3), 402(h) or 403(b). For plan years beginning on or after January 1, 2002, the annual compensation of each participant taken into account in determining all benefits provided under the plan for any determination period shall not exceed $200,000, as adjusted for cost-of-living increases in accordance with IRC 401(a)(17)(B). The cost-of-living adjustment in effect for a calendar year applies to any determination period beginning with or within such calendar year. If a determination period consists of fewer than 12 months, the annual compensation limit is an amount equal to the otherwise applicable annual compensation limit multiplied by a fraction, the numerator of which is the number of months in the short determination period, and the denominator of which is 12. If compensation for any prior determination period is taken into account in determining a participant's benefits for the current plan year, the compensation for such prior determination period is subject to the applicable annual compensation limit in effect for that prior period. (Note to reviewer: IRC 401(a)(17) limits compensation taken into account to $200,000 in determining contributions and benefit accruals and provides that this limit will be adjusted each year for cost of living increases. For 2026, the compensation limit was $360,000.) Sample Adoption Agreement Language: Compensation shall be determined over the following determination period: 11 | Defined Benefit Plan LRM Package 06/2026 ( ) the plan year. ( ) a consecutive 12-month period ending with or within the plan year. Enter the day and the month this period begins: _____ (day) _____(month). For employees whose date of hire is less than 12 months before the end of the 12-month period designated, compensation will be determined over the plan year. (Note to reviewer: The plan may provide that compensation will be determined over the period of plan participation during the plan year, as provided for in Treas. Reg 1.401(a) (17)-1(b)(3)(iii)(B).) (Note to reviewer: IRC 401(a)(17) limits compensation taken into account to $200,000 in determining contributions and allocations and provides that this limit will be adjusted each year for cost of living increases. For 2026, the compensation limit was $360,000. Treas. Reg. 1.401(a)(4)-12 (see definition of "plan year compensation").) Compensation ( ) shall not include employer contributions made pursuant to a salary reduction agreement which are not includible in the gross income of the employee under IRC 125, 132(f)(4), 402(e)(3), 402(h) or 403(b). In determining benefit accruals in plan years beginning after December 31, 2001, the annual compensation taken into account for determination periods beginning before January 1, 2002, shall be limited to: (check one) ( ) $200,000 ( ) $150,000 for any determination period beginning in 1996 or earlier; $160,000 for any determination period beginning in 1997, 1998, or 1999; and $170,000 for any determination period beginning in 2000 or 2001. If neither box is checked, the $200,000 limit shall apply. 7. Compensation formulas Statement of Requirement: Treas. Reg. 1.401(a)(4)-3(e)(2); Rev. Proc. 2023-37, 9.03 Document Provision: _____ Sample Plan Language: Average annual compensation. Average annual compensation means the average of a participant's annual compensation, as defined in section____ of the plan, over the three consecutive plan years (or 12-month periods) ending in the current year or in any prior year that produces the highest average. If a participant's entire period of service for the employer is less than three consecutive years, compensation is averaged on an annual basis over the participant's entire period of service. (Note to reviewer: The blank should be filled in with the plan section number that corresponds to LRM #6.) 12 | Defined Benefit Plan LRM Package 06/2026 (Note to reviewer: The election of the plan year or 12-month period for Compensation is made in LRM #6.) (Note to reviewer: The plan may provide for an averaging period that consists of more than three years or may permit the employer to select an alternate period (not less than three years)). (Note to reviewer: In an accumulation plan (a plan providing that the participant's total retirement benefit consists of the sum of the participant's benefits separately calculated for each plan year using compensation earned for the year), a participant's retirement benefit may be determined using a participant's annual compensation (as defined in LRM #6) in place of average annual compensation.) (Note to reviewer: In the sample plan language above, the participant's compensation history consists of the participant's entire period of service. However, a participant's compensation history may be limited to a period no shorter than the averaging period, as long as it is continuous and ends in the current plan year. For example, a plan may provide that average annual compensation is determined based on the 5 consecutive year period that produces the highest average out of the last 10 years. Note also that in determining a participant's compensation history, certain years may be disregarded. See Treas. Reg. 1.401(a)(4)-3(e)(2)(ii)(B).) 8. Definition of earned income Statement of Requirement: IRC 401(c)(2), 414(s); Treas. Reg. 1.414(s)-1(b)(3); Rev. Proc. 2023-37, 9.03(1) Document Provision: _____ Sample Plan Language: Earned income means the net earnings from self-employment in the trade or business with respect to which the plan is established, for which personal services of the individual are a material income-producing factor. Net earnings will be determined without regard to items not included in gross income and the deductions allocable to such items. Net earnings are reduced by contributions by the employer to a qualified plan to the extent deductible under IRC 404. Net earnings shall be determined with regard to the deduction allowed to the taxpayer by IRC 164(f). (Note to reviewer: This definition is not required if the plan is a Nonstandardized Plan that precludes participation by self-employed individuals.) 9. Definition of employee Statement of Requirement: IRC 414(b), 414(c), 414(m), 414(n), 414(o); Rev Proc. 2023-37, 9.02(10)(a) Document Provision: _____ 13 | Defined Benefit Plan LRM Package 06/2026 Sample Plan Language: Employee shall mean any employee of the employer maintaining the plan or of any other employer required to be aggregated with such employer under IRC 414(b), 414(c), 414(m) or 414(o). The term employee shall also include any leased employee deemed to be an employee of any employer described in the previous paragraph as provided in IRC 414(n) or 414(o). 10. Definition of leased employee Statement of Requirement: IRC 414(n), 414(q) Document Provision: _____ Sample Plan Language: The term leased employee means any person (other than an employee of the recipient) who pursuant to an agreement between the recipient and any other person ("leasing organization") has performed services for the recipient (or for the recipient and related persons determined in accordance with IRC 414(n)(6)(A)) on a substantially full-time basis for a period of at least one year, and such services are performed under primary direction or control by the recipient. Contributions or benefits provided a leased employee by the leasing organization which are attributable to services performed for the recipient employer shall be treated as provided by the recipient employer. A leased employee shall not be considered an employee of the recipient if: (1) such employee is covered by a money purchase pension plan providing: (i) a nonintegrated employer contribution rate of at least 10 percent of compensation, as defined in IRC 415(c)(3), but including amounts contributed pursuant to a salary reduction agreement which are excludable from the employee's gross income under IRC 125, 402(e)(3), 402(h) or 403(b), (ii) immediate participation, and (iii) full and immediate vesting; and (2) leased employees do not constitute more than 20 percent of the recipient's nonhighly compensated workforce. 11. Definition of highly compensated employee Statement of Requirement: IRC 414(q); Treas. Reg. 1.414(q)-1T; Notice 97-45 Document Provision: _____ Sample Plan Language: The term highly compensated employee means any employee who: (1) was a 5-percent owner at any time during the year or the preceding year, or (2) for the preceding year had compensation from the employer in excess of $80,000 (adjusted at the same time and in the same manner as under IRC 415(d)) and, if the employer so elects in the plan, was in the toppaid group for the preceding year. For this purpose, the applicable year of the plan for which a determination is being made is called a determination year and the preceding 12-month period is called a look-back year. 14 | Defined Benefit Plan LRM Package 06/2026 A highly compensated former employee is based on the rules applicable to determining highly compensated employee status as in effect for that determination year. Sample adoption agreement language: ( ) In determining who is a highly compensated employee the employer makes a top-paid group election. The effect of this election is that an employee (who is not a 5-percent owner at any time during the determination year or the lookback year) with compensation in excess of $80,000 (adjusted at the same time and in the same manner as under IRC 415(d)) for the look-back year is a highly compensated employee only if the employee was in the top-paid group for the look-back year. ( ) In determining who is a highly compensated employee the employer does not make a top-paid group election. ( ) In determining who is a highly compensated employee (other than as a 5percent owner) the employer makes a calendar year data election. The effect of this election is that the look-back year is the calendar year beginning with or within the lookback year. (Note to reviewer: Regulations promulgated under IRC 414(q) provide that the employer may elect to have special rules apply with respect to the determination of who is a highly compensated employee if they are provided for in the plan and they are applied by the employer on a uniform and consistent basis. The definition above does not provide for these special elections (see Treas. Reg. 1.414(q)-1T, A-4 and Notice 97-45). An employer may make a top-paid group election for a determination year. The effect of this election is that an employee (who is not a 5-percent owner at any time during the determination year or the look-back year) with compensation in excess of $80,000 (adjusted at the same time and in the same manner as under IRC 415(d)) for the look-back year is a highly compensated employee only if the employee was in the top-paid group for the look-back year. An employer may also make a calendar year data election for a determination year. The effect of this election is that the look-back year is the calendar year beginning with or within the look-back year. The plan may not use this election to determine whether employees are highly compensated employees on account of being 5-percent owners. These elections, once made, apply for all subsequent determination years unless changed by the employer. An employer making one of the elections is not required also to make the other election. However, if both elections are made, the look-back year in determining the top-paid group must be the calendar year beginning with or within the look-back year. These elections must apply consistently to the determination years of all plans of the employer. If a qualified plan contains the definition of highly compensated employee and an employer makes or changes either a top-paid group election or a calendar year data election for a determination year, the plan must reflect the choices made. Any retroactive amendments must reflect the choices made in the operation of the plan for each determination year.) 12. Definition of owner-employee 15 | Defined Benefit Plan LRM Package 06/2026 Statement of Requirement: IRC 401(c)(3); Rev. Proc. 2023-37, 9.02(10)(a), 9.03(1) Document Provision: _____ Sample Plan Language: Owner-employee means an individual who is a sole proprietor, or who is a partner owning more than 10 percent of either the capital or profits interest of the partnership. (Note to reviewer: This definition is not required if the plan is a Nonstandardized Plan that precludes participation by owner-employees.) 