I need a refresher... I know the plan document has to allow for adjustments in 415 in order to adjust existing retiree payments to the current limit or nonforfeitable benefits for terminated vesteds (not in pay status) that were limited by an earlier 415(B) limit.

Assuming the plan does not allow for 415(B) updates for former employees, would you say that a person terminating on 12/31/2001 with an ACD of 1/1/2002 is subject to year 2001's
415(B) limit (i.e. last working day in 2001)? The plan year and limitation year are calendar years.

Thanks

Tricky one. It seems to me that if the person's last day was 12/31, you would be stuck with that year's limit. In order to increase the amount payable as the limit increases a day later, the plan would have to provide for such increase (which you stated it does not).

I don't know of any cites that mention this specifically, but in my mind, this would be the same situation as a plan terminating on 12/31 but not paying out until the following year. IRS Announcement 95-99 (415 Audit Guidelines) states that the dollar limit in effect for the year containing the plan's termination date should be used as the applicable limit when determining the maximum benefit--not the dollar limit in effect for the year of distribution.

Thanks for your response. I, too, couldn't find anything more definitive other than the situation you mentioned (plan terminating and benefits paid a year after the term date).