kdriscoll

Her Hypothetical Account Balance from 2023 to 2024 did not decrease, I suppose, but she can't be distributed all of it now (unless reemployed, which I doubt will happen given the circumstances that were shared with me). Her compensation limit from 2023 to 2024 remains at $20K. The decrease in the maximum lump sum limit is coming from her being a year older (different factors being used in the calculation from last year to this year), and also the change in mortality from 2023 to 2024. In years past, her Hypothetical Account Balance was under the maximum lump sum limit, but now her maximum lump sum limit is less than her previously accrued Hypothetical Account Balance. The normal form of payment is the lump sum equal to the account balance. Since the maximum lump sum limit has now declined, and Single Life Annuity would be calculated based on the lump sum amount, the Single Life Annuity available to her has decreased from 2023 to 2024.

I have a similar situation, but for a former participant who is not at Normal Retirement Age. The participant is now a terminated vested participant, only 37 years old. This is a Cash Balance plan, and she was accruing a significant benefit, just under her 415 limit. Well, the unexpected happened, and she terminated. Her 415 limit from one year to the next declined, now chopping her previously accrued benefit by around $11K. I'm thinking this is a case where automatic commencement is required so she receives her entitled benefit. Is this cutback permissible, or does this fall under an impermissible forfeiture of benefits?