13. Definition of self-employed individual Statement of Requirement: IRC 401(c)(l); Rev. Proc. 2023-37, 9.02(10)(a), 9.03(1) Document Provision: _____ Sample Plan Language: Self-employed individual means an individual who has earned income for the taxable year from the trade or business for which the plan is established; also, an individual who would have had earned income but for the fact that the trade or business had no net profits for the taxable year. (Note to reviewer: This definition is not required if the plan is a Nonstandardized Plan that precludes participation by self-employed individuals.) 14. Definition of normal retirement age Statement of Requirement: IRC 411(a)(8); Treas. Regs. 1.401(a)-1(b)(2), 1.411(a)-7(b)(1), and 1.411(d)-4, Q&A-12; Notice 2007-69; Rev. Proc. 2023-37, 9.02(13), 12.03(4) Document Provision: _____ Sample Plan Language: Normal retirement age is the age selected in the adoption agreement. If the employer enforces a mandatory retirement age, the normal retirement age is the lesser of that mandatory age or the age specified in the adoption agreement. Sample Adoption Agreement Language: For each participant, normal retirement age is: (select A. or B.) A. ( ) age _____ (not less than 55, nor in excess of 65). (No age less than 55 can be inserted. If an age less than 62 is inserted, no reliance will be afforded on the Opinion Letter issued to the plan that such age is reasonably representative of the typical retirement age for the industry in which the participants 16 | Defined Benefit Plan LRM Package 06/2026 work.) B. ( ) the later of: (i) (i) age _____ (not less than 55, nor in excess of 65), or (ii) (ii) the _____ (not to exceed 5th) anniversary of the participation commencement date. If, for plan years beginning before January 1, 1988, normal retirement age was determined with reference to the anniversary of the participation commencement date (more than 5 but not to exceed 10 years), the anniversary date for participants who first commenced participation under the plan before the first plan year beginning on or after January 1, 1988, shall be the earlier of (1) the tenth anniversary of the date the participant commenced participation in the plan (or such anniversary as had been elected by the employer, if less than 10) or (2) the fifth anniversary of the first day of the first plan year beginning on or after January 1, 1988. The participation commencement date is the first day of the first plan year in which the participant commenced participation in the plan. (Note to reviewer: Under the provisions of Treas. Reg. 1.401(a)-1(b)(2), a plan’s normal retirement age (NRA) cannot be earlier than what is reasonably representative of the typical retirement age for the industry in which the participants work. An NRA of 62 or older is deemed to satisfy this requirement. An NRA under 55 is presumed not to satisfy this requirement unless the Internal Revenue Service determines that the facts and circumstances show otherwise. Whether an NRA from 55 and 62 satisfies this requirement depends on facts and circumstances.) 15. Definition of straight life annuity Statement of Requirement: Treas. Reg. 1.401(a)(4)-12 Document Provision: _____ Sample Plan Language: Straight life annuity means an annuity payable in equal installments for the life of the participant that terminates upon the participant's death. MINIMUM PARTICIPATION PROVISIONS 16. Maximum age restrictions not permitted Statement of Requirement: IRC 410(a)(2) Document Provision: _____ (Note to reviewer: The Provider must delete any provision that restricts participation based on the attainment of a specified age for employees who perform one hour of service in any plan year beginning on or after January 1, 1988.) 17 | Defined Benefit Plan LRM Package 06/2026 17. Provisions for entry into participation Statement of Requirement: IRC 410(a)(4); Treas. Reg. 1.410(a)-4(b) Document Provision: _____ Sample Plan Language: The employee will participate on the earlier of: (l) the first day of the plan year beginning after the date on which the employee has met the minimum age and service requirements or (2) six months after the date the requirement is met. (Note to reviewer: If the plan provides for a single annual entry date, the maximum age and service requirements must be reduced by ½ year unless the employee participates on the entry date nearest the date the employee completes the minimum age and service requirements and the entry date is the first day of the plan year.) 18. Eligibility computation periods Statement of Requirement: DOL Regs. 2530.202-2(a), 2530.202-2(b) Document Provision: _____ Sample Plan Language: For purposes of determining years of service and breaks in service for purposes of eligibility, the initial eligibility computation period is the 12-consecutive month period beginning on the date the employee first performs an hour of service for the employer (employment commencement date). The succeeding 12-consecutive month periods commence with the first anniversary of the employee's employment commencement date. (This paragraph is not applicable if the eligibility computation period shifts to the plan year.) The succeeding 12-consecutive month periods commence with the first plan year which commences prior to the first anniversary of the employee's employment commencement date regardless of whether the employee is entitled to be credited with 1,000 hours of service during the initial eligibility computation period. An employee who is credited with 1,000 hours of service in both the initial eligibility computation period and the first plan year that commences prior to the first anniversary of the employee's initial eligibility computation period will be credited with two years of service for purposes of eligibility to participate. (This paragraph is not applicable if succeeding eligibility computation periods commence on the 12-consecutive month anniversary of the employee's employment commencement date.) 19. Use of computation periods Statement of Requirement: DOL Reg. 2530.200b-4(a)(2) 18 | Defined Benefit Plan LRM Package 06/2026 Document Provision: _____ Sample Plan Language: Years of service and breaks in service will be measured on the same eligibility computation period. 20. All years of service counted toward eligibility except after certain breaks in service Statement of Requirement: IRC 410(a)(5)(A), 410(a)(5)(B), 410(a)(5)(D); Treas. Reg. 1.410(a)-5 Document Provision: _____ Sample Plan Language: All years of service with the employer are counted toward eligibility except the following: If an employee has a l-year break in service before satisfying the plan's requirement for eligibility, service before such break will not be taken into account. (Note to reviewer: The above provision is only permitted if the plan provides 100% vesting after an employee completes the IRC 410(a)(l)(B)(i) eligibility requirements. See IRC 410(a)(5)(B).) In the case of a participant who does not have any nonforfeitable right to the accrued benefit derived from employer contributions, years of service before a period of consecutive 1-year breaks in service will not be taken into account in computing eligibility service if the number of consecutive 1-year breaks in service in such period equals or exceeds the greater of 5 or the aggregate number of years of service. Such aggregate number of years of service will not include any years of service disregarded under the preceding sentence by reason of prior breaks in service. If a participant's years of service are disregarded pursuant to the preceding paragraph, such participant will be treated as a new employee for eligibility purposes. If a participant's years of service may not be disregarded pursuant to the preceding paragraph, such participant shall continue to participate in the plan, or, if terminated, shall participate immediately upon reemployment. (Note to reviewer: For plan language meeting the requirements of the eligibility oneyear hold-out rule (IRC 410(a)(5)(C)), see LRM #21). 