415 Adjustment Necessary?

[Dougsbpc]

The final 415 regs posted by J4FKBC is timely for this question.

Suppose a county employee retires with full pension benefits and then establishes a very profitable business at age 68.

If his corporation adopts a DB plan, must the 415 limit be adjusted for the benefits he accrued under the county plan? I would think not because the two entities are not related in any way.

Thanks much.

[Blinky the 3-eyed Fish]

No is correct.

[John Feldt ERPA CPC QPA]

Right. Benefits accrued under separate employers are not aggregated for 415 purposes. Be careful to understand what it means to be "separate" employers.

Generally, if the owner of a business ever earned a DB benefit in a previous business that he also owned, then aggregation would be required to offset the current plan's 415 limit by the previous benefits earned under the old DB plan.

When establishing a new DB plan it is important to ask the client if they ever had a prior DB plan or if they owned a business that maintained a DB plan. Then find out the details about how much ownership they had in the old business.

In your case, the county was not a business that he owned, so no worries!

[Mike Preston]

Remember the special rules on aggregating certain governmental plans. Sorry to be so cryptic but I don't have the time to look up the cite.

[John Feldt ERPA CPC QPA]

Yes, that is a fine point - thanks!