NRA 60

Hi,

Thank you all, as always, for all the insights.

Now that the Secure Act allows for a DB Plan to provide for in-service distributions starting at 59.5, is a DB Plan now allowed to adopt an NRA of 60? Or is 62 still the lowest safe harbor NRA for a DB Plan?

Thank you.

the lowest safe harbor NRA is still 62.

Agreed. If I remember, the prohibition of earlier NRAs (what IRS thought were artificially low NRAs) was to prevent manipulation of nondiscrimination testing - but maybe I'm off base. Doesn't change the answer though.

8 hours ago, CuseFan said:

Agreed. If I remember, the prohibition of earlier NRAs (what IRS thought were artificially low NRAs) was to prevent manipulation of nondiscrimination testing - but maybe I'm off base. Doesn't change the answer though.

That was the motive for the IRS's original restrictions on early NRA's, which it dropped, because it decided that the section 415 limitations were restrictive enough. It restored the restrictions, so far as I can discern, to thwart avoidance of whipsaw distributions in cash balance plans.  Then Congress repealed the whipsaw, but the new regulations weren't dropped.  They don't serve any real purpose now.

I think the restrictions serve the purpose to prohibit circumvating the in-service distributions at early ages.

On 6/1/2024 at 8:20 AM, truphao said:

prohibit circumvating the in-service distributions at early ages

agreed