21. Eligibility break in service, one-year hold-out rule Statement of Requirement: DOL Reg. 2530.200b-4(b)(l); IRC 410(a)(5)(C) Document Provision: _____ (Nonstandardized Plans only): Sample Plan Language: 19 | Defined Benefit Plan LRM Package 06/2026 In the case of any participant who has a 1-year break in service, years of eligibility service before such break will not be taken into account until the employee has completed a year of service after returning to employment. Such year of service will be measured by the 12-consecutive month period beginning on an employee's reemployment commencement date and, if necessary, subsequent 12consecutive month periods beginning on anniversaries of the reemployment commencement date. (This paragraph is not applicable if the plan shifts the eligibility computation period to the plan year.) Such year of service will be measured by the 12-consecutive month period beginning on an employee's reemployment commencement date and, if necessary, plan years beginning with the plan year that includes the first anniversary of the reemployment commencement date. (This paragraph is not applicable if the eligibility computation period is measured with reference to the employment commencement date.) The reemployment commencement date is the first day on which the employee is credited with an hour of service for the performance of duties after the first eligibility computation period in which the employee incurs a one-year break in service. If a participant completes a year of service in accordance with this provision, his or her participation will be reinstated as of the reemployment commencement date. 22. Participation upon return to eligible class Statement of Requirement: IRC 410(a)(4) Document Provision: _____ Sample Plan Language: In the event a participant is no longer a member of an eligible class of employees and becomes ineligible to participate but has not incurred a break in service, such employee will participate immediately upon returning to an eligible class of employees. If such participant incurs a break in service, eligibility will be determined under the break in service rules of the plan. In the event an employee who is not a member of an eligible class of employees becomes a member of an eligible class, such employee will participate immediately if such employee has satisfied the minimum age and service requirements and would have otherwise previously become a participant. PLAN BENEFIT PROVISIONS (Note to reviewer: All Standardized defined benefit plans must, by their terms, satisfy one of the design-based safe harbors in Treas. Regs. 1.401(a)(4)-3(b)(3), 1.401(a)(4)3(b)(4), or 1.401(a)(4)-3(b)(5). All Nonstandardized Plans may provide plan language that automatically satisfies one of the design-based safe harbors in Treas. Regs. 1.401(a)(4)-3(b) (3), 1.401(a)(4)-3(b)(4), or 1.401(a)(4)-3(b)(5), or provide a mechanism in the adoption agreement for the employer to select plan language that does. (See sections 12.02(4) or 9.03(4) of Rev. Proc. 2023-37.) LRM #26 provides sample benefit formulas that satisfy the 20 | Defined Benefit Plan LRM Package 06/2026 design-based safe harbors of the regulations for plans that do not provide for permitted disparity. LRM #27 provides sample formulas that satisfy the design-based safe harbors of the regulations for plans that provide for permitted disparity. A plan that changes its benefit formula or accrual method must, in order to satisfy the design-based safe harbors in the regulations, satisfy the fresh-start rules in Treas. Reg. 1.401(a)(4)-13(c) with regard to such change. LRMs ## 23-25 provide sample plan language that satisfies these rules. All Standardized Plans must comply with LRMs ## 23-25; all other Nonstandardized Plans must provide these LRM provisions either automatically or by option.) (Note to reviewer: No IRC 401(a)(4) failsafe language is allowed. The plan must pass nondiscrimination testing based on Treas. Regs. 1.401(a)(4)-1 through 1.401(a)(4)13.) 23. Fresh-start rules Statement of Requirement: Treas. Reg. 1.401(a)(4)-13(c) Document Provision: _____ Sample Adoption Agreement Language: The formula with wear-away and formula with extended wear-away fresh-start rules below take into account an employee's past service in determining the employee's benefit accruals under the plan; either of these rules may cause the plan to fail to satisfy the safe harbor for past service in Treas. Reg. 1.401(a)(4)-5(a)(3). In the case of a plan that is exempt from IRC 412 pursuant to IRC 412(e)(3) (“section 412(e)(3) plan”), the words "projected benefit" and "frozen projected benefit" will be substituted for "accrued benefit" and "frozen accrued benefit" respectively, wherever they appear in this section. The projected benefit is the participant's normal (or late, if the participant has previously attained normal retirement age) retirement benefit determined on the basis of current average annual compensation and all years of credited service plus years of credited service projected through the later of the plan year in which the participant attains normal retirement age or the current plan year. The accrued benefit of each participant in the fresh-start group will be equal to: 1. ( ) Formula with wear-away – the greater of: (a) the participant's frozen accrued benefit, if any, and (b) the participant's accrued benefit determined with respect to the current benefit formula as applied to the participant's total years of credited service under the plan. 2. ( ) Formula without wear-away – the sum of: (c) the participant's frozen accrued benefit, if any, and (d) the participant's accrued benefit determined with respect to the current benefit formula as applied to the participant's years of credited service beginning after the fresh-start date. 21 | Defined Benefit Plan LRM Package 06/2026 If, however, the participant's benefit under the plan is accrued under the fractional accrual rule in section ____ of the plan or the 3% accrual rule in section ____ of the plan, or if this plan satisfies the safe harbor for insurance contract plans in Treas. Reg. 1.401(a)(4)3(b)(5), this formula without wear-away will not apply, and the participant's accrued benefit will be determined in accordance with the formula with wear-away above. (Note to reviewer: The first blank above should be filled in with the plan section that corresponds to the fractional accrual rule in LRM #31. The second blank above should be filled in with the plan section that corresponds to the 3% accrual rule in LRM #31.) 3. ( ) Formula with extended wear-away – the greater of the accrued benefit determined for the participant under the formula with wear-away or the formula without wear-away above. If, however, the participant's benefit under the plan is accrued under the 3% accrual rule in section ____ of the plan, or if this plan satisfies the safe harbor for insurance contract plans in Treas. Reg. 1.401(a)(4)3(b)(5), the formula with extended wearaway will not apply, and the participant's accrued benefit will be determined in accordance with the formula with wear-away above. (Note to reviewer: The blank above should be filled in with the plan section that corresponds to the 3% accrual rule in LRM #31.) Definition of fresh-start group. The fresh-start group consists of all participants who have accrued benefits as of the fresh-start date and have at least one hour of service with the employer after that date. However, if designated below, the fresh-start group shall be limited to: 1. ( ) IRC 401(a)(17) participants (may be elected only with respect to a Tax Reform Act of 1986 (TRA '86) fresh-start date and with respect to an Omnibus Budget Reconciliation Act of 1993 (OBRA '93) fresh-start date). A TRA '86 fresh-start date means a fresh-start date that is not earlier than the last day of the last plan year beginning before the first plan year beginning on or after January 1, 1989 (the statutory effective date), and not later than the last day of the last plan year beginning before the first plan year beginning on or after January 1, 1994 (the regulatory effective date). An OBRA '93 fresh-start date means the last day of the last plan year beginning before the first plan year beginning on or after January 1, 1994. 2. ( ) Members of an acquired group of employees. An acquired group of employees means employees of a prior employer who become employed by the employer in a transaction between the employer and the prior employer that is a stock or asset acquisition, merger, or other similar transaction involving a change in the employer of the employees of the trade or business on or before ____________ (enter a date no later than the end of the transaction period defined in IRC 410(b)(6)(C)(ii), if the date selected is after February 10, 1993). The date in the preceding sentence will be the fresh-start date with respect to members of the acquired group described below. The acquired group consists of: 22 | Defined Benefit Plan LRM Package 06/2026 Employees with a frozen accrued benefit that is attributable to assets and liabilities transferred to the plan as of a fresh-start date in connection with the transfer, and for whom the current formula is different from the formula used to determine frozen accrued benefit. The fresh-start date in connection with the transfer is: _____________ (must be the date as of which the employees begin accruing benefits under the plan). The group of employees with a frozen accrued benefit that is attributable to assets and liabilities transferred to the plan is:____________________ Definition of fresh-start date. Fresh-start date generally means the last day of a plan year preceding a plan year for which any amendment of the plan that directly or indirectly affects the amount of a participant's benefit determined under the current benefit formula (such as an amendment to the definition of compensation used in the current benefit formula or a change in the normal retirement age of the plan) is made effective. However, if under this adoption agreement the fresh-start group is limited to an acquired group of employees, or a group of employees with a frozen accrued benefit attributable to assets and liabilities transferred to the plan, the fresh-start date will be the date designated above. 24. Determination of frozen accrued benefit Statement of Requirement: Treas. Reg. 1.401(a)(4)-13(c) Document Provision: _____ (Note to reviewer: This LRM #24 does not apply to IRC 412(e)(3) plans. See LRM #32 for the definition of frozen projected benefit.) Sample Plan Language: A participant's frozen accrued benefit is the amount of the participant's accrued benefit determined in accordance with the provisions of the plan applicable in the year containing the latest fresh-start date, determined as if the participant terminated employment with the employer as of the latest fresh-start date (or the date the participant actually terminated employment with the employer, if earlier) without regard to any amendment made to the plan after that date other than amendments recognized as effective as of or before the date under IRC 401(b) or Treas. Reg. 1.401(a)(4)-11(g). If the participant has not had a freshstart, the participant's frozen accrued benefit will be zero. If, as of the participant's latest fresh-start date, the amount of a participant's frozen accrued benefit was limited by the application of IRC 415, the participant's frozen accrued benefit will be increased for years after the latest fresh-start date to the extent permitted under IRC 415(d) (1). In addition, the frozen accrued benefit of a participant whose frozen accrued benefit includes the top-heavy minimum benefits provided in section ____ of the plan, will be increased to the extent necessary to comply with the average compensation requirement of IRC 416(c)(1) (D)(i). (Note to reviewer: The blank should be filled in with the plan section number corresponding to LRM #70.) 