Questions and Answers
The following is a list of Q & A’s that relate not only to Cash Balance Plans but to Defined Benefit Plans in general and non-discrimination testing. If you have a question regarding Cash Balance Plans that isn’t addressed below please contact us @ info@foxnfox.com with your question and we will attempt an answer!
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- What is a hybrid pension plan?
- What is the definition of hybrid benefit plans under the PPA?
- What is a hybrid plan with a lump-sum-based plan?
- What is a notional account?
- When is a pay (or service) credit accrued?
- What is a frontloaded interest credit cash balance plan?
- What are the interest crediting requirements for a hybrid defined benefit plan not to be age discriminatory?
- What are the requirements for defining interest crediting rates under the plan?
- When is an interest credit compounded?
- Do any pay limits apply to cash balance pension plans?
- How does the pay cap work if the plan year does not equal a calendar year?
- How are groups of employees eligible for a cash balance pension plan defined?
- What are the minimum participation requirements for a cash balance plan?
- When do employees join a cash balance plan?
- How is normal retirement defined in a cash balance pension plan?
- How are benefits typically paid from a cash balance plan?
- What are required forms of distribution for a cash balance plan?
- What limitations apply to the size of a cash balance plan benefit?
- How is the ultimate benefit amount limited under the law?
- Dollar Limit
- Compensation Limit
- $10,000 Limit Exception
- What are the rules prohibiting age discrimination for cash balance, pension equity, and other hybrid defined benefit plans?
- How has the PPA changed the age discrimination rules for defined benefit plans?
- What is the safe harbor age discrimination test created by the PPA?
- What are the general requirements to provide benefit statements to employees?
- How did the Pension Protection Act of 2006 modify the requirement for benefit statements?
- Must a cash balance plan offer a lump-sum form of payment?
- What forms of payment must a cash balance plan offer?
- What are the accrual rules for defined benefit plans?
- What special considerations apply to cash balance plans for accrual rule purposes?
- Which tests do cash balance plans use to pass the accrual rule requirements?
- Who is a highly compensated employee for purposes of testing?
- What is coverage testing?
- When is an employee considered to be benefiting under a plan?
- What is the ratio percentage test?
- What is the average benefit test?
