Cash Balance Plan Conversions: Old vs. New Formula (Posted June 15, 2006) Technical Tip 66: The following question and answer are from the DOL/EBSA website: This issue relates to the way in which a participant's benefit is accrued under the old defined benefit pension plan vs. the new cash balance plan. Is my employer required to give me a choice of remaining under the old formula rather than automatically switching me to the new formula? DOL Response: Neither ERISA nor the IRC requires employers to give employees the choice of remaining in the old formula. Employers have several options, including: Allowing employees to remain under the old formula, while restricting new hires to the new formula; Stipulating that certain employees who have reached a specific length of service or who have reached a certain age may choose to stay with the old formula; and; Providing no choice, replacing the old formula and applying the new formula to all participants. The law permits employers to have such flexibility, but whatever option applies has to satisfy legal requirements. For example, the option may not violate prohibitions against discrimination on the basis of age. Under each of these options, benefits already earned by the participants, as of the effective date of the amendment that converts the old formula to a cash balance formula, may not be reduced. View all Tips © 2012 Reish Luftman Reicher & Cohen, a Professional Corporation Important notice: Answers are provided as general guidance on the subjects covered in the question and are not provided as legal advice to the questioner's situation. Any legal issues should be reviewed by your legal counsel to apply the law to the particular facts of your situation.