23 | Defined Benefit Plan LRM Package 06/2026 If: (1) the plan's normal form of benefit in effect on the participant's latest fresh-start date is not the same as the normal form under the plan after such fresh-start date and/or (2) the normal retirement age for any participant on that date was greater than the normal retirement age for that participant under the plan after such fresh-start date, the frozen accrued benefit will be expressed as an actuarial equivalent benefit in the normal form under the plan after the participant's latest fresh-start date, commencing at the participant's normal retirement age under the plan in effect after such latest fresh-start date. If the plan provides a new optional form of benefit with respect to a participant's frozen accrued benefit, such new optional form of benefit will be provided with respect to each participant's entire accrued benefit (i.e., accrued both before and after the fresh-start date). In addition, if this plan is a unit credit plan, with respect to plan years beginning after the latest fresh-start date, the current benefit formula will provide each participant in the freshstart group a benefit of not less than 0.5% of the participant's average annual compensation times the participant's years of service after the latest fresh-start date. If this is a flat benefit plan, then, with respect to plan years beginning after the plan's latest freshstart date, the current benefit formula will provide each participant a benefit of not less than 25% of the participant's average annual compensation. If a participant will have less than 50 years of service after the latest fresh-start date through the year the participant attains normal retirement age (or current age, if later), then such minimum percentage will be reduced by multiplying it by the following ratio: participant's years of service after the latest fresh-start date 50 25. Adjustments to frozen accrued benefit Statement of Requirement: Treas. Regs. 1.401(a)(4)-13(c)(5), 1.401(a)(4)-13(d), 1.401(a)(17)-1(e) Document Provision: _____ (Note to reviewer: In accordance with Treas. Reg. 1.401(a)(4)-13(d), if as of the latest fresh-start date, the plan contained a benefit formula under which benefits of each participant in the fresh-start group that are accrued as of the freshstart date and are attributable to service before the fresh-start date would be affected by compensation earned by the participant in years beginning after the latest fresh-start date (where, for example, the benefit formula as of the fresh-start date bases benefits on a participant's highest average pay), an employer may elect to provide that the frozen accrued benefit of participants in the fresh-start group will be increased after the fresh-start date to reflect any increases in such participants' compensation after that date. If the employer elects, Treas. Regs. 1.401(a)(4)-13(d)(4) through 1.401(a)(4)13(d)(7) provide that if the plan provides for a minimum benefit adjustment (if applicable) and provides benefits after the latest fresh-start date that are meaningful with respect to benefits provided during plan years beginning before the freshstart date, the frozen accrued benefit of participants in the fresh-start group may be increased to the extent permitted by the methods provided in Treas. Reg. 1.401(a)(4)-13(d)(8), and that such post-fresh-start date increases to the participants' frozen accrued benefits will be disregarded in determining whether a plan meets one of the safe harbors under Treas. Reg. 1.401(a)(4)-3(b). This LRM #25 provision 24 | Defined Benefit Plan LRM Package 06/2026 is optional.) Sample Plan Language: Section 1. If elected by the employer in section ___ of the adoption agreement, the provisions of sections 1.1 through 5 below will apply to adjust the frozen accrued benefit of each participant in the fresh-start group determined as of the latest fresh-start date under the plan, if, as of that date, the plan contained a benefit formula under which the participant's accrued benefit could be determined with reference to compensation earned by the participant in years beginning after the latest fresh-start date occurring before the first plan year beginning on or after January 1, 1994. In the case of an IRC 412(e)(3) plan, the words "projected benefit" and "frozen projected benefit" will be substituted for "accrued benefit" and "frozen accrued benefit" respectively, wherever they appear in this section. (Note to reviewer: The blank should be filled in with the plan section number corresponding to the adoption agreement language at the end of this LRM #25.) Section 1.1. If a fresh-start group fails to satisfy the minimum coverage requirements of IRC 410(b) for any plan year, the provisions of sections 1.1 through 5 will not apply for that year or any subsequent year. A fresh-start group is deemed to satisfy the minimum coverage requirements of IRC 410(b) for any plan year if any one of the following requirements is satisfied: (a) the fresh-start group satisfied the minimum coverage requirements of IRC 410(b) for the first five plan years beginning after the fresh-start date; (b) the fresh-start group satisfied the ratio percentage test of Treas. Regs. 1.410(b)-2(b)(2) as of the fresh-start date; (c) the fresh-start group consists of an acquired group of employees that satisfied the minimum coverage requirements of IRC 410(b) (determined without regard to any of the special rules pertaining to certain dispositions or acquisitions provided in IRC 410(b)(6) (C)) as of the fresh-start date; or (d) the fresh-start date with respect to the freshstart group occurs before the first day of the first plan year beginning on or after January 1, 1994. Section 1.2. Unit Credit Plans – With respect to plan years beginning after the latest freshstart date, the current benefit formula will provide each participant in the fresh-start group a benefit of not less than 0.5% of the participant's average annual compensation times the participant's years of service after the latest fresh-start date. Section 1.3. Flat Benefit Plans – With respect to plan years beginning after the plan's latest fresh-start date, the current benefit formula will provide each participant a benefit of not less than 25% of the participant's average annual compensation. If a participant will have less than 50 years of service under the plan after the latest fresh-start date through the year the participant attains normal retirement age (or current age, if later), then such minimum percentage will be reduced by multiplying it by the following ratio: 25 | Defined Benefit Plan LRM Package 06/2026 participant's years of service after the latest fresh-start date 50 Section 1.4. Cash Balance Plans – With respect to plan years beginning after the plan’s latest fresh-start date, the current benefit formula will provide each participant in the fresh-start group an accrued benefit in the form of an annuity of not less than 0.5% of the participant's average annual compensation times the participant's years of service after the latest fresh-start date. Section 2. The minimum benefit in sections 2.1 through 2.3 below take into account an employee's past service in determining the participant's accrued benefit under the plan and may cause the plan to fail to satisfy the safe harbor for past service in Treas. Reg. 1.401(a)(4)5(a)(3). Section 2.1. If this plan was a defined benefit excess plan as of the latest fresh-start date, the frozen accrued benefit of each participant in the fresh-start group will be increased, to the extent necessary, if any, so that the base benefit percentage, determined with reference to all of the participant's years of credited service as of the latest fresh-start date, is not less than 50 percent of the excess benefit percentage as of the latest fresh-start date, determined with reference to all of the participant's years of credited service as of the latest fresh-start date. For this purpose, a defined benefit excess plan is a defined benefit plan under which the rate at which employerprovided benefits are determined with respect to average annual compensation above the integration level under the plan is greater than the rate at which employer-provided benefits are determined with respect to average annual compensation at or below the integration level. Section 2.2. If this plan was a Primary Insurance Amount (PIA) Offset plan as of the latest fresh-start date, the offset applied to determine the frozen accrued benefit of each participant in the freshstart group will be decreased, to the extent necessary, if any, so that it does not exceed 50% of the benefit determined without applying the offset, taking into account all the participant's years of credited service as of the latest fresh-start date. For this purpose, a PIA Offset plan is a plan that applies the plan's benefit rates uniformly regardless of a participant's compensation, but that reduces a participant's benefit by a stated percentage of the participant's primary insurance amount under the Social Security Act. Section 2.3. In the case of a plan other than a plan described in sections 2.1 and 2.2 above, the frozen accrued benefit of each participant in the fresh-start group will be increased, to the extent necessary, if any, in a manner that is economically equivalent to the adjustment required under sections 2.1 and 2.2. Section 3. If elected by the employer in the adoption agreement, the frozen accrued benefit (as adjusted under sections 2.1 through 2.3 above, as applicable) of each participant other than IRC 401(a)(17) participants in the fresh-start group will be adjusted in accordance with one of the methods set forth in section 4 below. The frozen accrued benefit of all IRC 401(a)(17) participants will be determined in accordance with the special adjustment applicable to IRC 401(a)(17) participants in section 5 below. Section 3.1. An IRC 401(a)(17) participant includes a Tax Reform Act of 1986 (TRA '86) IRC 401(a)(17) participant as well as an Omnibus Budget Reconciliation Act of 1993 (OBRA '93) IRC 401(a)(17) participant. A TRA '86 IRC 401(a)(17) participant means a participant 26 | Defined Benefit Plan LRM Package 06/2026 whose accrued benefit as of a date on or after the first day of the first plan year beginning on or after January 1, 1989, is based on compensation for a year beginning prior to the TRA '86 statutory effective date that exceeded $200,000. An OBRA '93 IRC 401(a)(17) participant means a participant whose accrued benefit as of a date on or after the first day of the first plan year beginning on or after January 1, 1994, is based on compensation for a year beginning prior to the first day of the first plan year beginning on or after January 1, 1994, that exceeded $150,000. Section 4. The frozen accrued benefit of each participant in the fresh-start group other than IRC 401(a)(17) participants will be adjusted in accordance with one the following methods, as elected by the employer in the adoption agreement: (a) Old compensation fraction The frozen accrued benefit of each participant in the freshstart group, as adjusted in sections 2.1 through 2.3 above, as applicable, will be multiplied by a fraction (not less than 1), the numerator of which is the participant's compensation for the current plan year, using the same definition and compensation formula used in determining the participant's frozen accrued benefit, and the denominator of which is the participant's compensation as of the fresh-start date, determined in the same manner as the numerator. (b) New compensation fraction The frozen accrued benefit of each participant in the freshstart group, as adjusted in sections 2.1 through 2.3 above, as applicable, will be multiplied by a fraction (not less than 1), the numerator of which is the participant's average annual compensation, as defined in section _____ of the plan, for the current plan year, and the denominator is the participant's average annual compensation as of the fresh-start date, determined in the same manner as the numerator. (c) Reconstructed compensation fraction The frozen accrued benefit of each participant in the freshstart group, as adjusted in sections 2.1 through 2.3 above, as applicable, will be multiplied by a fraction (not less than 1), the numerator of which is the participant's average annual compensation, as defined in section of the plan, for the current plan year, and the denominator of which is the participant's reconstructed average annual compensation as of the fresh-start date. (Note to reviewer: The blank should be filled in with the adoption agreement section number corresponding to LRM #7.) A participant's "reconstructed compensation" will be equal to the participant's average annual compensation, as defined in section ____ of the plan, for the plan year elected by the employer in the adoption agreement multiplied by a fraction, the numerator of which is the participant's compensation for the plan year ending on the latest fresh-start date determined using the same compensation definition and compensation formula used to determine the participant's frozen accrued benefit, and the denominator of which is the participant's compensation for the selected year, determined in the same manner as the numerator. 