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Guest kp

Extended Wear Away Benefit Calc

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Guest kp

We amended plan for OBRA 93 for $150 cap (indexed for inflation) and are using the extended wear away method to calculate benefits upon retirement or termination. Fresh start date is 1/1/94. Best method is frozen benefit accrual until 1/1/94 plus current year benefit accrual for benefits after 1/1/94. Assuming we can calculate frozen accrual, does the second part of calculation requires us to treat as if ee started over on 1/1/94?

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What do you mean?

You do not treat the 1994 accruals as a "new employee" in terms of participation, vesting, etc. I'm not really sure what you are asking.

If, for example, you are referring to a service maximum, then the "second part" of calculation will normally recognize any service included in the "first part", but the addtional benefit accrual beginning in 1994 can be any formula you want (generally). If the frozen part included SS integration, then there is still a max of 35 years (total) for use of 401(l) safe harbor definitions.

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