Benefitting determination

[FAPInJax]

A participant has accrued a top heavy benefit. For 2003, the participant does NOT earn an additional year of accrual under the normal formula OR for top heavy.

Are they considered benefitting???

1.410(b)-3(a)(3)© references how a participant could not experience an increase in benefit but still be considered benefitting.

Would the answer be different IF the participant had already had 10 years of top heavy service and did not earn an additional year of accrual under the formula?

One more, 10 years of top heavy and he earns a year of accrual but experiences no increase in benefit because the top heavy is larger??

Thanks for any and all responses.

[AndyH]

Frank, could you clarify your first paragraph? Why does he not earn an accrual? I find the situation a little unclear. How do benefits accrued under your example?

[mwyatt]

Frank, for clarification I'm assuming that your participant worked less than the requisite Hours of Service in the year to earn a benefit accrual under your Plan. Is that the case?

[FAPInJax]

Yes, for discussion purposes, the reason for non-accrual is less than the requisite hours.

[AndyH]

Well, then that would probably not be earning a year of service, so I would not think that any cap rule would apply, i.e. not benefitting because 11 years of service limited to 10.

But if this is a fractional accrual plan and the denominator has decreased then some would argue that the accrued benefit has increased, therefore the participant is benefitting. I was involved in a discussion on this subject on this board with Mike Preston among others last fall. It was new information to me, but quite interesting. If that is applicable, you could search this board to find it.