27 | Defined Benefit Plan LRM Package 06/2026 For purposes of calculating a participant's "reconstructed compensation," the selected year will be the plan year elected by the employer in the adoption agreement. (Note to reviewer: The blank should be filled in with the adoption agreement section number corresponding to LRM #7.) (d) Alternative adjustment In lieu of applying the fractions in paragraphs 4(a) and 4(b) above, if the employer elects the Alternative Adjustment in the adoption agreement, a participant's adjusted accrued benefit will be determined by substituting the participant's compensation (as defined in section _____ of the plan) for the current plan year determined under the same compensation formula and underlying definition of compensation used to determine the frozen accrued benefit of each participant in the fresh-start group. Section 5. If the Special Adjustment for IRC 401(a)(17) Participants is elected by the employer in the adoption agreement, the frozen accrued benefit of each IRC 401(a)(17) participant in the fresh-start group will be adjusted in accordance with the following method: IRC 401(a)(17) participants who are OBRA '93 IRC 401(a)(17) participants only: (1) Determine the frozen accrued benefit of each OBRA '93 IRC 401(a)(17) participant as of the last day of the plan year beginning before January 1, 1994. (2) Adjust the amount in step 1 by multiplying it by the following fraction (not less than 1). The numerator of the fraction is the average compensation of the OBRA '93 IRC 401(a)(17) employee determined for the current year (as limited by IRC 401(a)(17)), using the same definition and compensation formula in effect as of the last day of the last plan year beginning before January 1, 1994. The denominator of the fraction is the participant's average compensation for the last day of the last plan year beginning before January 1, 1994, using the definition and compensation formula in effect as of the last day of the last plan year beginning before January 1, 1994. IRC 401(a)(17) participants who are both TRA '86 IRC 401(a)(17) participants and OBRA '93 IRC 401(a)(17) participants: (1) Determine each TRA '86 IRC 401(a)(17) participant's frozen accrued benefit as of the last day of the last plan year beginning before January 1, 1989. (2) Adjust the amount in step 1 up through the last day of the last plan year beginning before the first plan year beginning on or after January 1, 1994, by multiplying it by the following fraction (not less than 1). The numerator of the fraction is the TRA '86 IRC 401(a)(17) participant's average compensation determined for the current year (as limited by IRC 401(a)(17)), using the same definition and compensation formula in effect as of the last day of the last plan year beginning before January 1, 1989. The denominator of the fraction is the participant's average compensation for the last day of the plan year beginning before January 1, 1989, using the definition and compensation formula in effect last day of the last plan year beginning before January 1, 1989. (3) Determine the TRA '86 IRC 401(a)(17) participant's frozen accrued benefit as of the 28 | Defined Benefit Plan LRM Package 06/2026 last day of the last plan year beginning before January 1, 1994. (4) Subtract the amount determined in step 2 from the amount determined in step 3. (5) Adjust the amount in step 4 by multiplying it by the following fraction (not less than 1). The numerator of the fraction is the TRA '86 IRC 401(a)(17) participant's average compensation determined for the current year (as limited by IRC 401(a)(17)), using the same definition and compensation formula in effect as of the last day of the last plan year beginning before January 1, 1994. The denominator of the fraction is the participant's average compensation for the last day of the plan year beginning before January 1, 1994, using the definition and compensation formula in effect as of the last day of the last plan year beginning before January 1, 1994. (6) Adjust the amount in step 1 by multiplying it by the following fraction (not less than 1). The numerator of the fraction is the TRA '86 IRC 401(a)(17) participant’s average compensation for the current year (as limited by IRC 401(a)(17)), using the same definition of compensation and compensation formula in effect as of the last day of the last plan year beginning before January 1, 1989. The denominator of the fraction is the participant's average compensation for the last day of the last plan year beginning before January 1, 1989, using the definition and compensation formula in effect as of the last day of the last plan year beginning before January 1, 1989. Add the amounts determined in step 5, and the greater of steps 6 or 2. Sample Adoption Agreement Language: If, as of the latest fresh-start date, the plan contained a benefit formula under which the participant's accrued benefit could be determined with reference to compensation earned by the participant in years beginning after the latest fresh-start date occurring before the first plan year beginning on or after January 1, 1994 and elected by the employer below ( ) the provisions of sections 1.1 through 5 of _________ apply to adjust the frozen accrued benefit of each participant in the fresh-start group determined as of the latest fresh-start date under the plan. (Note to reviewer: Insert plan section that corresponds to this LRM #25.) If elected by the employer below, each participant's frozen accrued benefit will be adjusted in accordance with the following fraction: ( ) Old compensation fraction ( ) New compensation fraction ( ) Reconstructed compensation fraction (may be selected only if the latest freshstart date is before the first day of the first plan year beginning on or after January 1, 1994) For purposes of calculating a participant's "reconstructed compensation," the selected year will be the plan year beginning in (the selected year must begin after the latest fresh-start date): 29 | Defined Benefit Plan LRM Package 06/2026 ( ) 1989 ( ) 1990 ( ) 1991 ( ) 1992 ( ) 1993 ( ) 1994 ( ) Alternative Adjustment ( ) Special Adjustment for IRC 401(a)(17) Participants 26. Current benefit formulas – plans not providing for permitted disparity and using the fractional accrual rule Statement of Requirement: IRC 401(a)(4); Treas. Reg. 1.401(a)(4)-3(b)(4) Document Provision: _____ (Note to reviewer: This LRM #26 contains language that satisfies the requirements of the safe harbor contained in Treas. Reg. 1.401(a)(4)-3(b)(4) (safe harbor for plans using the fractional accrual rule). For a sample current benefit formula for unit credit plans that do not use the fractional accrual rule, see Provision #1 of LRM #31.) Sample Adoption Agreement Language: Unit Credit Plans: Each participant will receive a benefit payable at normal retirement age equal to _____ % of average annual compensation for each year of credited service up to a maximum of _____ (no less than 25) years of credited service. This benefit is accrued under the fractional accrual rule in section _____ of the plan (other than plans that satisfy IRC 411(b)(1)(F)). (Note to reviewer: The last blank above should be filled in with the plan section that corresponds to the fractional accrual rule in LRM #31.) (Note to reviewer: The following language satisfies the requirements of the safe harbor for plans using the fractional accrual rule contained in Treas. Reg. 1.401(a)(4)3(b)(4)(i)(C)(1) for a plan that provides for a step in its benefit formula (i.e., that provides a rate of benefit that changes after a certain specified number of years of credited service).) Sample Adoption Agreement Language: Each participant shall receive a benefit payable at normal retirement age equal to__ % of average annual compensation (R1) per year for the first _____ years of credited service (y) and _____ % of average annual compensation (R2) per year for the next _____ years of credited service (such that the total years of credited service taken into account under R1 and R2 is not less than 33, and such that R1 is not one-third larger than R2 nor is R2 one-third larger than R1).). 30 | Defined Benefit Plan LRM Package 06/2026 This benefit is accrued under the fractional method in section _____ of the plan (other than plans that satisfy IRC 411(b)(1)(F)). (Note to reviewer: The last blank above should be filled in with the plan section that corresponds to the fractional accrual rule in LRM #31.) (Note to reviewer: A Standardized Plan must structure the formula to meet the safeharbor rules in Treas. Regs. 1.401(a)(4)-3(b)(4)(i)(A) and 1.401(a)(4)-3(b)(4)(i)(B), and either Treas. Reg. 1.401(a)(4)-3(b)(4)(i)(C)(1) or Treas. Reg. 1.401(a)(4)-3(b)(4)(i)(C)(2).) Flat Benefit Plans: Each participant will receive a benefit payable at normal retirement age equal to ____ % of average annual compensation (reduced pro rata for the participant's years of credited service less than 25). This benefit is accrued under the fractional method in section _____ of the plan. (Note to reviewer: The last blank above should be filled in with the plan section that corresponds to the fractional accrual rule in LRM #31.) 