Acquired rights laws have what effect on plan amendments?

• A. Create new benefits immediately
• B. Make it difficult or impossible to amend existing plans to introduce cost containment features
• C. Terminate all plans
• D. Invest all funds in a single fund

Answer: (B)

Acquired rights laws protect benefits that employees have already earned (vested) under a plan. Because those rights are secured, plan amendments that would reduce or erode those vested benefits are typically restricted or prohibited. That means changing an existing plan to add cost containment features—if such changes would lower what employees have already earned—is often not possible under these laws. As a result, sponsors can struggle to implement cost-containment changes in the current plan and may instead need to apply changes only to future benefits or create new plans for new entrants. This is why the correct choice notes that acquired rights laws make it difficult or impossible to amend existing plans to introduce cost containment features.