Transferring benefits from a defined benefit plan to a defined contrib

[Guest nlepk]

A highly compensated employee who is at the Section 415 limit and has reached normal retirement age would like to transfer the lump sum equivalent of his accrued benefit into a new money purchase plan being established for all of the employees. The existing plan allows for in-service distributions on or after NRA. Assets under the plan are sufficient enough to allow the distribution. The defined benefit plan may be terminated after the transfer or before the transfer, if possible. The intent is for the

distribution to be a transfer and not a rollover. The defined benefit plan is not subject to PBGC rules.

[AndyH]

I don't think you can do that. I think it has to be a rollover, unless the receiving plan has all the (DB) features of the original plan.

[Guest nlepk]

Thanks for your prompt response. I'm not sure. Question 3 in Reg 1.411(d)-4 Section © paragraphs (1), (2) and (3) deal with the issue. I'm having some difficulty applying the language in these paragraphs.

[AndyH]

I think this just says that you can't do what you propose after 8/10/88, may have been able to do so prior to 1/30/86, and have some opportunity in the interim provided certain requirements are met.