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Accrued-to-date testing after fresh start


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Suppose you had a small DB and PSP (each covers 5 participants). Suppose both of these plans have been in place for 8 years and the plans are expected to be active for 2 more years.

The business owner is 60 and assume all employees are nhces age 30. For 8 years all participants in the DB have received a benefit of 3% of average compensation. All employees have gotten a 7.5% contribution in the PSP for 8 years and the business owner has gotten $0. There has been light turnover in the past 8 years.

Now the business has experienced a windfall and will this year and next year. Clearly the business owner has received less than employees for the past 8 years.

Could the DB plan be amended to provide 15% of average pay for shareholders with the same 3% of average salary to remain for all non-shareholders? A fresh start would be used of course.

Then, is it possible to use accrued-to-date testing under this scenario?  The idea is that the business owner has not accrued that much on an average basis.

Thank you!

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