$160,000 Compensation Limit for DB Plans

[Guest Elaine Levin]

What are the most frequent methods of providing a plan to make those affected "whole"? Non-qualified lump sum payment at retirement? Annual cash out?, etc. Will the limit be increasing in 2000?

Thanks.

[Lorraine Dorsa]

By "whole" I assume you mean the portion of the benefit by formula not permitted in the qualified plan due to the 401(a)(17) limit.

I think the answer depends on the size of the company (small companies often have designed the plan around the principals and have taken this into account in determining compensation) and the individual arrangements the company has made with each highly paid employee.

Re the limit increasing next year--the cost of living data so far this year points at an increase to $170,000, but we'll need to see where cost of living is at the end of the year to know for sure. (This ignores possible changes pending in the various pension bills currently in various states of passage in Congress/Executive. My policy is not to count my chickens before they are hatched.)

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