Benefit Accruals

[Gary]

A small company wants to have a db plan where a key ee with a salary of $1,000 (no assumed future pay increases) is to receive a projected benefit of $10,000/yr. , but the plan formula is proposed to be something like 150% of pay. How can they arrive at such a benefit under such circumstances? Even if 415 allows for such a benefit, it doesn't seem to work under this criteria.

[Chester]

Gary, there is a special minimum benefit allowable under Section 415 of the IRS Code. This minimum benefit provides that if the employer never sponsored a defined contribution plan in which the employee participated, a $10,000 annual benefit can be provided, regardless of compensation.

[Chester]

Gary, one more addition to my previous posting. The plan document must specify that the $10,000 annual benefit is a minimum benefit, and it would have to apply to everyone in the plan.