Guild Plan

[jane murray]

a client who owns a loan-out company sponsors a one person defined benefit plan and has also accrued benefits under the SAG-AFTRA pension plan.  suppose the client is age 70 and her 415 dollar limit is $30,000/month and 415 salary limit is $22,500/month.  she has accrued a benefit of $5,000/month under the SAG-AFTRA pension plan.  do you simply reduce her 415 limit by $5,000/month so that her maximum benefit under her company sponsored defined benefit plan is $17,500/month ($22,500 less $5,000)?

i've read some old threads and don't seem to understand exactly how the offset should be applied.  

[Peter Gulia]

Your description doesn’t say whether all, some, or none of the worker’s labor credited under the SAG-AFTRA pension plan is attributable to the loan-out corporation.

 

Among other points, consider 26 C.F.R. § 1.415(f)-1(g):

 

(g)   Multiemployer plans—

(1)   Multiemployer plan aggregated with another multiemployer plan.  Pursuant to section 415(f)(3)(B), multiemployer plans, as defined in section 414(f), are not aggregated with other multiemployer plans for purposes of applying the limits of section 415.

 

(2)   Multiemployer plan aggregated with other plan—

(i)    Aggregation only for benefits provided by the employer.  Notwithstanding the rule of §1.415(a)-1(e), a multiemployer plan, as defined in section 414(f), is permitted to provide that only the benefits under that multiemployer plan that are provided by an employer are aggregated with benefits under plans maintained by that employer that are not multiemployer plans.  If the multiemployer plan so provides, then, where an employer maintains both a plan which is not a multiemployer plan and a multiemployer plan, only the benefits under the multiemployer plan that are provided by the employer are aggregated with benefits under the employer’s plans other than multiemployer plans (in lieu of including benefits provided by all employers under the multiemployer plan pursuant to the generally applicable rule of § 1.415(a)-1(e)).

 

(ii)   Exception from aggregation for purposes of applying section 415(b)(1)(B) compensation limit.  Pursuant to section 415(f)(3)(A), a multiemployer plan, as defined in section 414(f), is not aggregated with any other plan that is not a multiemployer plan for purposes of applying the compensation limit of section 415(b)(1)(B) and § 1.415(b)-1(a)(1)(ii).

 

https://www.ecfr.gov/cgi-bin/text-idx?SID=08f1d21bf4474cf4697e46754c983f57&mc=true&node=se26.7.1_1415_2f_3_61&rgn=div8

 

[jane murray]

lets assume that all of the worker's labor credited under the SAG-AFTRA pension plan is attributable to the loan-out corporation.  if that is the case, would her maximum benefit under her company sponsored defined benefit plan be limited to $17,500/month ($22,500 less $5,000)? 

or does 415(b)(1)(B) not apply and only the dollar limit is reduced? if this is the case, would her maximum benefit under her company sponsored defined benefit plan be $22,500/month?

[Big Tuna]

It'd be $22,500/month because you don't aggregate benefits in ME plans with benefits in SE plans for the comp limit (only for the $ limit).

Note that the portion of the dollar limit that is being paid (has already commenced) shouldn't be increased for delayed commencement (beyond age 65). So, if $5K/month started at age 65 as a SLA, that part of the $ limit wouldn't increase.  

[jane murray]

so effectively, since her 415 dollar limit at age 70 is lets say $30,000/month and she is capped by the 415 salary limit of $22,500/month, then the benefits from the SAG-AFTRA pension plan will not reduce her benefits from her company sponsoring defined benefit plan in any way?

 

no benefits have commenced from the SAG-AFTRA pension plan.  lets assume the current age 70 benefit from the SAG-AFTRA pension plan is $5,000/month.  the 415 dollar limit is reduce by $5,000/month as follows - $30,000/month less $5,000/month equals $25,000/month.  since the 415 salary limit which is not reduce is less than the 415 dollar limit, she simply is entitled to $22,500?

[Big Tuna]

My understanding is that in that scenario, if she took her full SE plan $22,500/month benefit via a lump-sum, her $ limit would then be $7,500 - and the $5,000/month (assuming SLA) would be fine to be paid out of the ME plan. Her full 415 limit would be done as far as the SE plan goes. Except for maybe if her highest-3 limit increased in the future.

[jane murray]

thanks big tuna.

does anyone else have an opinion on the matter?  all opinions would be greatly appreciated.