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More to the point, are future interest credits part of the accrued benefit for purposes of 411? Any thoughts?

Is the rate that is used for purposes of calculating future interest credits under 401(a)(4) part of a participant’s accrued benefit for purposes of Section 411(d)? In other words, if for purposes of Code Section 401(a)(4) you project future interest credits at 8%, is that 8% for future interest credits part of the accrued benefit that is protected by Section 411?

Just to be clear, 417(e) is not about "accrued benefit", but about the lump sum present value of the accrued benefit. Am I correct, that a participant’s benefit is the greater of the PV of the Accr. Ben. under the Plan’s rate and such benefit calculated using the applicable interest rate in (d)(3) and the applicable mortality table in (d)(2). In other words the rate provided in 417(e) is a floor.

In regard to a cash balanced db plan, is IRC Section 417(e)(3)(B) (Applicable mortality table) and © (Applicable Interest Rate) a floor against which the accrued benefit is measured? In other words, the present value of the accrued benefit can be more than the present value calculated by using the applicable mortality table and the applicable interest rate.

In regard to a cash balance plan, does anyone know whether the definitions of accrued benefit for purposes of testing under 401(a)(4) and backloading under 411 have to be the same?

Here's a difft angle. To allow more flexibility for participants who make affirmative elections, and to avoid any potential 401(a)(17) issues, we want to amend the plan to define the plan limit as the 402(g) limit. IRS has said, albeit informally, "if the plan terms provide that participants can't defer more than 6% of comp, that would be 6% of the Section 401(a)(17) lmiit. If the plan is vague and has an election form that allows the participant to elect a percentage, but the actual plan limit is the Section 402(g) limit, then 401(a)(17) is not a problem." The QACA rules unfortunately provide that you can't defer more than 10% of comp (401(a)(17)) for automatic deferrals. We would like to amend the plan with respect to affirmative deferrals to provide that the actual plan limit is the 402(g) limit. This way participants can make deferrals up to the 402(g) limit without any issues under Code Section 401(a)(17). I have read the QACA regulation and do not see anything in there that stops us from making such an amendment. Any thoughts?

Thanks, Tom. One more question. The Preamble to the Regulation provides that "compensation for purposes of determining default contributions means safe harbor compensation as defined in 3(b)(2)...", which links to 414(s), etc. It seems to me that you must use 414(s) comp for all default contributions, but you do not have to use safe harbor comp for contributions that are not made automatically under the arrangement (affirmative elections).

Are you saying that having a QACA feature in a Plan makes the Plan a safe harbor 401(k) plan? It seems to me that you are required to use the safe harbor definition of compensation for contributions made under the QACA, but you are not required to use that definition in regard to participants who make affirmative elections. Thanks for your response.

The QACA rules provide that a plan must use the Section 414(s) definition of compensation for automatic contributions. May a plan that has a QACA use a different definition of compensation for participants who already made affirmative elections? In other words, does the 414(s) requirement also apply to affirmative elections?