truphao Posted April 21, 2023 Share Posted April 21, 2023 I am looking at a takeover CB Plan. The Plan Doc provides for 2.0% ICR for HCEs and 5.0% ICR for NHCEs. I vaguely recall that idea was floating around 5 or 6 years ago but was informally criticized by IRS on account of creating different BRFs and thus failing that test. Does anyone have any recent information on such design and any source of additional background info to research in more depth? Link to comment Share on other sites More sharing options...
Bri Posted April 21, 2023 Share Posted April 21, 2023 I don't recall any discussion about it, but why would a higher ICR for NHCEs be a BRF that fails? Tongue-in-cheek, I can't imagine the IRS position is "Oh no, not enough NHCEs get a crappy ICR"... Was it a way the plan was trying to "justify" a larger principal credit? Link to comment Share on other sites More sharing options...
truphao Posted April 21, 2023 Author Share Posted April 21, 2023 I think the informal IRS position was that there would be 2 different classes of implicit ERFs - one for HCEs and another for NHCEs thus it automatically fails the BRF test. Bri 1 Link to comment Share on other sites More sharing options...
CuseFan Posted April 24, 2023 Share Posted April 24, 2023 I do not remember exact details but do recall that it created a lesser early retirement reduction for HCEs as alluded to by truphao. Kenneth M. Prell, CEBS, ERPA Vice President, BPAS Actuarial & Pension Services kprell@bpas.com Link to comment Share on other sites More sharing options...
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