I'm working on a proposal for a DB plan for a beginning of year valuation for the plan year 1/1/2002 - 12/31/2002.

There is one employee (DOB = 4/20/53) who is making $500,000 per year. Assume immediate entry (1/1/2002). Assume salary remains level at $500,000. Normal Retirement age is 65.

I want to set up a 10% of pay times years of participation (max 10 years) plan.

Am I correct in the following?
Accrued Benefit = $0 (because he has 0 participation at 1/1/02)

Current Liability Monthly Accrued Benefit =
Minimum of (1) 170000 / 12 x .10 x 1 = $1,416.67
(2) 160000 / 12 x 1 / 10 = $1,333.33 (415b $ Limit)

Projected Monthly Benefit =
Minimum of (1) 170000 / 12 x .10 x 10 = $14,166.67
(2) 160000 / 12 x 10 / 10 = $13,333.33

If you are looking to maximize contributions, you should not be using age 65. Age 62 has the same DB limit now. Using something lower may produce higher contributions, but would be scrutinized as to whether that is reasonable for the given industry.