suspension of benefits associated with excess plan

[Gary]

say a participant retires at age 66 with a total ben of 5,000; where 4,000 is from qual plan and 1,000 is from non qual plan. say he earned more than 401(a)(17) limits.

and say his age 65 total ben was 4,800 and act increased to actual ret would be 5,400. and his age 65 qual ben was say 3,700 and act increased to act ret would be 4,400.

assume no suspension notice provided.

clearly, the act increased qual ben is still less than the total age 66 ben. so in effect, he is receiving an amount greater than act increased qual ben.

but act increased ben in total is greater than actual ben in total.

the question is, can the suspension requirements and thus the act increase requirement be applied to the total benefits? thus meaning that it would apply to the non qual benefits.

my first impression is that since the total ben is greater than act increased qual ben, then no additional benefits would be statutorily required.

any thoughts?

[david rigby]

I don't think this question should be concerned with any non-qualifed plan. The qualified plan is required to follow the terms of the plan, and applicable statute and regulations.

Many non-qualifed plans merely define a target, offset by whatever the qualified plan provides. Thus, the non-qualifed plan is not required to mimic the qualified plan by including an actuarial increase post NRD.

[MGB]

I agree with Pax. I would also add that the actuarial increase requirements are under the Code, so you cannot satisfy benefits required to be paid under the qualified plan with amounts from the nonqualified plan.