Testing Age For DB/DC Combination

[Guest merlin]

Current ps plan NRA = 59.

Poposed cash balance plan NRA = 62.

Plans are to be aggregated for 401a4.

I expected to see all BARs/EBARs calculated at the aggregated plan's latest uniform NRA of 62. Instead the ps plan EBARs are calc'd at 59 and the cb plan BARs are calc'd at 62. When I questioned the folks at Relius about it they pointed me to 1.401a4-9b2iiA and B. Is that what's meant by "...treating all defined contribution plans... as a single plan, and all defined benefit plans...as a separate single plan..."?

[Blinky the 3-eyed Fish]

I too would expect calcs at 62 for both plans. I don't see how the cite they gave you explains their position.

[Tom Poje]

my understanding is that you have to use a uniform ret age for testing, hence age 62 in your example.

Outside of your example I would add some precautionary notes if the NRA in the DB was less than the DC.

At the 2005 ASPPA Q and A (#22)

the question was as follows

NRA age in the ps is 65 and in the DB it is 62, which means my latest uniform age is 65, which equals the testing age.

[so the opening statement aggrees with the idea that the unform age is the latest of all NRA in the combo plans]

the question then went into what 'happens if the DB plan opts to recognize the 415 limit for testing'. Is the max accued benefit the same at 65 as it was for 62 or do you have to normalize it?

sorry, I only have the handout and not the answer, which was discussed from the podium.

in addition, when testing for meaningful benefit, you still use the DBs NRA not the latest uniform age.

and in addition, its buried somewhere in some chicken scrawled notes I have somewhere, if the DB was cash balance then you ahve to be careful about what interest rates you use. I think it might have been one interest rate through the DB retirement age, and then another to the latest uniform age. or maybe that was for determining the gateway minimum provided. I don't remember.

[Guest merlin]

Thanks for the responses.

Tom, my recollection of the answer to the normalization question was that you did have to normalize to 65. But I don't remember how strongly it was worded.

[Penman2006]

I think the DB testing benefit would have to be the age 65 actuarial equivalent of the age 62 benefit. Jim Holland said as much at the Northeast Benefits Conference although it was a pretty casual remark, no cites involved. Unfortunately the 415 issue mentioned here wasn't discussed.