Guest Posted February 15, 2001 Posted February 15, 2001 I have a client who sponsors a DB/PS floor-offset plan. The DB portion has frozen accruals but contributions are still being made to the PS portion. The top-heavy minimum is being met in a stand-alone MP plan. Can the post-freeze PS contributions still be used to further offset the frozen accrued benefits on the DB side of the plan? This question was asked at the 1998(?) Enrolled Actuaries' Meeting and the IRS representative was non-commital. Has anyone heard anything more definitive since then?
Guest Rae Posted July 16, 2002 Posted July 16, 2002 Has there been any new information since this was first posted? I work on a floor-offset arrangement now with a similar situation. Does anyone have any experience submitting a floor-offset termination to the IRS? I know of one attorney who is actually having to answer some other questions on a submission he prepared--the agent reviewing the case seems to think that the DB plan does not provide meaningful benefits. Does anybody else have any stories?
Guest merlin Posted July 16, 2002 Posted July 16, 2002 I don't think the agent has an issue. The 401(a)(26) regs say pretty clearly that if a participant would have accrued a benefit but for the application of the offset the part. is considered benefitting.As for "meaningful" benefits Paul Shultz referred at the Northeast Area (Region?) Employee Benefits Conference last month to some upcoming guidance on cash balance plans that talked about a minimum accrual of 0.5% of pay. I asked him if this standard applied to floor-offset plans and he said no.
Guest merlin Posted July 18, 2002 Posted July 18, 2002 As far as I know the entire conference was taped,so I would say yes.
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