Excess Assets

[Dougsbpc]

Have a 3 participant DB that terminated and has excess assets (about $40k).

Our document indicates that the excess can be allocated in any non-discriminatory manner.

In this case it is a husband and wife plan with one younger employee. The husband and wife are each 70.

The wife has participated for over 10 years but has had very small accruals (I think 1% of pay for the past 10 years).

The business owner would like to be able to allocate most of the excess to his wife. 

Would there be any problem with attempting to do that and using accrued to date for 401(a)4?

I would think accrued to date would have the effect of spreading out the excess as though it were additional accrued benefits over all the past years. Perhaps making it so it would have the effect of her earning 2% of pay rather than 1%.

Thanks.    

[Effen]

I think anything that you can demonstrate is non-discriminatory under the applicable regulations (410(b), 401(a)(4), etc.) would be acceptable.  

[CuseFan]

Agreed, and using accrued to date methodology would seem the most logical.

[david rigby]

Think outside the box.  Does it help or hurt the goal to limit the allocation to the husband?