Offset DB plan - refresher

Hi

Looking at a possible takeover. This is a question on what is used for offset calculations. I have not done of these in 20+ years.

DB is 50% of pay offset by 26.25% of TWB, fractional

DC has 401k+PS+NESH (mandatory 3%)

What is used for offset?

Thank you

1 hour ago, Jakyasar said:

What is used for offset?

This question is vague. What exactly are you asking? The plan document should describe in detail how the normal retirement benefit and accrued benefit are calculated, including any offsets.

That said, "offset" can mean (at least) two very different things which I think you may be confusing based on the context here. There is a "floor-offset" which is when the accrued benefit in a DB plan is reduced by the actuarial equivalent of a DC account balance. Then there is an "offset benefit formula" which is one way of integrating the plan's benefit formula with social security. An offset benefit formula would usually be designed to be a safe harbor formula.

Hi CB

You are absolutely right that I did not mention what kind of offset, it the DC plan AE offset. Thank you for pointing that out.

Sorry, my question, in this case, is what DC components are used to offset?

Again, the plan document should specify exactly what part of the DC account is used to offset the accrued benefit, but generally it would be the amount attributable to employer non-elective contributions. The amount used for the offset has to be a uniform percentage of pay for all participants if you want to satisfy 401(a)(26) on a pre-offset basis.

Ok, thank you