We recently acquired a target benefit plan. Upon review of the plan document and through discussions I've had with the client, my understanding is that benefits stop accruing at the age of 66. The way that the formula is written, a participant would receive their final contribution at age 65.

I am not familiar with target benefit plans and would like to resolve any issues now, while the client is transitioning to our system. Does this allocation formula sound right?

Thank you!

It doesn't sound right, but I haven't worked on a target benefit plan since 2002. I guess it might depend on the formula - if it is based on years of service or participation, then I think the target benefit would continue to increase and additional contributions would be required. I guess if it is a flat formula, then one would reach their theoretical accumulation amount at retirement age so yeah, I guess contributions would cease in that case (except for top-heavy, if applicable). That's very much "for what it's worth" because it's been a long time. I'd want to read the document forward and backward.

I suppose it is conceivably possible for someone to cap out - e.g. that the theoretical reserve becomes so large that one doesn't receive a contribution, but I would have to see what type of formula resulted in that scenario. I guess someone's comp could drop dramatically from prior years.
and if the plan was top-heavy, you would still have to provide a top heavy.