MGOAdmin Posted February 23, 2015 Posted February 23, 2015 I have a Cash Balance plan (not covered by PBGC) that is terminated an currently underfunded. 1. There is an emeployee that used to be an HCE, but is no longer an HCE - can we reduce this employee's benefit (pro rata) based on account balance? 2. Do we need to have the owners sign waivers to reduce their benefit? 3. Are we allowed to just reduce all participants benefits pro-rata?
Lou S. Posted February 23, 2015 Posted February 23, 2015 Non-PBGC plan, what does the document say? I think there is a Rev-Proc (80-229 I think) dealing with underfunded non-PBGC plans in termination that allows reducing benefits is in a "nondiscriminatroy manner" one of which I believe was pro-rata reduction.
Effen Posted February 23, 2015 Posted February 23, 2015 You really need to check the document. It most likely a 4044 procedure which is not necessarily pro-rata, but it could work out that way. Either way, you need to follow the language in the document, especially if you are going to be reducing NHCE benefits. The material provided and the opinions expressed in this post are for general informational purposes only and should not be used or relied upon as the basis for any action or inaction. You should obtain appropriate tax, legal, or other professional advice.
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