If a plan (for a chiropractor) was established in 2005 and has a nra of 55, didn't the nra need to be amended to at least 62?

Age 62 will not draw scrutiny from the IRS. Below age 62, you are supposed to be able to show that the retirement age is justifiable based on data available for that industry. For NRAs of 55 to 62 there are differing opinions as to how much leeway the IRS will give.

is there anywhere that I can get retirement trend date sorted by field?

Do you really need that?
The most common method of dealing with this issue/problem is to amend the NRA to 62, and simultaneously add a subidized early retirement.

doesn't that still lower the PVAB and FT?

Is there any anti cutback issues?

The PVAB and FT are based on the actuarial assumptions.
Is it reasonable to assume (without regard to the plan's definition of NRA) that one or more participants will retire prior to NRA?

Yes. That is why you provide a subsidized early retirement benefit (like 0% reduction). Plus you need to adjust the formula going forward if you don't issue a 204(h) Notice because you need to avoid both accrued decreases and avoid a significant reduction in the rate of future benefit accrual.

And if the plan is not a safe harbor, the changes will have testing implications.

Ok, I have another scenario... maybe it's monday or maybe I'm just not that smart...

Currently, Plan assumptions are:

NRA: 60
Benefit 32% reduced for service less than 25
Accrual formula: Fractional based upon Service.


What would be the best way to get this up to code?

abanky, the minimum requirement is to change the nra to 62. Existing employees still retain full right to the benefits that existed before the change, so someone could retire at 60 and get their full current accrued benefit.
But future accruals have no such guarantee.

If you want to make the plan whole, then compute a reasonable actuarial equivalent of 32% at 60 to a higher rate at 62.
Maybe this would end up with a 37% benefit at 62, depending on your mortality and interest assumptions.

Also, consider some type of unit accrual formula, prospectively.

Perfect... those were both ideas I was thinking of. Thank you.

But, Andrew, the change in NRD was supposed to be retroactive to 1/1/2009 (for a calendar year plan). So that makes the fix a bit dicier.

But the IRS dealt with this issue. The benefit change cannot reduce any values accrued to the signing date of the change. A choice to go with the same formula at a later NRA is a cutback in benefits, so you also need to do your 204(h) notice as well. So a signed amendment now will provide the correct NRA adjustment, retro to 1-1-09, but the only problem will be for people who took an inservice distribution at the old NRA between 1-1-09 and the signature date.

Andy,

Very good point... Got to love take over plans...

How does this sound...

freeze the benefit at 1/1/2010, actuarially increase the benefit to 62 and throw in a actuarial equivalent age 60 ERB.

Then create a future benefit that is slightly better than the formula they currently have.