COLLECTED WISDOM™ On DB(k) Plans

Beginning in 2010, an employer may adopt an "eligible combined plan." Consisting of a defined benefit plan and a 401k plan held in a single trust, using one plan document, one summary plan description, one Form 5500, and one audit (if required). The DB(k) plan may be used only by employers with no more than 500 employees.

The DB(k) would be deemed NOT top-heavy or subject to non-discrimination testing where it meets specific safe harbor formulas for both the DB and the 401k elements of the plan. The DB component is either a 1% of final average pay formula for up to 20 years of service, or a cash balance formula that increases with the participant's age. The 401k component must provide automatic enrollment and a fully vested 50% match on the first 4% of deferred pay.

Some source material (although there isn't much being published about them at this point):

DB(k) Rules

DB(k) Plans to Offer Opportunity in 2010

New Pension Law Creates DB(k) Plans for Small Employers

Sec. 903 of the PPA Which Deals With DB(k) Plans

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