Flat Dollar Contribution, requires cash-balance arrangment ?

[JAY21]

Client is putting in DB plan primarily for owners but with enough employee classifications to pass testing (401(a)(26), 410(b), 401(a)(4)). Now at the last minute the client wants benefit other classes of employees initially designed to be excluded, by giving them a token $500 contribution per year. These other employee classes are already in a generous MP plan but client seems to want them to feel like they are also benefiting under the new proposed DB plan.

Is there any way to write this into a DB formula (general tested of course) or do I have to use a cash-balance arrangement to get this type of result. I really don't want to have 10 different token formulas to get each participant of different ages $500 or thereabouts. Any easy way to accomplish this without going to cash-balance ?

[david rigby]

Possible that this discussion (noting the difference between coverage and discrimination) will be helpful.

http://benefitslink.com/boards/index.php?showtopic=28805

[JAY21]

Right, I am using permissive aggregation and passing fairly easily before including the previously excluded employee classifications. The previous excluded group really does little to help testing (in general they're not benefiting at a level that satisfies meaningful benefits under 401(a)(26), and they only help the ABPT a little bit), so the question is more of a document design/administrative ease as to how to benefit them at levels roughly equating to $500 each on a present value basis when they're all different ages.

If I have to use cash-balance I will, but the initial proposal wasn't based upon a cash-balance plan, so I'd need to go back to the client and explain the new game plan if there isn't any easy way to design this with a traditional plan.

[SoCalActuary]

I agree that you have identified the design that gets what they want, namely a CB minimum formula.

They asked for the change in design, so I would give them a revised fee quote and let them decide if they really want it.