Draper55 Posted February 9, 2023 Posted February 9, 2023 I have a small defined benefit plan that has been frozen to new entrants for a few years. It is no longer passing the ratio% test. Based on the numbers it would be a nondiscriminatory classification but is the set of employees hired before a certain date a reasonable classification? The formula is a safe harbor formula so the plan still passes 401(a)(4) by itself. Of course if i cannot get the sb plan to pass the average benefits tests I will move onto testing on a combined plan basis with the dc plan for which coverage will not be an issue.
Nate S Posted February 10, 2023 Posted February 10, 2023 Yes, hire date is a reasonable classification. The employer has no discretion over who is or is not in the group going forward, it's not based on age, and it is definitely determinable.
Effen Posted February 10, 2023 Posted February 10, 2023 I assume the closed db plan passes 401(a)(26)? 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.
Draper55 Posted February 14, 2023 Author Posted February 14, 2023 The plan passes 401(a)(26) testing in 2023 if noone terminates. However, I think now the plan satisfies the 401(a)(26) relief conditions of the Secure Act. Hence, the main focus is on coverage and nondiscrimination testing.
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