Can the qualified replacement plan (QRP) pay for retiree medical benefit?

Hi

I was asked the following:

Terminating overfunded defined benefit plan (DB) - small plan covering husband&wife - both over age 72). Overfunded portion will be rolled over into a QRP - just a profit sharing plan (PS)

Can they pay their retiree medical benefit directly from the overfunded portion? I never heard of but..

Thank you

Client is looking for somebody to go along with a 420 transfer.  Every time I read the rules regarding 420 transfers the complete absence of NHCE's blows it out of the water. A technical reading does not preclude a transfer.  However, the amount that can be transferred is limited to $0 when there are no NHCE's.  

I don't suppose the DB had 401(h) accounts, did it?

No, DB did not have 401(h), this just came up. They need to shut down the plan as funding is going to be an issue soon. At this time, the overfunded portion is small so trying to take advantage of it before becomes larger.

Mike, thank you for your comment.

Mike, did you mean NHCE or non-key I read no keys (e)(1)(E)? This is from IRC 420. Just curious.

Thank you

Non owners.😁

Thank you for clarifying.

Consider buying life insurance with LTC rider on each prior to termination?