A doctor and his wife are the only participants in a defined benefit plan. The plan is underfunded. The doctor has reached normal retirement age but rather than commencing benefits, he wants to make a $100,000 withdrawal which is more than the annual payment under a straight life annuity.

Does anybody think that we get an exemption from the restrictions on payments to HCE's because this is a two person plan with just the doctor and his wife.

There is no such thing as discriminating against an HCE. 401(a)(4) pertains to discrimination in favor of HCEs over NHCEs.

I don't.

It should be noted (if thumb-wrestling is in order over this issue) that the pre-termination restirctions do not apply "if the Commissioner determines that such provisions are not necessary to prevent the prohibited discrimination that may occur in the event of an early termination of the plan" (IRS Reg. 1.401(a)(4)-5(b))

In short, remove the provision from the plan and seek a determination letter. We have seen the IRS not question the removal, in particular in respect of DB plans sponsored by not-for-profit employers. Whether you announce the removal in the cover letter is a matter of legalistic style. I know lawyers on both sides of this fence.

I agree it is a document provision.