Capping Benefits Due to 415(b)(1)(B) for Delayed Retiree

[Eric Taylor]

Welcome any thoughts on this. Frozen plan has participant with max years of service who is still working at age 69 so well beyond normal retirement age of 65. When he hit NRA, benefits did not commence and are being adjusted for delayed retirement but will soon hit compensation cap for high 3 under 415(b)(1)(B). Actuaries advise that the plan should start distributions as of the date he hits the 415 cap as no suspension notices provided / contemplated. 1.415(a)-1((f)(7), however, seems to speak in terms of distributions needing to commence at normal retirement age. I can see how that makes sense if a 415 limit exists as of the NRA but am unclear about the authority / practice for commencing as of the date the 415(b)(1)(B) limit is reached due to post-NRA actuarial adjustments. Appreciate any thoughts or guidance on this.

[My 2 cents]

What does the plan say? Some are explicit and others not so much. The plan language may justify starting the payments as of the beginning of the plan year after the 415 limit would have been reached.

In general, it is permissible to defer commencement beyond NRA if the person is still working and the plan says to do so. It depends on how the plan handles things (i.e., actuarial increases or suspension notices)

Failure to start payments if the 415 limit would step in could be treated as an impermissible forfeiture after NRA, especially if the plan does not contain suspension language.