26A. Current benefit formulas – Cash Balance Plan Statement of Requirement: IRC 401(a)(4) and 411(b)(6); Treas. Regs. 1.401(a (4)-3(b)(4) and 1.401(a)(4)-12; Notice 96-8; T.D. 9505 ; T.D. 9693; T.D. 9743; Rev. Proc. 2023 37, 9.05(1) and (2), 10.02(2)(f) and (m), 12.02(7); Rev. Proc. 2018-21, 3.01; Notice 2024-2 Document Provision: _____ (Note to reviewer: A Statutory Hybrid Plan benefit formula that is not a Cash Balance Formula, such as a formula under which benefits are determined by reference to the current value of an accumulated percentage of the participant’s average compensation (Pension Equity Plan) may not be a Pre-approved Plan. Additionally, Variable Annuity Plans that include a variable annuity benefit formula as defined under Treas. Reg. 1.411(a) (13)-1(d)(6) and plans that provide for accruals that are determined in whole or in part based on the value of, or rate of return on, identified assets, including plan assets, may not be a Pre-approved Plan.) (Note to reviewer: Section 348 of the SECURE 2.0 Act added IRC 411(b)(6) to provide that starting with plan years beginning after 12/29/2022, for a cash balance plan that provides for pay credits to participants that increase with a participant’s age or service and provides for a variable interest crediting rate, the plan no longer risks violating the accrual requirements of IRC 411(b)(1) if that interest crediting rate falls below a certain point. A fixed annual minimum interest crediting rate is no longer needed to avoid a violation of IRC 411(b)(1) for this type of plan. No amendment may reduce a participant’s accumulated benefit. An amendment that affects interest credits may take effect only for future interest crediting rates and only apply to interest crediting periods beginning after the later of the effective date of the amendment or the date the amendment is adopted.) 1. Normal Retirement Benefit. Each participant will receive a benefit payable at normal retirement age equal to the lifetime annuity in the normal form of payment described in section ___ that is the Actuarial Equivalent of his or her Hypothetical Account Balance as 31 | Defined Benefit Plan LRM Package 06/2026 of normal retirement age. (Note to reviewer: The blank above should be filled in with the plan section that corresponds to LRM #31.) 2. Establishment of Hypothetical Account Balance. A Hypothetical Account Balance shall be established and maintained for each Participant. Additions to and reductions in the Hypothetical Account Balance shall be made in accordance with the provisions set forth below. This Hypothetical Account Balance shall be a hypothetical account for bookkeeping purposes only and neither the maintenance nor the adding of credits thereto shall be construed as an allocation of assets of the Plan to, or a segregation of such assets in, any such Hypothetical Account Balance, or otherwise creating a right for any individual to receive specific assets of the Plan. Benefits provided under the Plan shall be paid from the general assets of the Trust in the amounts, in the forms, and at the times provided, under the terms of the Plan. When applying any statutory or Plan limitation and/or minimum benefit that is expressed in terms of an annuity to the benefit derived from the Hypothetical Account Balance, the limit shall be applied to the annuity derived from the Hypothetical Account Balance that is payable at the time and in the form corresponding to the Plan limitation or minimum benefit, determined under the terms of the Plan. 3. Principal Credits. At the end of each Principal Credit Period in which a Participant has earned a Year of Participation in accordance with section ___ of the Plan, a Principal Credit amount as set forth in the Adoption Agreement shall be determined as of the last day of the Principal Credit Period and credited to such Participant’s Hypothetical Account Balance, whether or not the Participant remains an Employee as of that date. For purposes of determining the Principal Credit Period, if a Plan Year begins on the first day of a calendar month, a Plan Month is any calendar month. If the Plan Year begins on a day other than the first day of a calendar month, each Plan Month begins on the day of the calendar month that corresponds to the date of the calendar month that is the first day of the Plan Year. Thus, for example, if the first day of a Plan Year is January 15, then a Plan Month starts on the 15th of each calendar month. However, if a calendar month does not contain a day that corresponds to the day of the calendar month which is the first day of the Plan Year (for example, if a calendar month has only 30 days and the first day of the Plan Year is the 31st day of a calendar month), then the first day of the Plan Month that begins during that calendar month is the last day of that calendar month. A Plan Quarter is a three-month period beginning on the first day of the first, fourth, seventh, or tenth Plan Month. (Note to reviewer: The blank in the paragraph above should be filled in with the section of the plan corresponding to LRM #29.) If the Principal Credit is based on a dollar amount (as opposed to a percentage of Compensation) and if elected in section ____ of the Adoption Agreement, the dollar amount of the Principal Credit for a Participant for the Plan Year is adjusted as described in section ___ of the Plan. (Note to reviewer: The first blank in the paragraph above should be filled in with the section corresponding to section 26A.I.A.(3) of the sample adoption agreement language of 32 | Defined Benefit Plan LRM Package 06/2026 this LRM #26A, and the second blank should be filled in with the section of the plan corresponding to LRM #29.) 4. Interest Credits. At the end of each Interest Credit Period as designated in section ____ of the Adoption Agreement, an Interest Credit shall be credited to the Hypothetical Account Balance. The Interest Credit shall be calculated by multiplying the balance in the Participant’s Hypothetical Account Balance at the beginning of the Interest Credit Period by the Interest Crediting Rate applicable for such Interest Credit Period, based upon the stability period and the lookback month that applies for the Interest Credit Period. The Interest Crediting Rate applicable for an Interest Credit Period shall be the rate specified in the Adoption Agreement. No Interest Credits shall accrue to any portion of the Hypothetical Account Balance after the annuity starting date that applies to that portion. (Note to reviewer: The blank above should be filled in with the section that corresponds to section 26A.I.B.(1) of the sample adoption agreement language of this LRM #26A.) If a Plan provides for the crediting of interest more frequently than annually (for example, daily, monthly or quarterly), then the Plan must determine each periodic interest credit using an Interest Crediting Rate that is no greater than a pro rata portion of the applicable annual Interest Crediting Rate, as specified in section ____ of the Adoption Agreement. However, a Plan that credits interest daily is not treated as providing an above market rate of return merely because the Plan determines each daily Interest Credit using a daily Interest Crediting Rate that is 1/360 of the applicable annual Interest Crediting Rate. For purposes of determining the Interest Credit Period, a Plan Month and Plan Quarter are determined in the same manner as for the Principal Credit Period. (Note to reviewer: The first blank above should be filled in with the section number corresponding to section 26A.I.B.(3) of the sample adoption agreement language of this LRM #26A.) If an Actual Rate of Return is elected in the adoption agreement, the Interest Crediting Rate applied to a Participant’s beginning Hypothetical Account Balance for each Interest Credit Period shall be the Actual Rate of Return on the aggregate assets of the Plan for that period, including both positive and negative returns. If the use of Actual Rate of Return is elected in the adoption agreement, plan assets must be diversified so as to minimize the volatility of returns in accordance with Treas. Reg. 1.411(b)(5)1(d)(5)(ii) (A). The Actual Rate of Return, which includes both realized and unrealized gains and losses, will be calculated as provided in the Adoption Agreement. Additionally, the employer may elect in the adoption agreement for purposes of the first Plan Year only of the Plan that the Interest Crediting Rate for such Plan Year shall be the fixed rate specified in the Adoption Agreement and then for all subsequent Plan Years will be the Actual Rate of Return. If a cumulative floor is selected under section ____ of the Adoption Agreement, a Participant’s Hypothetical Account Balance as of the annuity starting date as of which the distribution of the Participant’s entire remaining vested benefit under the Cash Balance Formula commences is equal to the greater of (1) the Hypothetical Account Balance determined using the actual Interest Crediting Rate(s) that applied during the guarantee period, or (2) the Hypothetical Account Balance determined as if the plan had used a fixed 33 | Defined Benefit Plan LRM Package 06/2026 annual Interest Crediting Rate equal to the rate selected in section _____ of the Adoption Agreement for the guarantee period. For this purpose, the guarantee period is the period beginning on the date selected in section ____ of the Adoption Agreement and ending on the annuity starting date as of which the distribution of the Participant’s entire remaining vested benefit under the Cash Balance Formula commences, and the cumulative floor is applied taking the value of any previous distributions into account. The annual rate selected for the cumulative floor cannot be greater than 3%. (Note to reviewer: The blanks above should be filled in with the section corresponding to section 26A.I.B.(5) of the sample adoption agreement language of this LRM #26A.) 5. Preservation of Capital. For annuity starting dates on or after the date specified in section ____ of the Adoption Agreement, the Participant’s Hypothetical Account Balance as of the Participant’s annuity starting date shall be no less than the sum of the Principal Credits to such Participant’s Hypothetical Account Balance, reduced to reflect the value of any prior distributions. This requirement applies only as of an annuity starting date as of which a distribution of the Participant’s entire remaining vested benefit under the plan commences. (Note to reviewer: The blank above should be filled in with the section corresponding to section 26A.I.B.(6) of the sample adoption agreement language of this LRM #26A.) 6. Interest Credit after Plan Termination. For Interest Credit Periods after the termination of the Plan, the Interest Crediting Rate used to determine accrued benefits under the Plan shall be equal to the average of the Interest Crediting Rates used under the Plan during the 5-year period ending on the date of Plan termination as required under Treas. Reg. 1.411(b)(5)-1(e)(2)(ii). 