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Excess Assets on Termination


Dougsbpc

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A floor-offset defined benefit plan will be terminated with excess assets. The plan is covered by PBGC so priority categories 1-6 must be followed.

The allocation of excess will pass 401(a)4 on its own.

Question: Must the excess allocation be provided before offset or after offset?

For example, suppose a participant has PVAB of $10,000 prior to offset and an offset of $15,000 resulting in $0. Now he receives an excess allocation equal to $1,000. Is his distribution:

A. $10,000 + $1,000 - $15,000 = $0

or

B. $10,000 - $15,000 = $0, + $1,000 = $1,000

Thanks.

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