Salary in a frozen DB PLAN

[SSRRS]

Hi,

Thank you as always for all the insights. 

Can a Hard Frozen DB Plan, (that is owner only), take into account salaries that were taken during the current frozen years. Not to increase the benefits of course, as the plan is hard frozen. Rather, to increase the salary average. 

The owner is past retirement age and is receiving each year an actuarial increase on his A/B, since he is not taking benefits yet (although plan allows for in service distributions after NRA).  

However, the AB cannot be increased beyond 100% of average compensation. Therefore, if the salary average is allowed to be increased based on current salaries (even though plan is frozen), then the annual increase on the AB  can keep going up until the new higher salary average. Thank you

[CuseFan]

There has been some discussion on that before in this forum. The consensus seemed to be that this is definitely a gray area and that the amendment and document language matters - meaning either interpretation is possible. You could likely amend to unfreeze if needed to accomplish your objective, if not for the entire benefit formula at least for average compensation.

[david rigby]

As I read the implications here: (1) the owner can afford to pay more into the plan, and (2) the 100% pay limit has not been reached. 

If my interpretation is accurate, the simplest way for the owner to accomplish his/her goal might be to amend the plan to unfreeze.  Have I missed something?

[Calavera]

Moreover, with unfreeze you can change the benefit formula to target precisely what your client wants to accomplish.

[SSRRS]

Thank you as always CuseFan, David Rigby, and Calavera. I had given a "like" your responses when you had responded, however, I forgot to write this. It was a big help. Thank you