7. Conversion Amendment. If any Conversion Amendment (as defined below) is adopted, then the Accrued Benefit of a Participant affected by such amendment shall not be less than the sum of: (1) The Participant’s Prior Accrued Benefit, equal to the Participant’s Accrued Benefit for Years of Service before the Effective Date of the Conversion Amendment, determined under the pre-amendment terms of the Plan, plus (2) The Participant’s Accrued Benefit for Years of Service after the Effective Date of the Conversion Amendment, determined under the terms of the Plan after the Effective Date of the Conversion Amendment. For this purpose, the Effective Date of the Conversion Amendment is the date indicated in section ____ of the Adoption Agreement, as modified by the definition of Conversion Amendment in paragraph 7. (Note to reviewer: The blank above should be filled in with the section that corresponds to section 26A.II of the sample adoption agreement language in this LRM #26A. An Opinion Letter will not be issued for a plan that uses an opening hypothetical account balance as described in Treas. Reg. 1.411(b)(5)-1(c)(3) to meet the requirements of Treas. Reg. 1.411(b)(5)-1(c).) For purposes of determining the Participant’s Prior Accrued Benefit under clause (1) of the preceding paragraph, such Participant’s Accrued Benefit shall be credited 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, service or 34 | Defined Benefit Plan LRM Package 06/2026 other requirement under the Plan for entitlement to such benefit or subsidy. Conversion Amendment. Under Treas. Reg. 1.411(b)(5)-1(c)(4), whether an amendment is a Conversion Amendment with respect to a participant is determined on a participant-byparticipant basis. An amendment (including multiple amendments) is a Conversion Amendment with respect to a participant if it meets two criteria: (1) The amendment reduces or eliminates the benefits that, but for the amendment, the participant would have accrued after the effective date of the amendment under a benefit formula that is not a Cash Balance Formula and under which the participant was accruing benefits prior to the amendment; and (2) After the effective date of the amendment, all or a portion of the participant’s benefit accruals under the plan are determined under a Cash Balance Formula. Notwithstanding any other provisions in the plan, in accordance with IRC 411(d)(6), the terms of the Conversion Amendment will apply on the later of the date such amendment is adopted or effective. (Note to reviewer: Provisions for Offsets of benefits accrued under another plan may not be included in a Pre-approved Plan unless it meets the following requirements: (1) The Offset is applied on an accumulated basis at the participant’s annuity starting date, rather than offsetting each year’s Principal Credit by that year’s accruals or contributions under the offsetting plan; (2) If plan provisions are consistent with treatment of the Cash Balance Formula as a lump sum-based benefit formula under Treas. Reg. 1.411(a)(13)-1(d)(3), then the offsetting plan is a defined contribution plan and the Offset is applied by subtracting the account balance under the defined contribution plan from the hypothetical account balance under the Cash Balance Formula prior to converting the balance to an annuity benefit; (3) The Offset meets the safe-harbor requirements of Treas. Reg. 1.401(a)(4)-8(d) (except that the Offset can be computed by subtracting the account balance under the offsetting plan from the hypothetical account balance under the Cash Balance Formula), including the requirement that the offsetting plan may not be an IRC 401(k) plan or an IRC 401(m) plan; (4) For the purpose of determining the amount of the Offset against any defined benefit formula, the Offset reflects the value of any distributions from the offsetting plan made prior to the participant’s annuity starting date under the Cash Balance Plan; (5) The Offset is applied on a uniform basis for all participants; (6) The plan provides a minimum accrued benefit to participants (expressed as a lifetime annuity commencing at normal retirement age) of no less than 0.5% of compensation for each year of credited service, which is not reduced by the Offset applied to other formulas under the plan; (7) Accrued benefits, considered in conjunction with defined contribution accounts subject to any Offset, meet nondiscrimination requirements; and (8) The amount of the Offset, including any procedures and actuarial assumptions for 35 | Defined Benefit Plan LRM Package 06/2026 converting a defined benefit contribution account balance (under a specificallynamed defined contribution plan) to an annuity amount, is definitely determinable.) Sample Adoption Agreement Language: 26A.I. A. ESTABLISHMENT OF HYPOTHETICAL CASH BALANCE ACCOUNT Principal Credits (1) Principal Credits shall be allocated at the end of each Principal Credit Period, which is: ( ) Each Plan Year ( ) Each Plan Quarter ( ) Each Plan Month ( ) Each calendar year ( ) Each calendar quarter ( ) Each calendar month (2) Principal Credits shall be determined as follows: Any schedule of Principal Credits must comply with the 133⅓% rule under IRC 411(b)(1) (B) , taking into account the minimum Interest Credits guaranteed under the options chosen in section ___ of the Adoption Agreement. For this purpose, a plan for which the Interest Credit could be negative is permitted to assume that the Interest Credits for the current and future years will be equal to zero. In addition, in the case of a plan which provides a variable Interest Crediting Rate, the Interest Crediting Rate which is treated as in effect and as the projected Interest Crediting Rate shall be a reasonable projection of such variable Interest Crediting Rate, not to exceed 6%. Any schedule of graded Principal Credits designed by an Adopting Employer via completing blanks in the Adoption Agreement (even where parameters have been included) will not afford the employer reliance from the opinion letter that such schedule satisfies the 133⅓% accrual rule of IRC 411(b)(1)(B). An Adopting Employer will have reliance with respect to the 133⅓% accrual rule of IRC 411(b)(1)(B) if the schedule of graded Principal Credits used by the employer was specified and reviewed by the Service during the opinion letter process. (Note to reviewer: The blank should be filled in with the section number corresponding to section 26A.I.B.(4) of the sample adoption agreement language of this LRM #26A.) a. ( ) Each Participant’s Hypothetical Account Balance will be credited with ______% (percentage) of Compensation earned by the Participant during each Principal Credit Period. b. ( ) Each Participant’s Hypothetical Account Balance will be credited with $______ (dollars) for each Principal Credit Period. c. ( ) Each Participant’s Hypothetical Account Balance will be credited with the greater of: 36 | Defined Benefit Plan LRM Package 06/2026 _______% (percentage) of Compensation or $_______ (dollars) for each Principal Credit Period. d. ( ) Each participant’s Hypothetical Account Balance will be credited with the lesser of: _______% (percentage) of Compensation or $_______ (dollars) for each Principal Credit Period. e. ( ) Schedule of graded Principal Credits Each Participant’s Hypothetical Account Balance will be credited with an amount for each Principal Credit Period, determined in accordance with the following table: For range based on: [ ] Age [ ] Credited Service [ ] Age plus Credited Service Under ________ From ______ to ________ From ______ to ________ _______ and over The Principal Credit is shown below, determined as: [ ] A dollar amount [ ] A percentage of Compensation earned by the participant during the Principal Credit Period _________ _________ _________ Note: The Internal Revenue Service does not provide reliance on the opinion letter with respect to whether this formula meets the accrual rule requirements under IRC 411(b). (Note to reviewer: The above caveat only applies to a schedule following the above general format that includes blanks for the Adopting Employer to fill in. If the Principal Credits and the range being used are specified in the schedule and have been reviewed by the Service during the opinion letter process, the caveat should be deleted.) (Example: For a plan that provides Principal Credits equal to 3.0% of Compensation for the first 10 years of Credited Service, 3.5% for 11-20 years of Credited Service, and 4.0% thereafter, the table would be completed as shown below: 37 | Defined Benefit Plan LRM Package 06/2026 For range based on: [ ] Age [ x ] Credited Service [ ] Age plus Credited Service From 0 to 10 Years From 11 to 20 Years 21 years and over The Principal Credit is shown below, determined as: [ ] A dollar amount [ x ] A percentage of Compensation earned by the participant during the Principal Credit Period 3.0% 3.5% 4.0% (Note to reviewer: If not enough spaces are provided above, a schedule following the above general format may be specified as an addendum to the Adoption Agreement.) (Note to reviewer: Different schedules for different participant groups following the above general format may be specified as an addendum to the Adoption Agreement. Describe the objective criteria for determining the make-up of each Participant group. Criteria may not be subject to employer discretion, which would cause the plan to fail to have definitely determinable benefits. The plan’s Participant groups may not be structured to limit participation to only the shortest service and lowest paid NHCEs while excluding other NHCEs.) (3) Adjustment of Principal Credit Any Principal Credit for a Principal Credit Period that is determined as a dollar amount (and not as a percentage of Compensation) ( ) Is ( ) Is not Reduced as described in section ____ of the plan if the Participant does not earn the full amount of Credited Service during the Principal Credit Period. (Note to reviewer: The blank should be filled in with the section number of the plan corresponding to LRM #29. However, if the Principal Credit Period is less than one year, the above language should be adjusted accordingly. Any participant who earns a year of participation must receive a Principal Credit for that year based on their total service for that year.) B. Interest Credits (1) Interest Credits shall be allocated at the end of each Interest Credit Period, which is: ( ) Each Plan Year ( ) Each Plan Quarter ( ) Each Plan Month ( ) Each calendar year 38 | Defined Benefit Plan LRM Package 06/2026 ( ) Each calendar quarter ( ) Each calendar month ( ) Each day (2) If a Participant’s annuity starting date occurs before the end of an Interest Credit Period, the Interest Credit for the partial Interest Credit Period: ( ) Will be zero. ( ) Will be determined on a pro rata basis, reflecting the portion of the Interest Credit Period before the Participant’s annuity starting date. (3) If interest is credited more frequently than annually, Interest Credits for the Interest Credit Period are determined: ( ) If credited monthly, the annual rate divided by ( ) 12, or ( ) the rate determined as if interest were compounded twelve times each year. ( ) If credited quarterly, the annual rate divided by ( ) 4, or ( ) the rate determined as if interest were