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415 Benefit Limits

Guest ptshamoun

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Guest ptshamoun

I am an administrator of numerous governmental defined benefit plan in the state of Florida. Recently, a number of employee groups have started converting from a defined contribution to a defined benefit plans by using DC money to purchase the past service in the new DB plan. It has come to my attention from my actuary that under 415(b), if an employee has less than 10 years of participation in a DB plan, the 415 limit is reduced by a fraction where the numerator is the years of service in the DB plan and the denominator is 10.

Does this 415 limit reduction apply to converted DC to DB plans or is there a way out of this reduction.

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