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Convert DB to DC

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Company has a nonqualified DB plan. Company is thinking of converting to a nonqualified DC plan by treating the lump sum equivalent as of 12/31/2008 as the opening balance for the DC plan. Distribution elections will be solicited and will be effective 1/1/2009. No one sees any problem with this under transition guidance (in some way, conversion is similar to changing the investment options).

However, the company asked whether they can solicit elections on whether the participant wishes to have their plan moved from the DB to the DC? As an alternative, the company wants to know whether they can mandate this only for those currently under a specified age. I can't figure out any way to accelerate distributions to 2008, but something about either option bothers me.

Any thoughts?

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To answer a question you did not ask, you might look at how FICA applies after conversion to a DC plan. I looked at this recently (can't remember the facts or my conclusions) and remember being mystified.

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To answer a question you did not ask, you might look at how FICA applies after conversion to a DC plan. I looked at this recently (can't remember the facts or my conclusions) and remember being mystified.

Haven't gotten too far on the details yet, but the thought is to argue the lump sum equivalent will be reduced for FICA that needs to be withheld effective 12/31/2008 (suitably grossed up for income tax withholding). Hate to do it 1/1 to avoid OASDI.

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