Insurance in DB/DC combo plan

[Earl]

Agent wants to put insurance in the DB Part of the DB/DC Plan for Mr. Big.

Since the DB Plan, on its own, is a discriminatory arrangement, wouldn't putting in insurance at 100x proj monthly benefit be a discriminatory ancillary benefit?

Is there a way to make this work?

Mandatory insurance in the DC Plan which the employees and cannot waive out of the coverage?

Thank you for any thoughts.

[david rigby]

Whoa.  Step back.  Of course, the agent "wants to put insurance" in the plan.  Might be good for the agent but not really useful (or efficient) for the plan/employer.  

I recommend consultation with the Enrolled Actuary (well, of course I do) to focus on (1) what is the goal of the plan, then (2) how to pay for it.  The sequence is important.  (You may be familiar with that old saying about a cart and a horse.)  BTW, I'm not saying the proposed insurance is "bad" or "wrong", only that the sponsor must first determine what death benefit other than the minimum QPSA/QJSA, if any, will be provided by the plan.  A death benefit can be provided via other mechanisms, so don't assume the plan is the best/only way without first considering the alternatives.

[Earl]

Thanks, but I am not assuming anything.  I am just a lowly TPA trying to tell a client and his adviser if something is possible.   I don't think it is my place to go beyond that.  (Happy to admit I am wrong, though.)

I spoke with my consulting actuary and we cannot find anything definitive for how to handle this issue.

I can say the goal for this guy is to contribute as much as possible out of the millions he earns each year.  And I am sure the agent is salivating, but I don't think that is my issue.

Thank you, again, for responding.