Please refer to IRS Reg. 1.411(a)-7(B), last sentence of subsection (1), immediately before the Examples in subsection (2).



This sentence seems to state, for purposes of vesting and other requirements in IRC 411, that the latest NRA is the first day of the plan year which contains the fifth anniversary of participation, even if that is not the "fifth anniversary of participation."



I don't know where this came from. It is not supported by a plain reading of IRC 411(a)(8), nor do I find anything in the Committee Reports from 1974 that would support this. The Gray Book does not address it.



Can anyone help?



In case you are wondering, this is the only other discussion thread I found that seems to be related.

http://benefitslink.com/boards/index.php?showtopic=13667

Your reading of 1.411(a)-7(B) appears to be correct. For NRA purposes the fifth anniversary is the first day of the Plan Year in which participation in the Plan commenced. Thus for a calendar year plan, the fifth anniversary for mid-year entrants would still be January 1st.

I have never really considered the apparent discrepancy with 411(a)(8). Every Plan document I have read, sets forth clearly that the fifth anniversary is the first day of the Plan Year, regardless of actual entry date.

Our document provider defines normal retirement age as of the 5th anniversary of the date of participation, without an automatic way to get it to say 5th anniversary of the first day of the plan year. However, we modify the wording to read as we believe it should.

I asked that this question be inlcuded in the 2003 Gray Book. It was not answered, so either it was not sent to the IRS or it was purposely not answered. Due to the conflict between the Code and the regulation, it seems the latter is likely. At the 2003 Gray Book discussion, we were told that about 70 questions were submitted; 44 were answered.