Cash balance plan with owner/spouse as sole participants; must be 100% funded to take a distribution?

[MGOAdmin]

I have a cash balance plan with only a husband and wife (they have no employees).

Since there are no NHCEs, does that plan still have to be 100% funded in order for one of them to take a distribution?

[Calavera]

I think yes, and it should be 110% funded.

[My 2 cents]

Does that rule (restrictions on distributions to the 25 highest-paid HCEs) apply to defined benefit plans covering only highly compensated employees?

[Calavera]

I am not aware of any exemption from the applicability of this rule just because plan is covering only HCEs.

[david rigby]

Reg. 1.401(a)(4)-5(b)(3). I did not see any such exemption listed.

However, see the language in (b)(1), which refers to "...discriminating significantly in favor of HCEs...". For that matter, see the language at the beginning of the (a)(4) reg and IRC 401(a)(4) itself. All of (a)(4) is concerned with HCEs vs NHCEs. If a plan covers only one of those categories, does that mean there is no discrimination? Perhaps this topic is addressed in writing somewhere else (it's not in the Gray Book), but this seems like a regulation that does not apply to the plan described in the original post.

I stand ready to read/consider other information.

[AndyH]

My old (2008) version of The ERISA Outline Book says there is no clear guidance on this issue. Maybe somebody could check a newer version?