Distribution at the 415 limit

[Dennis Povloski]

I have a small firm that benefits husband, wife, and 3 employees.

The husband is at the full 415 dollar limit and hits normal retirement age this year. The plan allows for in service distributions at normal retirement.

The hubby would like to take out his lump sum on his normal retirement date, but keep the plan so that his wife can accrue her full benefit.

The client has the ability to make a contribution that will release his benefit so that we avoid any restricted distribution issues (must be nice!).

My question is if he takes a lump sum based on this year's 415 limit, and there is an increase in the 415 limit in some future year, will he then earn a benefit equal to the increase? or is he just done because he was fully paid out at the maximum benefit at the time he took the distribution.

Any thoughts or leads that I could research would be great!

Thanks!

[Gary]

I don't see why he can't continue accruing a gross benefit that is offset by his prior distribution(s).

[JanetM]

Am not an actuary - but IMHO If the plan language allows for total distribution at NRA and provides for additional accrual of benefits for continued service I would think you must provide for 415 increases. At retirement or 70.5 he would have the difference in the accrued benefit less the prior distribution.