What is testing age when a plan defines NRD as the later of an age and

[AndyH]

I find the language in the regulations to be unclear. For a cross tested DC plan, at what age are contributions converted to benefits when a plan, for example defines NRD as later of 62 and 5 years of participation. Assume a new participant becoming eligible at age 61. Is testing age 62 or 66? What about year 3 when the participant is age 63 but has a NRD of 66?

I know this is the wrong Board, but would the answer be different for a DB which gives post NRA actuarial equivalent increases?

[Guest]

A plan must have a Uniform Normal Retirement date.

Just because a retirement date is defined as 62 and 5 yrs participation, does not mean it is non-uniform if most people retire at 62 and another retires at 65 and another at 66.

Those are all still considered 'uniform' and thus the testing age becomes 62 for some and 55 or 66 for others.

A non uniform retirement date would occur if a plan has ret age = plan val date nearest 65. Some participants may be 64 others may be 65. In that case, testing should be done at age 65. see 1.401(a)(4)-12 under definition of TESTING AGE, point 3.

[AndyH]

Thanks for the response. I understand that including a participation requirement is still uniform. That's clear in the regs. What makes no sense to me in a DC plan is projecting the earnings for 4-5 more years for someone participating at a late age, then converting that accumulation back at a lower annuity rate. That creates distorted results, which don't make sense to me. The participation requirement makes sense for DB plans, but I don't see the logic of using this for testing in DC plans. It helps with vesting, but vesting's not being tested in a cross test. Anyway, thanks again for the response.

t se