What recourse would sponsor have to avoid disqualification

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Reference no: EM1379980

Q. Due to a profitable year, a plan sponsor would like to enhance its qualified defined benefit plan for a select group of participants. Current NRB also AB formula provides 1% x FAE x years of participation/65/life only or J&S. early retirement reduction factor is 3%. Sponsor would like to enhance benefit annual accrual rate to 1.5% for a select group of participants only.

a. What additional numerical testing is required to be satisfied in order to maintain plan's qualified status? Briefly describe how tests would be satisfied.

b. Assume change is made in 2006 for a select group of participants also; as a result, plan fails to satisfy applicable discrimination tests for 2006. What recourse would sponsor have in order to avoid disqualification?

Reference no: EM1379980

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