Termination of Underfunded DB Plan

[ScottR]

Hi all,

What's the current thinking on allocating assets among participants in an underfunded, non-PBGC-covered DB plan?

May we simply allocate the available assets among all participants in proportion to their PVABs?

Or must we pay certain classes of participants in full? If so, which participants must be paid in full? e.g. NHCEs?

Non-owners? Non-50% owners? etc.

TIA.

.. Scott

[david rigby]

I'm surprised that the plan document does not already spell out a procedure.

If not, the document should be amended first. IMHO, you probably have some flexibility:

- proportional to PVAB;

- use the PBGC procedure (but don't change it one iota);

- all NCHE's first, then PVAB ratio for HCEs;

- other??

Just an opinion.

[Blinky the 3-eyed Fish]

Also read Rev. Rul. 80-229.

[david rigby]

Good find Blinky!

Also, this: http://benefitslink.com/boards/index.php?showtopic=20619