DTH Posted June 27, 2003 Posted June 27, 2003 I have a plan that is going to replace their DB plan with a DC plan. They are going to freeze benefit accruals in the DB plan. Is it possible to freeze the accruals at different dates for different employees. I have combed through the regs. and found nothing that says they can't do it (other than a possible 401(a)(26) problem). Also, I assume they can design the freeze where new employees will participate in the DC plan only and the current DB plan participants can opt-out of the DB plan to participate in the DC plan. Any design issues here? Does anyone have Code sites that can direct me to any opt-out rules? Thanks!
david rigby Posted July 9, 2003 Posted July 9, 2003 I think you have a 401(a)(4) issue if you do a "staggered" freeze. I'm a retirement actuary. Nothing about my comments is intended or should be construed as investment, tax, legal or accounting advice. Occasionally, but not all the time, it might be reasonable to interpret my comments as actuarial or consulting advice.
Blinky the 3-eyed Fish Posted July 9, 2003 Posted July 9, 2003 I agree with pax. It would no longer be a safe harbor formula because differing participants will have different rates of accrual based on when their freeze date is. Regarding your DC and DB plans question, you may have a 410(b) problem and, depending on the size of the plan, a 401(a)(26) problem in the DB plan. "What's in the big salad?" "Big lettuce, big carrots, tomatoes like volleyballs."
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