Jump to content

DB plan credits predecessor employer service; that provision benefits


Guest BJGrenier

Recommended Posts

Guest BJGrenier

I am reviewing a db plan which credits service with a predecessor employer of certain employees back to 1977. The provision benefits several HCEs, but only one NHCE. The IRS issued a determination letter approving this provision back in 1995. The Demo 7 for the application provides that the formula is nondiscriminatory because past service for HCEs is limited to no more than what at least one of the NHCEs is credited. Anyone have any thoughts about this?

Link to comment
Share on other sites

I've looked at these issues before, but I'm probably pretty rusty -so you'll want to check over my references.

The nondiscrimination regulations on amendments (requirement that any amendment - in this case an amendment that provides for past service) covers this.

Question - is the predecessor employer related to the plan sponsor - I believe there has to be some relationship in order for the past service to be credited at all - you say it is the predecessor employer of some of the employees - but is it the predecessor employer in the sense that the current employer is continuing the business of the predecessor? If not, that is, if the predecessor employer is some random employer (related only to the current employer in that it employed some of the current employees), then I think there would be a problem. The problem being that you can't credit service to a person who is not an employee of an employer that sponsors the plan (or that is related to such an employer).

Assuming this is not the case, and if the old determination letter request fully described the facts, I would think it would be ok - but it's not clear from your post that this is the case.

Link to comment
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
×
×
  • Create New...