Reply To: RetroPayment from a Cash Balance Plan

Home Fairmark Forum Retirement Savings and Benefits RetroPayment from a Cash Balance Plan Reply To: RetroPayment from a Cash Balance Plan


Alan, thank you for your response. I agree on how unusual this situation is. I have been in contact with a CPA and Lawyer and neither had heard of anything such as this. This Cash Balance Plan is a defined benefit plan, so none of her personal money has been contributed to this plan. From what has been sent to us it seems that the Plan administrator noticed recently that she should have been removed from the plan in 1984, but they didn’t catch it at the time, probably because she has been on Workers Comp. She is now 91 and still considered an employee of this company. Their course of action is to pay her 206 months of annuity payments as a Retro Payment and allow her to take those accumulated funds along with a monthly annuity for life. I worry about the marginal tax rate as well, estimating it at 27.4%. I am also wondering if she could do a 10 year tax averaging using Form 4972. Until I see her 1099R I won’t know how they filled in each line, so I don’t know if she is eligible for that. Could you explain what a benefits attorney would be useful in this matter right now. It seems as though they are usually hired by the company in matters such as this.