Suppose you have a traditional DB sponsored by medical corporation A. Corporation A is owned equally by 3 separate corporations. Each of these corporations employ one physician. They are a related employer group so each of the physician corporations will adopt the plan as a participating employer.

I believe that each participating employer is only responsible for funding contributions for its employees. Could the contribution be allocated on PVAB's? Or would this be treated like a partnership where the contribution must be allocated on ownership interest only? Or would any reasonable method consistently applied be acceptable?

Thanks much.

The contribution may be allocated among the participating entities in any reasonable manner. There are no hard and fast rules, as far as I know. IMO, allocating costs based on PVABs would be eminently reasonable.

.. Scott

I agree there are no hard and fast rules. Unless actuarial equivalents yield a greater lump sum than that generated by 417(e) factors though, you might be in for some disproportionate numbers when it comes time to make one or more distributions. That is one reason a cash balance plan makes sense in these situations.