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Determining eligibility of participants in new 403(b) plan (terminating existing DB plan)

Guest nadiarott

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Guest nadiarott

Company wants to do away with their defined benefit plan due to the expensive nature of maintaining/funding the plan. They will establish a 403(b) plan for their employees, as a new option.

Any advice on the best way to achieve this while keeping the employees happy is greatly appreciated. Also, any comments/concerns with the options that I have come up with is also greatly appreciated.

1. Terminate the DB plan and move everyone to the 403(b) plan - no choice. (not the best choice because ees will likely not be thrilled)

2. Give every ee a choice between remaining in the DB plan or switching to the 403(b) plan (not the best because it may not help company achieve its goals).

3. Provide all ees based on age participation in the DB plan (a sort of grandfathering) and move the rest (and new ees) to the 403(b) plan.

4. All vested ees (with certain age or service amount) could choose - the rest go to 403(b) plan. Must determine the vesting rules.

Of course, my main concern is that the latter two options create some age discrimination issues under ADEA, etc. Any other options that anyone has would be greatly appreciated.


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