Offset plan - 415 Limits

[MGOAdmin]

When calculatiing the maximum benefit a participant can recieve when a Cash Balance plan has an offset feature, is the maximum benefit (the 415 limit say $2.6 Million) before or after the offset?

If the Offsetting profit sharing plan for example has $2 million. Is the lump sum beneif only $600k or is it still $2.6 million, which would make the full benefit $4.6 Million?

Thanks

[Lou S.]

Are you asking about the 415 limit itself or the benefit calculation?

The 415 limit itself is not affected by the DC offset (at least not since the elimination of 415(e)) since DB & DC plans have seperate 415 limits.

The benefit itself I think you need to read the plan document to determine the order in which the offset is applied. That is to say is the offest done to the benefit calc and then the result compared to the 415 limit or is the 415 limit applied to the benefit and then the offset applied. Depending on how the document is drafted I think you could potentially have either result.

[My 2 cents]

Do the current IRS regulations require application of the Section 415 limits to the gross benefit (before offset)?