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AdKu

Is age 65 or 62 to be used when cross-testing a DB/DC plan?

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Is age 65 or 62 to be used when cross-testing a DB/DC plan?

If the DB Plan doc. states NRD "The later of age 65 or the fifth anniversary of Plan participation, or if earlier, the later of age 62 or the 10th anniversary of Plan participation"

The DC plan doc. states NRA means the "Later of age 65 or 5th anniversary of the date the participant commenced participation in the plan

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4 minutes ago, CuseFan said:

yes, generally the latest NRA between the two plans.

Correct when both plans have Uniform Retirement Ages.

However, if one or more of the plans has a NRA that is not uniform, it is age 65.

In this case, I don't think the NRA in the DB plan is uniform, so it is age 65.

 

 

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and my understanding

when looking at the DB portion you use the DB assumptions to age 62, because that is the normal retirement in the DB plan. now you convert what was at age 62 to age 65 using the DC testing assumptions

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Some of the DB plan participants are past age 62 (like 64).

Do I convert their age 62 or age 64 benefits to age 65 using DC testing assumption?

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for a moment, pretend the DB plan is the only plan. you would calculate everyone at 62 unless they were past NRA and calculate at that age. then you adjust to 65

at least that is my understanding.

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If I may chime in, Tom's suggested procedure interests me because I don't recall seeing that done before, but yet again I haven't often tested plans with the two-prong NRA definition discussed here.

According to 1.401(a)(4)-3(f)(3), an actuarial increase may be disregarded for testing purposes if

(A) the same uniform retirement age applies to all employees and

 (B) the percentage increase factor is no greater than the largest percentage increase factor that would be produced using any standard mortality table and interest rate.  

So it appears to me that if the AdKu's plan did not have the non-uniform NRA definition then using the DB factors is optional but not required and you could use the testing factors to age 65.   For example, if the DB plan had a NRA of 62 and the DC plan 65.

Anyone disagree?

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