Overfunded Cash Balance plan

[Nodolor]

Advertisement - Members don't see this ad

Has anyone ever dealt with the consequences of of an overfunded Cash balance plan?

Situation is other doctor and I are selling our practice and we have approximately 500K surplus in plan according to actuary.

As it stands looks like we could be on hook for a 50% excise tax on that amount!

Any thoughts?

 

[The White Coat Investor]

Has anyone ever dealt with the consequences of of an overfunded Cash balance plan?

Situation is other doctor and I are selling our practice and we have approximately 500K surplus in plan according to actuary.

As it stands looks like we could be on hook for a 50% excise tax on that amount!

Any thoughts?

Interesting dilemma. Normally when that happens you just stop putting any money in for a year or two until you catch up. But if you have to now close the plan, I thought that money then came back to you. But $500K is quite an overage for two docs.

Can you amend the plan to increase benefits?

Does the company buying the plan by chance have an underfunded plan? They could be combined and they could pay you more cash for the company in exchange for part of the DBP.

MOre options discussed here: Overfunded Defined Benefit or Cash Balance Plan? The #1 Plan