Using SS Retirement Age as Testing Age

[austin3515]

Can someone give me a good write-up on how to do this?  I can't find anything elaborate but I've heard this is agood technique. At the end of the day, is it as simple replacing NRA in a formula with the SSRA?  So for example, if someone is 70, testing age is 70, but otherwise, use SSRA?

[Tom Poje]

many moons ago the legal beagles at Corbel noted if you used this option you had to also perform BRF on the different age groups.

so if you had 1 HCE at SSRA 65 and no NHCEs it tossed this method out the window.

in addition, the regs require you test at plan's NRA, so your document would also have to have Normal retirement age = SSRA.

[austin3515]

I guess that explains this statement in my Basic Plan Document:

Quote

Furthermore, effective for Plan Years beginning after the adoption of this Plan, the Employer may not deem the Social Security retirement age (as defined in Code §415(b)(8)) as the Normal Retirement Age for purposes of nondiscrimination testing under Code §401(a)(4).

Very interesting indeed...

[Tom Poje]

oh great, now you want to follow the terms of the document all of a sudden

[BG5150]

On 1/27/2017 at 3:33 PM, Tom Poje said:

oh great, now you want to follow the terms of the document all of a sudden

Right?  I mean, who does this?

[austin3515]

Revisiting this question.  What do I do if Plan A and Plan B are in a controlled group and one has an NRA of 62 and the other NRA is 65?  I was hoping testing at SSRA would be a perfect solution, but obviously no luck there...

[austin3515]

From 1.401(a)(4)-12

Testing age. With respect to an employee, testing age means the age determined for the employee under the following rules:

(1) If the plan provides the same uniform normal retirement age for all employees, the employee's testing age is the employee's normal retirement age under the plan.

(2) If a plan provides different uniform normal retirement ages for different employees or different groups of employees, the employee's testing age is the employee's latest normal retirement age under any uniform normal retirement age under the plan, regardless of whether that particular uniform normal retirement age actually applies to the employee under the plan.

[Tom Poje]

dang it. there you go reading the regs and following them. why did you go and do that? even Dr Evil isn't that ethical.

.................

and so you 'treat' everyone as if they have NRA of 65.(or later for those that are past 65)

might be more troublesome if the plan with age 62 was more heavily weighted toward HCEs in contributions.

This is especially fun if one plan is a DB. you have to calculate things out to 62 under the DB assumptions/interest rates and then convert to age 65 using the DC plans.