Plan Document Wording - with NRA 62 and accrued benefit based on ERA 55

[HarleyBabe]

May not be asking this correctly, but I will try. Because of the required amendment for age 62 in pension plans. Those defined benefit plans we have that have an age less than 62, we took the approach of many and that was to have an ERA of the age that we had been using and continuing to base the accrued benefit on that number as well as using it for funding.

With the DB restatements, our prototypes don't seem to cover the above. The master document uses the accrued benefit definition as ....to Normal retirement. That is now presenting us a problem for those plans we are restating with throwing it off the prototype.

How are others handling their docs?

[John Feldt ERPA CPC QPA]

Let's assume that when the plan added an early retirement date, it also defined the early retirement benefit as an benefit payable without reduction at early retirement. Let's also assume that this amendment was done timely to comply with the Final Normal Retirement Age regulations (now my soap box: you remember - the phased retirement regulations that were proposed by the IRS, then almost 100% deleted and replaced with something completely different after the comment period ended, and then released as Final Normal Retirement Regulations with no option for folks to comment, thanks). All better now.

Your current prototype probably allows for an unreduced early retirement benefit, right? If so, and the plan provides the unreduced benefit payable at early retirement, the actuary can choose an assumption regarding the age that employees will retire equal to the early retirement age (if they think that's reasonable) - thus funding would not be affected.

If your EGTRRA prototype does not allow an unreduced early retirement benefit, perhaps look for another prototype document to use?