Funding to Inferred Normal Retirement Age

[Andy the Actuary]

Suppose we currently have a DB plan with Doc and two helpers. The entity is a C-Corp. The Plan's current NRA is 52 and Doc is 45 with 13 YoS. Helpers are age 35 with 2 YoS. Suppose we change NRA to 65 but allow for unreduced early retirement at 52/20 YoS. Now, suppose it's for real that the Doc will call it quits at 52. So, the expectations are the Doc will terminate at 52 and so goes the corporation. The helpers will not have 20 YoS at 52, so their benefit at 52 will be the accrued benefit payable at 65. That's how we expect life to play out.

Question: Can we fund the plan under the assumption that it ends when the Doc turns 52? That is, can we assume the employees will not work long enough to get a fully-subsidized early retirement benefit but the Doc will?

[tymesup]

Does the plan termination deprive the helpers of the chance to grow into the subsidized early retirement? Would they get the subsidy anyway?

Is it likely the helpers will make it another seven years, given the doc seems to have gone through at least one set of predecessors?

Does a4 limit what this is trying to accomplish, anyway?

[mwyatt]

A little curious as to the 52/20 need, if this is anything like a typical doctor DB plan (i.e., benefits are overridden by 415 concerns). Is there really any "subsidy" for your doctor? In point of fact, this move to higher NRAs due to the final regulations usually provides for lower benefits for rank and file with the NRA change; the HCEs typically come out somewhat indifferent due to the 415 limits. Another unintended consequence...