compounded four times each year. ( ) If credited daily the annual rate divided by ( ) 365, ( ) 360, or ( rate determined as if interest were compounded daily. (4) ) the The annual Interest Crediting Rate is as follows: a. ( ) The discount rate on 3-month Treasury Bills plus ______ [0 to 175 basis points] with an annual floor of ______% [floor may not exceed 5%] b. ( ) The discount on _____-month Treasury Bills [specify duration, not to exceed 12 months] plus _______ [0 to 150] basis points with an annual floor of ______% [floor may not exceed 5%] c. ( ) The yield on 1-year Treasury Constant Maturities plus ______ [ 0 to 100 basis points] with an annual floor of ______% [floor may not exceed 5%] d. ( ) The yield on ____-year Treasury Bonds [specify duration, not to exceed 3 years] plus _______ [0 to 50] basis points with an annual floor of ______% [floor may not exceed 5%] e. ( ) The yield on ___-year Treasury Bonds [specify duration, not to exceed 7 years], plus _______ [0 to 25] basis points with an annual floor of ______% [floor may not exceed 5%] f. ( ) The yield on ___-year Treasury Bonds [specify duration, not to exceed 30 years], with an annual floor of ______% [floor may not exceed 5%] g. ( ) The third segment rate described below, with an annual floor of ______% [floor may not exceed 4%] h. ( ) The second segment rate described below, with an annual floor of ______% [floor may not exceed 4%] i. ( ) The first segment rate described below with an annual floor of ______% [floor 39 | Defined Benefit Plan LRM Package 06/2026 may not exceed 4%] If g., h., or i. is chosen, complete the following: The segment rate chosen shall be: ( ) The segment rate defined under IRC 430(h)(2)(C), ( ) Reflecting ( ) Not reflecting the adjustment for 25-year average interest rates under IRC 430(h)(2)(C)(iv) ( ) The segment rate defined under IRC 417(e)(3)(D). j. ( ) The cost-of-living increase determined equal to the percentage change in the __________ from the date of the preceding increase, (Note to reviewer: The blank above should be completed with a description of a Consumer Price Index. The description must contain enough detail so that the Plan is definitely determinable, and must be consistent with the description of cost-of-living increases in Treas. Reg. 1.401(a)(9)-6(o)).) ( ) plus ____ basis points [basis points cannot exceed 300] ( ) minus _____ basis points ( ) with an annual floor of ______% [floor may not exceed 5% and may not be less than zero] If any rate in a. through j. is chosen, complete the following: The Interest Crediting Rate is determined as of the: ( ) first ( ) second ( ) third ( ) fourth ( ) fifth calendar month preceding the first day of the: ( ) Plan Year ( ) Interest Credit Period k. ( ) The Actual Rate of Return on the aggregate assets of the Plan If k. is chosen, complete the following: i. The Actual Rate of Return will be determined to the following number of decimals: ( ) none (e.g., 1% or 3%) 40 | Defined Benefit Plan LRM Package 06/2026 ii. ( ) one decimal (e.g., 1.2% or 2.7%) ( ) two decimals (e.g., 1.24% or 2.75%) Employer contributions (excluding a contribution receivable) will be included based on the actual date of such contribution(s), with weighting for the period of time between the contribution date and the end of the Interest Credit Period based on the number of: ( ) days ( ) whole plan months ( ) whole calendar months ( ) nearest plan months ( ) nearest plan quarters ( ) nearest calendar months ( ) nearest calendar quarters Additionally, in calculating the Actual Rate of Return, only distributions of benefits made during the Interest Credit Period will be reflected, and contributions receivable as of the last day of the plan year shall be treated: iii. iv. ( ) as if they were made as of the last day of the plan year, or ( ) as if they were made on the day each amount was actually contributed Distributions of benefits will be included in the calculation of the Actual Rate of Return with weighting for the period of time between the actual date of distribution and the end of the Interest Credit Period based on the number of: ( ) days ( ) whole plan months ( ) whole calendar months ( ) nearest plan months ( ) nearest plan quarters ( ) nearest calendar months ( ) nearest calendar quarters The following Plan expenses incurred for the Interest Credit Period will be included: ( ) Investment expenses paid from the Plan’s Trust ( ) Administrative expenses paid from the Plan’s Trust ( ) Administrative and investment expenses paid by the Plan’s Trust ( ) Administrative and investment expenses paid by the Plan’s Trust except: 41 | Defined Benefit Plan LRM Package 06/2026 ______________ (insert description of excluded expenses) ( ) v. No administrative or investment expenses For purposes of the first Plan Year only of the Plan, the Interest Crediting Rate shall be: ( ) 4% ( ) 5% ( ) 6% ( ) Not applicable l. ( ) Annual fixed rate of ________% interest [must not exceed 6% annually] m. ( ) The lesser of the following rates: ________________________________________________, or ________________________________________________: Describe rates in enough detail so that the plan will provide a definitely determinable benefit. At least one of the rates must be a rate described in section _____ of the Adoption Agreement. However, to qualify for the Nonstandardized Preapproved Plan Program, the rate cannot be based on an Actual Rate of Return (as described in Treas. Reg. 1.411(b)(5)-1(d)(5)(ii)) for a subset of plan assets, the rate of return on a regulated investment company (as described in Treas. Reg. 1.411(b)(5)-1(d)(5)(iv)), subject to participant choice, or any rate that does not meet the requirements of Treas. Reg. 1.411(b)(5)-1(d). (Note to reviewer: The last blank above should be filled in with the section corresponding to section 26A.I.B.(4) of the sample adoption agreement language of this LRM #26A.) (5) Cumulative Floor. As of the annuity starting date as of which a distribution of a Participant’s entire remaining vested benefit under the Cash Balance Formula commences, the Participant’s Hypothetical Account Balance is the greater of (1) the Hypothetical Account balance determined using the actual Interest Crediting Rate(s) that applied during the guarantee period, and (2) the Hypothetical Account Balance determined as if the plan had used a fixed annual Interest Crediting Rate equal to _____% [specify rate no greater than 3%] for the Guarantee Period. For this purpose, the Guarantee Period is the period beginning on __________ [date the cumulative floor began to apply to the plan] and ending on the annuity starting date as of which a distribution of the Participant’s entire remaining vested benefit under the Cash Balance Formula commences, and the cumulative floor is applied taking the value of any previous distributions into account. (Note to reviewer: If a Cash Balance Plan has already established an Interest Crediting Rate, that rate cannot be changed in a way that could potentially reduce the future Interest Credits applying to a participant’s Hypothetical Account Balance already earned as of the date of the amendment without protecting the cash balance account as required 42 | Defined Benefit Plan LRM Package 06/2026 under IRC 411(d)(6). However, if a plan’s Interest Crediting Rate exceeded a market rate of return as defined in Treas. Reg 1.411(b)(5)-1(d), the rate may be reduced using the transition Regulations as provided in Treas. Reg. 1.411(b)(5)1(e)(3)(iv), provided the amendment was made before the effective dates outlined in Treas. Reg. 1.411(b)(5)1(f)(2) (i)(B)(1) or Treas. Reg. 1.411(b)(5)-1(f)(2)(i)(B)(3). Generally, this means that in order to qualify for relief from IRC 411(d)(6), a transitional amendment must be made before the first day of the plan year beginning on or after January 1, 2017, or as late as January 1, 2019 in the case of certain collectively bargained plans.) (6) Preservation of Capital: Notwithstanding the above, the Interest Crediting Rate will not result in a Participant’s Hypothetical Account Balance as of an annuity starting date that is less than the sum of the Principal Credits that were credited to the Participant’s Hypothetical Account Balance, less the value of any earlier distributions. This provision applies only as of the annuity starting date as of which a distribution of the Participant’s entire remaining vested benefit under the plan commences. ( ) This requirement applies only to distributions made on or after ________ [Insert date, no later than June 29, 2005, or the date the Plan became a Cash Balance Plan, if later.] 26A.II. CONVERSION AMENDMENT ( ) If the Plan has been amended to convert the benefit formula from a non-Cash Balance Formula to a Cash Balance Formula as described in section ____ of the Plan document, enter the Conversion Amendment Effective Date: ____________. [This date is the effective date of a Plan amendment that reduces or eliminates future benefits that Participants would have accrued under a non-cash-balance formula, and provides for them to begin accruing benefits under a Cash Balance Formula, instead. Note that if a Participant transfers from another plan or otherwise becomes covered by the Cash Balance Formula in this Plan, and experiences a reduction in future benefits that would have accrued under a non-cash-balance formula, the Conversion Amendment Effective Date for that individual is the effective date of the change described in this paragraph, if that is later than the date specified above.] 27. Current benefit formulas – plans providing for permitted disparity Statement of Requirement: IRC 401(a)(4), 401(a)(5), 401(l), 411(b)(1); Treas Regs. 1.401(a)(4)-3, 1.401(l)-1, 1.401(l)-3 Document Provision: _____ Sample Adoption Agreement Language: EXCESS BENEFIT PLANS A. Subject to the overall permitted disparity limit below, the current benefit formula under the plan will provide a benefit payable at normal retirement age equal to: 43 | Defined Benefit Plan LRM Package 06/2026 (1) ( ) Unit credit: The sum of (a) and (b) below: (a) (i) ___% (base benefit percentage) times average annual compensation up to the integration level times each year of credited service plus a benefit equal to _____% (excess benefit percentage – not to exceed the base benefit percentage by more than the maximum excess allowance) times average annual compensation in excess of the integration level times each year of credited service. The maximum number of years of credited service during which permitted disparity is taken into account under this paragraph will be _____ (may not exceed 35, and, if benefits after the latest fresh-start date are determined under the fractional accrual rule in section _____ of the plan or the plan satisfies IRC 411(b)(1)(F), may not be less than 25). (Note to reviewer: The last blank above should be filled in with the plan section that correspond [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/agency%3Airs%3Afc80cb90455198f2. Public record. Not legal advice.