In last week’s blog post covering nondiscrimination testing pitfalls for soft-frozen pension plans, we discussed how defined benefit (DB) plans that are closed to new participants can run afoul of the IRC §410(b) minimum coverage rules. Today’s post discusses how small DB plans closed to new …
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Beware Nondiscrimination Pitfalls for Frozen Pension Plans
Many defined benefit (DB) pension plans were closed to new entrants over the past several years. Oftentimes, these plan closures were done with a focus on short-term cost control without understanding some of the long-term compliance implications. Then, one day, the plan sponsor gets an unwelcome …
Fixing a §401(a)(4) test failure
Our philosophy for coverage and nondiscrimination testing has always been "everything passes, some plans just take a little longer to prove it". That was put to the test recently for one of our law firm clients: an unusually young new partner was causing their §401(a)(4) nondiscrimination test to …