Rollover From DC to DB Plan

[Guest DEK1]

Does anyone have any model language that they could share related to Rev. Rul. 2012-4 and allowing roll-overs from a DC Plan to a DB Plan?

[ETA Consulting LLC]

Does anyone have any model language that they could share related to Rev. Rul. 2012-4 and allowing roll-overs from a DC Plan to a DB Plan?

Would you elaborate on what you are trying to accomplish. I ask this because everything that is legal is not necessarily administratively feasible.

Good Luck!

[SoCalActuary]

Does anyone have any model language that they could share related to Rev. Rul. 2012-4 and allowing roll-overs from a DC Plan to a DB Plan?

If you intend to keep the DC character of the funds, it is simply allowing a rollover account within the DB trust, and most standard documents will allow such an option. Of course, you have a fiduciary duty to account for the rollover properly and to allow proper investment decisions.

On the other hand, perhaps you wish to convert a DC account into an equivalent DB balance, as is done in many public pension plans that allow "air-time" purchases. Is this your intent? If so, look at the document language in one of the public plan documents.

[Guest DEK1]

I represent a multiemployer DB plan that would like to accept rollovers, at the time of retirement, from a multiemployer DC plan as permitted by Rev. Rul 2012-4. The idea is to use the DC plan monies to provide a larger monthly benefit from the DB plan. I would like to see how other plans allow for such rollovers in their plan documents. Any help?

[Effen]

Interesting thought. Have you seen this in practice, or are you just wondering if it can be done?

[SoCalActuary]

I represent a multiemployer DB plan that would like to accept rollovers, at the time of retirement, from a multiemployer DC plan as permitted by Rev. Rul 2012-4. The idea is to use the DC plan monies to provide a larger monthly benefit from the DB plan. I would like to see how other plans allow for such rollovers in their plan documents. Any help?

There is an extreme moral hazard here, because the DB plan is accepting an annuity purchase and making a guarantee for future benefits.

There are countless examples where the purchase rate decision was made without regard for actuarially sound pricing and reserving principles, as shown by practically every public plan that offers interest rates at least double those used by insurers for air-time.

If the inmates run the asylum, don't expect sound behavior. Who you represent matters here: if you work on behalf of participants, expect pressure to use a very favorable conversion rate, the height of fiduciary irresponsibility.