defined benefit plan

[Guest joe22]

I have a client who had a defined benefit plan that terminated in 1987. The owner and a few other employees rolled their money into the companys new target benefit plan. Is it possible to start up another db plan and if so, do I have to offset my benefit by the amount of benefit they accrued as of the date of termination.

[FAPInJax]

Yes, you may start up another DB plan. HOWEVER, the accrued benefits (at time of payout) must be used to reduce the maximum benefits permitted under the new plan.

[Guest merlin]

If you're talking about aggregating benefits for purposes of 415 you only have to aggregate for more-than-50% owners. And if you do have to aggregate you get to count the old plan service/participation for purposes of the 10-year rule.

[Guest Keith N]

Merlin,

I'm not sure what your suggesting. If it's all the same employer, than the old db plan accruals count against db maximums for all employees, not just the owners, although I doubt it is in issue for anyone else.

I also agree that if you should count the participation for 415.

[Guest joe22]

Thanks for the info. The owner is the only one remaining who got a distribution from the prior db plan.

This firm did not handle the prior db plan although we were provided with copies of their calculations. The participant reached normal retirement age of 55 at plan termination, which was 15 years ago. He accrued the maximum benefit of 6250 per month, however, his distribution was offset by the then current value of his dc plans. He will be 70 in January.

To calculate the maximum benefit he can have in a new plan do we ratio the amount received to the present value of his $6250 accrued benefit, to arrive at an adjusted accrued benefit (approx. 4000) at age 55 and then adjust this actuarially to a new retirement age of 74?

The prior distribution was rolled over into a new target benefit plan and that rollover account has a current value of $2 million.

Any comments or help would be greatly appreciated.

[Guest merlin]

Keith, I'm dyslexic. I read " company's new" as "new company's". So my post was accurate but irrelevant.

[Guest Keith N]

no problem... Did you hear about the dyslexic agnostic?

He wasn't sure if there was a dog!

[Kirk Maldonado]

Did you hear about the organizations ADD? It stands for "Dislexics Against Drugs?"

Their motto is "Just say ON!"