415 and 100% of comp

[RLR]

We have a husband and wife DB plan that terminated 12/31/09. They have not distributed assets because of illiquidity, but are ready to distribute now. Assets now exceed PVAB so we are going to allocate the excess. The $ limit does not apply but the 100% of comp limit does. Is there any problem with counting service for 2010 - 2012 toward the 10 year requirement?

[rcline46]

Not distributing inside of 12 months after terminating the plan is a problem, and illiquidity is no excuse. The IRS could have a problem with the 3 year delay and say the plan was never terminated. If so, I sure hope you did a plan freeze.

Oh, you want to count the accrual years. Well, you could not with a plan freeze. Your only hope is unfreeze the plan and rescind the termination, figure out how to file the SBs for the missing years without incurring penalties, and then you can have what you want. Otherwise, I think you are up a creek without a paddle.

[SoCalActuary]

Not distributing inside of 12 months after terminating the plan is a problem, and illiquidity is no excuse. The IRS could have a problem with the 3 year delay and say the plan was never terminated. If so, I sure hope you did a plan freeze.

Oh, you want to count the accrual years. Well, you could not with a plan freeze. Your only hope is unfreeze the plan and rescind the termination, figure out how to file the SBs for the missing years without incurring penalties, and then you can have what you want. Otherwise, I think you are up a creek without a paddle.

You might be right, but this is only an issue of allocating excess assets. If I were responsible for this plan, I would submit the proposed allocation as part of the plan termination process to the IRS.

[AndyH]

We have a husband and wife DB plan that terminated 12/31/09. They have not distributed assets because of illiquidity, but are ready to distribute now. Assets now exceed PVAB so we are going to allocate the excess. The $ limit does not apply but the 100% of comp limit does. Is there any problem with counting service for 2010 - 2012 toward the 10 year requirement?

I think so. The benefit was fixed when the plan was teminated, and service at that point would be used to determine the benefit. This assumes that the plan does terminate with that term date. If it changes, the benefit may or may not change depending on what transpires.