Late retirement for vested terms

[AndyH]

Takeover plan does not expressly state that benefits that don't start until after age 65 for a vested term are actuarially increased. Plan does have Suspension of Benefits provision for active or reemployed retirees. It says nothing about vested terms.

Plan states that benefits are "available" for a vested term at NRA age 65.

I see this "SOB for actives only" fairly often, and usually there is no retroactive annuity start date language.

I assume that we are required to provide an actuarial increase if no relevant SOB type notices have been provided to vested terms once they approach age 65 - anybody disagree?

Why don't plan documents typically address this? I have seen many from different sources that ignore this issue as it applies to vested terms.

Comments?

[david rigby]

I assume that we are required to provide an actuarial increase if no relevant SOB type notices have been provided to vested terms once they approach age 65?

That's my understanding.

Why don't plan documents typically address this?

Sloppy?

[AndyH]

Thanks for the feedback.

Looking at the DOL regulation 2530.203-3 for the first time in a while, now I am thinking that issuing a SOB notice to a vested term is irrelevant since they have no "section 203(a)(3)(B) service", i.e. "suspendible service". So that leaves only the document question I think.

[Andy the Actuary]

Dear Andy the Other:

Have faced this situation many times on take over cases. I argue that the TVs must be given actuarial increase because the Plan cannot forfeit benefits due to increase in age. 1.411(b)-1(d)(3)

[AndyH]

I'll buy that as a second argument. Thanks!

[Effen]

Jim Holland wrote a nice article about this in the most recent ASPPA quarterly. Basically Jim agrees with everything posted, but it might be helpful to read the article.

I agree that you can't suspend a terminated participant because they are working in "suspendable service". If your plan does not provide for an actuarial rollup, or a retro-active payment, you may need to prepare a VCP filing to correct the problem.

[AndyH]

Thanks for the additional info Effen. I'll look for that.