RamblinWreck24

I'm not even sure if they have a formal parthership agreement and even if they do I suspect that it is silent on cash balance funding. Some of the decision-making on expense allocation seems very ad hoc - some expenses are shared equally by each partner while others (especialy administrative overhead types of costs) are paid according to a formula (half fixed and half variable according to certain productivity measures). Just by way of example for how arbitrary some of the decision-making seems, a rank-and-file employee (not a partner) left with a remaining balance < $5,000 in the plan. As they were looking to distribute to her, one of the HR admins noted that her account had a shortfall of about $500 and they were deciding on whether to invoice her for the shortfall. This didn't make any sense to me since I don't believe the rank-and-file employees contributed any of their own funds. That situation is what prompted me to start researching rules about taking distributions and funded status of the plan. We are in the process of getting a lawyer to vet everything as part of her upcoming separation next year, since neither of us really trust that the officers and administration of the practice have a good grasp on things in general, not to mention the specifics of the cash balance plan. Would it be worth reaching out directly to the actuary that performs the calculations on behalf of her plan to get a better understanding of where things stand?

Yes, she would likely be an HCE in the context of the entire clinic and after reviewing the High 25 rule she would probably be covered by that as well. At the end of 2022, her balance amounted to only 2% of the total funding target for the plan and about 1.6% of the market/actuarial value of the plan assets. Using those same values from the end of 2022, it would appear that the plan would exceed the 110% funding requirement for paying out an HCE. That should allow her to take an immediate payout despite her HCE/High 25 designation, correct? I still can't really reconcile why some of the administrative staff are treating the plan as underfunded when the last form 5500 shows it was overfunded.

My wife is a participant in a cash balance plan as a partner in a medical practice. Some internal discussions have made it seem like the plan is underfunded even though the 5500 for 2022 shows over 120% funded status. She will be separating from employment next year and our plan was to rollover her vested benefits to an IRA. When others have left, there have been discussions about who should be responsible for the “make-whole” payment if the plan is truly underfunded at the time of separation. Some thoughts have been that the employee should just true up their own balance through an additional deduction from their P&L. That struck me as odd, so I was curious if there were any actual federal guidelines or regulations that would govern a situation like this where vested employees are seeking their benefits from an underfunded plan. The plan is covered by PBGC. Not sure what other details might be relevant, but thanks in advance for any assistance!