I noticed that our plan document provider's Post-EGTRRA "Good Faith" amendment (needed to be adopted by 12/31/09) seems to have the following options:

1. Just change the in-service distribution age to 62 or later but not the actual NRA for other purposes.

2. Change both the NRA definition and the in-service distribution age to 62 or later.

I'd like to make as few of changes as possible while still complying with final phased-NRA regs.

For the few plans with NRAs of say 55, that may lack supporting industry data for 55, would keeping the NRA at 55 but changing ONLY the in-service distribution age to 62 or later meet the IRS concerns (ie., they would only get a distribution at age 55 if they physically retired) ? Or are there other reasons I need to be concerned about changing the NRA to 62 for to be in compliance ? (you can assume I don't want the change for funding purposes)

Opinions ? Thoughts ? Thanks in advance.

The push for NRA 62+ is in-service distribution related. If that's what is restriced to age 62, then by all means a lower NRA can apply to other provisions.

Remember though that the actuarial valuation considers your best assumption. Either amendment choice is irrelevant to your assumed NRA for funding.

Thanks Blink.

Any change to lower in-service distributions to age 62 [per IRC 401(a)(36)] is voluntary.

I'm late to this party, but I am puzzled by this thread.

Are Blinky and David saying, for example, that a plan that has a NRA lower than 62 (without the industry justification) but has no in-service distribution provision need not take any action?

Or am I reading too much into the replies?

I am not saying that. While the in-service distributions are driving the rule change, I would still amend the plan to a 62 retirement age.

Ok, that I agree with. Thanks for the clarification.

So if there is still value in using age 62 for reasons OTHER than in-service distributions why is it ok then to fund for a 100% probability of an early retirement age of say 55. What's the practical difference between this and say a plan with an NRA of 55 but does not allow for in-service distribution. For Example:

Option A: Plan has an NRA of 62 and in-service distribution option at age 62 and an ERA option (no in-service) with fully subsized benefit at ERA of 55 (no in-service distribution option at 55) and assumes a 100% probability of ERA being taken and thus funds for an ERA of 55 (fully subsidized benefit).

Option B: Plan has an NRA of 55 but no in-service distribution option whatsoever.

Sounds like the comments suggest Option A is the better way to go ?? I'm not sure I'm seeing a lot of difference here, what am I missing ?

Option A would be the only way to go unless you can justify the pre-62 NRA. But you would not want to general test such a plan because the MVAR would be through the roof. And, you still must justify the retirement assumption.

AndyH, I guess I'm still missing what the practical difference is between option A and option B. Both fund for the same benefit at age 55 (one via a subsidized ERA) and neither has an in-service distribution before age 62.

I agree that option A looks more "cosmetically correct" in showing an NRA of 62 but the bottom line for both scenarios for funding (assuming 100% probability of retiring at 55) and in-service appear virtually the same. Is there any other reason for reasonable retirement ages OTHER than funding and in-service distributions ?? Am I missing some other compelling issue that deals with using a reasonable retirement age ??

Anyone have any thoughts on why Option A above is superior to Option B ?

Why do you think the first one is an option (unless you have the industry statistical backup)? You are aware of the 5/22/07 regulation and subsequent notices, right?