Suppose a business owner (age 29) has 4 years of service by 12/31/2007 and starts a new DC plan (in this year, 2007). No other qualified plan.

Suppose one employee (age 28) has just been hired (March 2007). Assume we do not go with 2 YOS for entry, so this ee would enter sometime in 2008.

I would like to run the cross-testing for 2008 using a testing age equal to the normal retirment age, and I would like to use a normal retirement age equal to the later of age 30 or 5 years of service.

What do you think? Issues?

Is it customary or realistic that people would actually retire at that age?

Those might be some funky EBARs.

I agree with WDIK's point, that testing age might not necessarily follow a plan document's NRD in extreme cases, but then again, WDIK?

Yes, the ebar possibility is what has caused the question. If no one on this board has been doing anything like this, that's fine. Perhaps a 50-year old owner with 5 years and a 51 year old NHCE (just hired) would be a better example, using age 50 and 5 years as the NRA. The owner gets tested using age 50, the employee gets tested projecting to age 56.

Anyway, just wondering if others have gone there.

I am confused as to whether you believe the question I posed approves of or condemns the proposed methodology and whether you support or oppose such aforementioned approval or condemnation.

I would have several concerns about doing what is being floated.

Testing Age is Normal Retirement Age if NRA is uniform; otherwise it is age 65.

At least one (recently struggling Notice writer) IRS rep has stated that the IRS reserves the right to interpret NRA as something other than what is in the plan document. That's where I thought you were going.

So if the proposed NRA is viewed as invalid, testing age would revert to 65.

Second, while the 5 year service requirement would appear on the surface not to cause non-uniformity, if it were considered non-uniform then testing age would again be 65.

Presumably such a plan would be a new plan because few one-lifers have cross tested plans. I would question whether the 5 year requirement would satisfy the BRF requirements for a qualified plan based upon facts and circumstances.

Just one opinion, nothing more.

Just to clarify, I had hoped that my initial question would imply that I was skeptical of such an approach.

Why do you doubt your success?

perhaps you would want to read from the following cite:
(I knew a quick search of 'unreasonable retirement age would turn up something!)

http://209.85.165.104/search?q=cache:ue9qH...;cd=5&gl=us

In DeMarco v. DeMarco, 787 A.2d 1072 (Pa. Super. 2001), the employee was 51 at time of trial and the normal retirement age for the man's profession was age 50. The husband is a police officer with the City of Pittsburgh. The valuator used age 50 as the retirement age. This made no sense, since the employee had not retired at age 50. The Superior Court found that use of retirement age 50 was unreasonable:
"The trial court concedes its selection of age fifty was an arbitrary age chosen to maximize the value of this asset," the court wrote.
Age 51 would be a reasonable retirement age in a pension valuation, under the theory of market worth. However, husband argued that the pension should be valued using the average retirement age, which he claimed to be 65. The Superior Court accepted this argument, and found that the retirement age to be used in valuing the pension should be based on the average age of retirement, as well as other related factors. This is also a method indicated in the Actuarial Standard of Practice (3.3.3.d). Thus, when the employee is beyond the normal retirement age and the retirement age is in dispute, DeMarco indicates the use of "statistical data regarding average age of retirement from the company or industry with which the employee/spouse is affiliated."
Mark K. Altschuler is an actuary and president of Pension Analysis Consultants, Inc. in Elkins Park. He is a contributing author to Valuing Specific Assets in Divorce, edited by Robert D. Feder, which covers issues in choice of retirement age and actuarial standards. He has spoken on the topic of age and service retirement before the Pennsylvania Bar Association.

Notes at the bottom of the page say:
Published with permission from Pennsylvania Law Weekly

Thanks Tom, that is somewhat along the vein of what I was curious about.

Due to the following four words.

and now, its official. no more goofy super early normal retirement ages. anything less than 62 might be pushing it as far as qualification goes.
its in the regs.

Yuck. Thanks Tom.