Testing Age DB/DC Combo

[Penman2006]

Part 1:

I would like to check my interpretation of Testing Age in 1.401(a)(4)-12.

Combining plans for 410(b) and 401(a)(4).

DB Plan NRA = Later 62 or 5 YOP (NRD is first of mo. following)

DC Plan NRA = 65 (NRD is first of mo. following)

No EE is at or past either plan's NRA. No EE comes under the 5 YOP NRA provision.

EE1 is in the DB Plan Only

EE2 is in the DC Plan Only

EE3 is in both plans.

Testing Age:

EE1 = 65

EE2 = 65

EE3 = 65

Agree/Disagree????

Part 2:

What if the NRD in the DC plan is the last day of the plan year NRA is attained (the DB NRD is first of month following NRA). Therefore, in the DC plan, some particpants actually retire at age 66 based on age nearest birthday. Would that change anything? The regs only use the term "normal retirement age" not "normal retirement date". I can add that my software vendor uses age nearest at NRD. If age nearest at NRD is applicable, would everyone's testing age be 66 or just those that are actually 66 at NRD (the rest would have an age 65 testing age)?

[AndyH]

My view is that you would need to use age 65 (not effectively 66) in each case because otherwise you would have a non-uniform NRA in the combined plan.

[Penman2006]

Thanks Andy. What about Part 1 (assumes both plan have NRD = first of month following)? Do you agree with my testing ages?

[AndyH]

yes, for the same reason. They are not uniform-therefore age 65 is the testing age.

[Penman2006]

This is what my original thinking was:

A. My understanding is that a NRA of "the later of age 65 and 5 YOP" is a uniform retirement age, even though some participants may be different ages at retirement.

B. If A. is correct, why wouldn't a plan with NRA = 65 and NRD = Anniversary Date (last day) following NRA be a uniform NRD?

If B. is correct, then you would have in my Part 2 example, a plan with different uniform retirement ages, in which case paragraph (2) under the testing age definition would apply, and the the testing age would be the "latest uniform normal retirement age". (Again, I don't know if that's 65 or 66 in my example.)

In other words, I was not looking at the combined plan as a plan that does not provide a uniform retirement ages (where paragraph (3) of the testing age definition would apply and testing age would be 65).

What do you think?

[AndyH]

A. My understanding is that a NRA of "the later of age 65 and 5 YOP" is a uniform retirement age, even though some participants may be different ages at retirement.

Agreed.

B. If A. is correct, why wouldn't a plan with NRA = 65 and NRD = Anniversary Date (last day) following NRA be a uniform NRD?

Because this is manipulation of the numbers, for the sake of manipulation of the numbers, in my opinion.

In other words, I was not looking at the combined plan as a plan that does not provide a uniform retirement ages (where paragraph (3) of the testing age definition would apply and testing age would be 65).

I think you need to.

Just one opinion.

[Penman2006]

FWIW, I did not design the DC plan to manipulate the numbers, it was drafted that way and was in existence when the DB plan was installed.

Thank you for input. I am not hoping for an outcome, I just want to get it right. We'll see if anyone else chimes in. Maybe I should put it in the X-tested plan forum.