prior cash outs

[Draper55]

It has been my understanding that in doing accrued to date testing one should factor in the ebar associated with the dc account balance if one exists. Is there a correct technique when a dc plan has been previously terminated and cashed out? Moreover, if such balance should be included, would it be brought forward with or without interest? If with interest, then what rate;a 401(a)(4) standard rate or perhaps the experience rate under a replacement dc plan if one exists?

[AndyH]

Can you be a bit more specific about your situation?

If you are cross testing a DC plan using the accrued to date method then you would add back distribution of benefits to HCEs "(including a reasonable adjustment for interest)" but you can disregard distributions to NHCEs.

Note that you only include people who are benefitting in the current testing year, not people who terminated years ago.

I'm not sure if this covers your situation completely but it should help.

[Draper55]

AndyH,

I'm doing a DB/DC combo using accrued to date. So my thinking is right to include the HCE cashout, but what is the reasonable rate of interest? Is there guidance in this regard or do I just submit the combo for a letter and see if the service likes my rate?

Draper1

Can you be a bit more specific about your situation?

If you are cross testing a DC plan using the accrued to date method then you would add back distribution of benefits to HCEs "(including a reasonable adjustment for interest)" but you can disregard distributions to NHCEs.

Note that you only include people who are benefitting in the current testing year, not people who terminated years ago.

I'm not sure if this covers your situation completely but it should help.