Paired plans

[Guest Kevin1]

I'm taking over a Defined Benefit-Profit Sharing Plan combo. Last amended 2003.

The defined benefit plan document says "If this is a paired plan the eligibility requirements must be the same." You guessed it, they aren't. DB is six months no hours and the PS is one year with 1,000 hours. Also one is a standardized plan and one is non standardized. Contributions have been under the 25% limit.

I've looked in Sal's book, but can not identify anything on point. There is a document issue, however is there a statutory issue? Also will there need to be a submission under EPCRS, lower the eligibility requirements for the PS plan and make contributions for anyone omitted?

[Belgarath]

Does the document define "paired plan?" In the limited situations where I've ever seen this, the plans were "paired" only if BOTH plans were standardized.

Just a shot in the dark...

[Tom Poje]

Curiosity got the better of me, so I tried gooooooooogling paired pension plan and the following popped up: (ok, so I was waiting for a print job and had nothing better to do when trapped at the desk)

http://www.retirementdictionary.com/definitions/pairedplan

•Revenue Procedure 2000-20 defines "Paired plans" as follows “ … either a combination of two or more defined contribution standardized plans or a combination of one or more defined contribution standardized plans and one defined benefit standardized plan (for example, a money purchase pension plan, a profit-sharing plan and a unit benefit or flat benefit pension plan), so designed that if any single plan, or combination of plans, is adopted by an employer, each plan by itself, or the plans together, will meet the nondiscrimination rules set forth in § 401(a)(4), the contribution and benefit limitations set forth in § 415, and the top-heavy provisions set forth in § 416. Paired plans must have the same sponsor. In addition, only one of the paired plans that an employer adopts may provide for disparity in contributions or benefits that is permitted under § 401(l). If one of the paired plans is a defined benefit plan that includes a final pay limitation as described in § 401(a)(5)(D), then the paired defined contribution plan(s) may not provide for disparity in contributions.”

•Under Revenue Procedure 2005-16, paired standardized plans are discontinued as separate categories of master&prototype plans

[Guest Kevin1]

The definition of Paired Plans in the DB document is as follows:

"Paired Plans. Two or more plans maintained by the Sponsor designed so that a single or any combination of plans adopted by and employer wil meet the antidiscrimination rules, the contribution and benefit limitations. and the Top-Heavy provisions of the Code".

To me it looks like it fits and now I need to deal with the discrepencey. I haven't looked at the details, but there's not a lot of employee turn over here. So I'm guessing there won't be any significant correction amounts.

[masteff]

But given what Tom posted, you don't meet the definition of paired plans, which says they both have to be standardized; your OP says one is non-standardized.

Also you say the DB plan says: "IF this is a paired plan..." That's a big "IF".... what does the 2nd plan say? That Rev Proc that Tom cited says the plan doc must contain pairing provisions... so if the 2nd plan is silent or otherwise fails to have sufficient language, then they're not paired.

As a CPA that I once worked for said: always try to figure why it's not broken before you go trying to fix things.