436 Restrictions for a frozen plan

[mwyatt]

Have a plan which was frozen back in '96. The 2007 AFTAP was 86.8% and the 2008 AFTAP is 77.7%, hence we look to the restrictions under IRC 436. Have one terminated (nonHCE) participant in the Plan due a lump sum. My reading of 436(d)(4) is that since benefits were previously frozen prior 9/1/2005 is that I can in fact actually pay him out the full lump sum, regardless of (d)(3) ordinarily applying.

Have seen the model notices on the board ("dear Perplexed client" et al ), but since (d)(4) negates the restriction, would I actually need to provide notice (or just modify the samples to include "never mind, doesn't apply, we can pay out because of the old frozen plan exception?)

Anything I'm missing here?

[Andy the Actuary]

Exemption applies. Benefit may be distributed in lump sum.