Leaderboard

ESOP Guy - again, if plan had a last day provision, then no one has earned a right to anything. perhaps that is what you are thinking of, and that would still hold true, or at least that is what I was always told

The DB relies on the DC contributions to pass non-discrimination, the DB benefits on their own would be discriminatory, right? So it then follows, if each participant gets an ancillary death benefit in the DB plan of 50x the monthly benefit, then the death benefit will also be discriminatory because it is based on discriminatory benefit amounts. The death benefit cannot be made non-discriminatory by simply offering additional insurance in the DC plan (whether or not the employees waive it) because the insured death benefit is paid for by participants in the DC plan, whereas it is employer-paid in a DB plan. Stated another way, providing the insured death benefit in a DB does not reduce a participant's eventual retirement benefit. However purchasing insurance in a DC plan does reduce the eventual retirement benefit because the premium is charged against the account balance of each participant. There is at least one firm out there designing combo plans with insured death benefits where they say they provide additional employer-paid contribution to the DC plan to pay for the insurance necessary to make the death benefit non-discriminatory. If there is a right way to design such plans this is probably it. Personally I choose not to go there and do not design or administer combo plans with insured death benefits. As far as any supposed legal advice from the insurance company, I agree with the other comments. If the agent brings it up, ask for an opinion in writing and that the insurance company indemnify the client - you won't get either.