Dougsbpc Posted January 1, 2018 Posted January 1, 2018 We have a 1 participant DB plan with the unusual scenario of the business owner being over age 70 when the plan was started. The NRA is 65 and 5 yrs partic. Vesting is 3 year cliff excluding yrs prior to effective date. He works one week per month. Suppose the plan had 500 hr. requirement to accrue a benefit but 1,000 hours for vesting purposes. Would think he would not need to take an RMD until his 5th year of participation. Anyone disagree with this? Thanks.
CuseFan Posted January 2, 2018 Posted January 2, 2018 No, but suggest being very careful and diligent in tracking hours. Other thoughts - why not 5-year cliff vesting (is it a CBP)? Kenneth M. Prell, CEBS, ERPA Vice President, BPAS Actuarial & Pension Services kprell@bpas.com
Belgarath Posted January 2, 2018 Posted January 2, 2018 How can you use 5-year cliff? Wouldn't this automatically be top heavy (no non-keys) and therefore subject to 3 year cliff, rather than 5-year cliff being available?
Effen Posted January 2, 2018 Posted January 2, 2018 I agree with Belgarath - best you can do it 3-yr cliff due to Top Heavy. 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.
CuseFan Posted January 2, 2018 Posted January 2, 2018 Yeah, I thought of that after, was a little too quick on the submit button. Looked to see if there was any owner-only plan exception/exemption from TH rules but didn't find any. Kenneth M. Prell, CEBS, ERPA Vice President, BPAS Actuarial & Pension Services kprell@bpas.com
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