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Posted

If a plan sponsor maintains both a cash balance plan and a defined contribution plan and the plans are top heavy, it is my understanding that the top heavy minimum must still be funded, regardless of the DB plan’s frozen status. But my question is, would that contribution amount be 3% or 5% and would the amount depend on the contributions funded by the Key employees?
 

Posted

Is the answer already specified in the plan document(s)?

I'm a retirement actuary. Nothing about my comments is intended or should be construed as investment, tax, legal or accounting advice. Occasionally, but not all the time, it might be reasonable to interpret my comments as actuarial or consulting advice.

Posted

Both the Adoption Agreement and the Base Plan Document state that if the ER maintains a DB plan in addition to the DC plan, the ER may elect to provide the THM allocation in the DC plan but increasing the minimum allocation from 3% to 5%....so I guess you've got me there. I was just wondering if, perhaps a frozen DB plan would reduce that amount. No? If no one has reached the 1,000 hour requirement and there is such a requirement in the plan, could the plan be amended to reduce the THM to 3%?

Posted

Yes, the document should say somewhere that  DB minimum is not required if the plan is frozen.   That would mean just the 3% DC applies.  But I agree you should locate such language in the document to be safe.

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