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Bumppo23

For Terminating Overfunded Defined Benefit Plan, If Funds Transfer to a Qualified Replacement Plan, Must QJSA Options Ensue for the Transferred Amounts?

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For Terminating Overfunded Defined Benefit Plan, If Funds Transfer to a Qualified Replacement Plan, Must QJSA Options Ensue for the Transferred Amounts? 

For a terminating defined benefit plan, as an example a hybrid plan, further as an example, a cash balance plan, if the plan terminates while overfunded, must all assets from the plan retain QJSA options for distribution? Must one only preserve the QJSA options for amounts correlated to respective individual hypothetical account balances? 

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If there are excess funds, that means that each participant has already received his/her entire accrued benefit.  There is no J&S to "protect".  In other words, the J&S feature applies to the benefit, not to the assets.

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Also, maybe another way to look at this... The excess assets that are transferred to a QRP are really reversions to the company (in which case, they are not "benefits" for any participant), and the excise tax on reversions can be reduced to 20% (if transferring at least 25% of the excess) or zero (if transferring all excess).  So these are assets being transferred, not "benefits".

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