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401(a)(26) for closed plan

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Currently active DB plan with about 25 active participants.  Employer will be hiring about 100 new employees later in 2020 and then more in the near future.  Employer would like for those employees not to participate in DB plan.  He will start a 403b plan in near future.  There is one HCE in DB plan.  If DB plan is frozen to new entrants effective say, 4/1/2020 and new 403b plan is established, will 401(a)(26) still apply to DB plan.  And if so, if DB plan is also amended to freeze and exclude HCEs, will 401(a)(26) still apply, or will plan satisfy 401(a)(26)?  Thanks. 

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Yes, 401(a)(26) will apply, but there is an exemption for plans that benefit only NHCEs.  In other words, if you freeze the accruals for HCEs, not just participation, you would be exempt from (a)(26) going forward.  

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That was my understanding, but a little confusion lately.  Thanks.

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4 hours ago, Effen said:

Yes, 401(a)(26) will apply, but there is an exemption for plans that benefit only NHCEs.  In other words, if you freeze the accruals for HCEs, not just participation, you would be exempt from (a)(26) going forward.  

As long as plan is not a top-heavy plan, and it is not aggregated with any other plan to enable the other plan to satisfy section 401(a)(4) or 410(b).

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What about SECURE Act relief, if the plan has been in existence long enough (5+ years) and not increased benefits within last 5 years?

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2 hours ago, Cloudy said:

The frozen DB plan must be underfunded in order for the a26 exemption to apply.

Cloudy are you referring to the a26 exemption for PBGC Plans that are frozen and underfunded.

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The exemption for certain underfunded frozen plans applies to PBGC covered plans and non-PBGC covered plans that are not top heavy.  1.401(a)(26)-1(b)(3).  The other exemption mentioned for certain plans that do not benefit any HCEs is in 1.401(a)(26)-1(b)(1).

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