Combined 415 limits

[nancy]

Employer X sponsored a DB plan prior to 1986 and terminated plan. The same employer now wants to put in a new DB plan in which he will have only 5 years of participation. Can he count the participation in the prior plan toward meeting the 10 year participation requirement to get a full DB benefit? I understand that we will need to offset the current benefit with the prior benefit. Do we offset 50% of the DB limit or the DB limit adjusted for the sum of the prior participation and the current participation.

[Guest]

Yes, the prior participation counts towards the 415 limit. I think it is a two part calculation. First determine the benefit based on the new Plan formula and second, compare that to his current 415 max less the amount he's already received. Be care to account for differences in the form of the prior distribution and the prior plan's normal retirement age. Make sure your comparing apples to apples.

Also be carefull about discriminatin issues if your counting more than 5 years of past service in the new plans benefit and accrual formulas.