Company A is a participating employer in a multiple employer defined benefit pension plan (the "DBPP"). The DBPP provides a career average pay retirement benefit of 2.6% of earnings for year of service. Approximately 10 employees of Company A participate in the DBPP. These 10 employees entered the DBPP when they were employees of Company B, prior to Company A being formed. Once Company A was formed, Company A became a participating employer under the DBPP. There is no control group or affiliated service group.
Company A is considering establishing a new cash balance pension plan (the "CB Plan") for its 200 employees (including the 10 who participate in the DBPP). Our actuary calculated maximum credits that could be made to the CB Plan. The maximum credits do not take into account any accured benefits under the DBPP.
As our actuary is out of the office for the next couple of days, I was hoping to pose a question to the community.
What is the interplay between the two plans? How are the maximum credits under the CB Plan affected by accrued benefits under the DBPP? Do we aggregate the benefits under the DBPP and the CB Plan to determine comliance with Code Section 415? Does it make sense to have 10 employees terminate participation in the DBPP? I am a pension attorney who is just trying to address this issue before our actuary returns mid-week.
Thanks in advance for your consideration.
Ed