frizzyguy

I had a whole reply setup about AE with 415 until I reread what you said about the A62 @ 5.5% = 12. The power of rereading I guess. I think you have it correctly.

I used the term allocation to refer to the Cash Balance amount after the long process I discussed above. I usually refer to it as a 4% Pay Credit and an Allocation after the deed has been done. Sorry for not clarifying.

I'm sorry, you are correct. I was trying to make it easy and made it wrong. See what trying to be quick gets you.

Thanks much!

Unfortunately it's not that simple. The 2% is actually converted into an allocation by projecting the pay credit (and maybe the interest credit depending on how the document is worded) to NRD at the interest crediting rate, converting it to an annuity using the plan terms (again, depending on how the document is worded) and then converting it back to a lump sum using the testing rate. Then that amount needs to get discounted back to the attained age using the testing rate. (8.5% usually.) To add to complication, some documents have unusual traits such as normal form and how interest is credited and this needs to be factored into your method. The nice thing is that for the CB allocation, you can use the average for all NHCE's which is a big time help. So if there are two NHCE's and one is excluded and has a 0% CB allocation and the other has a 4% CB allocation. You can say the group has a 2% average and add that to your 5% Profit Sharing Allocation and you just passed your 7% gateway. There is probably situations I am not thinking of but that is how I believe it needs to be done most of the time. Sorry I have no regs, if you really want to see them you can message me and I'd be happy to help you find them.

What about the fact that 2.5% is protected on all past accrued benefits? I think that would protect against non-discrimination.

We decided to use the prior november interest crediting rate for the projection. I think you are fine using either method but the signing actuary felt more comfortable with that rate. It was a fun debate but that pesky "I'm signing the report" is a pretty solid discussion ender! That is what we normally do but I just wanted to rock the boat a bit. So you use a stable rate? What is the ICR that your plans normally use?

We were discussing an EOY Cash Balance Valuation today. We use the 30 yr treasury for the ICR (November). For the actual interest credit rate that get the EOY Balance we use the rate preceeding the plan year. We are now in a debate on whether we should use that same rate for projecting balances out for the FT and NC or should we use the next novembers rate. There are good arguement both ways, I guess I'd just like to get other's opinion.

There are a lot of things to make sure you pay attention to with Life Insurance in a plan. I have found that some insurers will give you the PS58 cost to put on the participants 1099. Have you gone that route yet? I could be way off though.

A 71 year old electing a 26 year certain annuity? Am I getting punked? Ashton, is that you? Just at a quick view, I think you are using an annuity function payable montly for the straightlife and annually for the certain annuity. Just quickly using good old excel, I get 176.423 for the 5% annuity. I very well could be over looking something though.