Age-weighted PSP in Floor/offset

[Guest Ddalk]

Can a floor/offset arrangement have an age-weighted defined contribution plan offsetting a defined benefit floor plan. I know a New Comparability PSP can be used as an offset, but I find no definitive information for an age-weighted PSP as such. Thanks very much for any help you can provide.

[Guest Ddalk]

Would someone please help me with this? I'm really troubled with this question and any feedback is greatly appreciated.

The only references I find state that a defined contribution plan benefit must be used to offset the defined benefit plan benefit. I don't think using a the projected benefit from an age weighted profit sharing plan to offset the DB benefit is inappropriate. An age weighted profit sharing plan is just a defined contribution plan with special sort of contribution formula.

Yet I really need someone else's input on this matter.

[Blinky the 3-eyed Fish]

An age-weighted PS plan can be used to offset DB benefits. Why are you unsure of this specific type of plan?

[Guest Ddalk]

Thank you Blinky. I really appreciate your help.

[Everett Moreland]

If you will rely on 1.401(a)(26)-5(a)(2)(iii)(A)(2), I have concern about whether an age-weighted profit sharing plan would satisfy that requirement.

[Blinky the 3-eyed Fish]

Everett, what is your concern? Why is an age-weighted formula not reasonable and uniform? Now, if the participants in the PS plan differered in some manner from those in the DB plan, I could see an issue here, but the same would apply with another safe-harbor allocation formula.

[Everett Moreland]

1.401(a)(26)-5(a)(2)(iii)(A)(2) requires that "The employees who benefit under the formula being tested also benefit under the other plan on a reasonable and uniform basis . . . ." I don't know what "benefit . . . on a . . . uniform basis" means. That's why I have concern about an age-weighted profit sharing plan. I would like to know what you think it means.

[Tom Poje]

well, in the 'eyes' of the govt, to avoid the gateway minimum, an ageweighted plan is considered to have smoothly increasing intervels. that sounds uniform to me. if it is good enough for the govt....

[Blinky the 3-eyed Fish]

My understanding of the reasonable and uniform basis is it relates to whom is benefiting, not the level of benefits. We have offset plans with determination letters where the PS plan is cross-tested and that type of plan would be much more likely to not satisfy the uniform and reasonable criteria versus an age-weighted plan. But, I think to argue either type of plan is not reasonable and uniform in the offset situation would be to argue they are not reasonable and uniform on their own.