annual retirement benefit
(1) Defined benefit plans (A) In general A defined benefit plan meets the requirements of this subsection if the accrued benefit derived from employer contributions of each participant who is a non-key employee, when expressed as an annual retirement benefit, is not less than the applicable percentage of the participant’s average compensation for years in the testing period. (B) Applicable percentage For purposes of subparagraph (A), the term “applicable percentage” means the lesser of— (i) 2 percent multiplied by the number of years of service with the employer, or (ii) 20 percent. (C) Years of service For purposes of this paragraph— (i) In general Except as provided in clause (ii) or (iii), years of service shall be determined under the rules of paragraphs (4), (5), and (6) of section 411(a). (ii) Exception for years during which plan was not top-heavy A year of service with the employer shall not be taken into account under this paragraph if— (I) the plan was not a top-heavy plan for any plan year ending during such year of service, or (II) such year of service was completed in a plan year beginning before January 1, 1984 . (iii) Exception for plan under which no key employee (or former key employee) benefits for plan year For purposes of determining an employee’s years of service with the employer, any service with the employer shall be disregarded to the extent that such service occurs during a plan year when the plan benefits (within the meaning of section 410(b) ) no key employee or former key employee. (D) Average compensation for high 5 years For purposes of this paragraph— (i) In general A participant’s testing period shall be the period of consecutive years (not exceeding 5) during which the participant had the greatest aggregate compensation from the employer. (ii) Year must be included in year of service The years taken into account under clause (i) shall be properly adjusted for years not included in a year of service. (iii) Certain years not taken into account Except to the extent provided in the plan, a year shall not be taken into account under clause (i) if— (I) such year ends in a plan year beginning before January 1, 1984 , or (II) such year begins after the close of the last year in which the plan was a top-heavy plan. (E) Annual retirement benefit For purposes of this paragraph, the term “annual retirement benefit” means a benefit payable annually in the form of a single life annuity (with no ancillary benefits) beginning at the normal retirement age under the plan.