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Guest lifeweb

Lump Sum Equivalent Benefits

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Guest lifeweb

The soon to be ex-wife of a Plan Participant has approached me to value her spouses benefit. My question is do I use GATT factors, PBGC factors, or some alternative. I do not have access to the Plan to see what they are using. As a matter of information, this is a Union Plan (I believe multi-employer type arrangement). I am trying to help someone out as a favor. Any suggestions would be appreciated.

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Be careful.

The plan may not allow a lump sum benefit payable at any time to any individual;

My guess is she needs to know a number of things, at least with respect to her husband's plan's benefits - the first being what the accrued benefit is (monthly at reitrement, early retirement, with or w/o cola, etc.;

second: what is the community interest - note in many states this differs from the normal benefit in a number of ways - may not be the entire benefit; may be based upon a projection of benefit at retirement; may have to be calculated using state mandated assumptions, etc.

third - what is the equivalent value (or market place lump sum value of the monthly benefits).

In order to protect yourself from providing answers which may be inaccurate, you should, as a minimum, get the spd and other specific information from the plan administrator.

And, beware of reactions to favors given to soon-to-be-ex-wives.

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Are you affiliated with the Plan in any way? If so, I don't see how you can respond to that question, at least not without EE approval.

As far as what assumptions to use, that seems to me to pretty difficult without information about the Plan provisions. If you need to do something anyway, I suggest GATT, with a healthy dose of caveats.

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