The IRS and Treasury recently proposed regulations that, if finalized, would permit an employer in bankruptcy to amend its defined benefit plan to eliminate certain optional forms of benefit, including lump sum payments. To take advantage of the new exception to the anti-cut back rules, a few conditions must be met: (1) an actuary must certify that the plan's adjusted funding target attainment percentage for the year of the amendment is less than 100%, (2) the plan is prohibited from making certain payments due to the bankruptcy, (3) the court must issue an order finding the amendment is necessary to avoid a distress plan termination and (4) the PBGC must issue a determination that the amendment is necessary to avoid a distress or involuntary termination of the plan. The proposed regulations are not effective until finalized, which will require further action by the IRS and Treasury.