NRA = 70

[Penman2006]

I am looking at a DB plan for a not-for-profit organization that has/had an individually designed plan with an age 70 NRA. Benefit Commencement Date was defined as the latest of (1) reaching age 65, (2) 10 YOP, (3) terminating employment. So, if you quit at age 65 you could get your benefit but the document clearly says that it would be actuarially reduced from 70 to 65. Tha plan has a favorable determination letter dated in 1995. I didn't think any qualified plan could have a NRA greater than 65 & 5 YOP. How is this possible?

The plan was subsequently restated for GUST and put on a prototype but the age 70 NRA remained.

[AndyH]

I believe this is permitted but participants must be fully vested and benefits must be available at the 411 NRD of not greater than 65+5P. I have one that uses SSRA but it meets the 411 requirements at age 65 and it has received several FDL's over the years.

[Andy the Actuary]

If you look at the D-letter submission, it is unlikely you will find in the cover letter that the submitter is requesting the IRS to opine on the qualification of this particular provision. In short, if the submitter raises no issue and simply includes the provision, the IRS reviewer may not observe the "actuarial reduction" aspect.

[SoCalActuary]

I last encountered this for a church based plan, exempt from 411. Be clear whether this is such a plan or not.

Mathematically, it seems OK to me that you have a different benefit rate payable at age 65 vs 70, so long as the vesting issue is met at age 65. For fractional accrual plans, there could be some discussion of the accrual rates for those hired very young. If you use unit accrual, then this is probably irrelevant.