- 34 -
exercised the Commissioner’s authority under section
1.401(b)-1(c)(3), Income Tax Regs., in Rev. Proc. 99-23, supra,
by establishing an additional requirement for plan sponsors that
adopted amendments to those plan provisions in plan years
beginning after December 31, 1999. Specifically, Rev. Proc.
99-23, sec. 3.06, 1999-1 C.B. at 923, added the following
requirement: If the sponsor of a defined benefit plan, which
uses the calendar year as its plan year, adopted an amendment to
a plan provision providing for the determination of the present
value of a participant’s accrued benefit on or after January 1,
2000, the amendment had to be made effective for distributions
with annuity starting dates occurring on or after January 1,
2000, and had to provide that, with respect to distributions with
annuity starting dates occurring on or after January 1, 2000, but
before the date of the adoption of the amendment, the amount of
any such distributions would be the greater of the amount
determined under the plan without regard to the amendment and the
amount determined under the plan with regard to the amendment.
As discussed above, the amendment that Hercules made to the
lump-sum payment option falls squarely within the safe harbor
provided by section 1.417(e)-1(d)(10)(iv), Income Tax Regs.
Because Hercules amended the lump-sum payment option in 2001, the
amendment occurred before the February 28, 2002, deadline to
adopt such plan amendments had passed. Furthermore, the 2001
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