Testing an early retirement window for a frozen plan

[AndyH]

Sponsor of a frozen plan wants to temporarily add 5 years of age to the calculation of retirement benefits for a division.

Is this merely a BRF test or does this need the general 401(a)(4) test?

[My 2 cents]

Sponsor of a frozen plan wants to temporarily add 5 years of age to the calculation of retirement benefits for a division.

Is this merely a BRF test or does this need the general 401(a)(4) test?

1. My guess would be that it would have to pass 401(a)(4). How could the answer to "How many years of service does this person have credit for" be a BRF?

2. Note that if the plan has been frozen since before 9/1/05, do this and then you can kiss your exemption from IRC Section 436 goodbye. And if the plan's AFTAP is under 80%, you probably have to fully fund the cost impact in order for the amendment (there is an amendment, right?) to take effect.

[AndyH]

Separate but good points on 2. Not sure if those are issues or not but we'll look.

On the basic question, I think this is analogous to restructuring the plan into to component plans that have different ERFs. We believe that each component will pass 410(b). 1.401(a)(4)-3(f)(4) touches upon this, but it's not easy reading.

[MWeddell]

The group to whom the early retirement window is offered must pass BRF testing.

The employees who accept the offer are subject to coverage and 401(a)(4) testing.