Gary

I was trying to present a case where it has already been determined that the particpant is entitled to $ 500 and the alt. payee is entitled to $ 500. And then assume that the participant begins this payment at his NRA. So I was wondering if all those aspects were in place, if there was a typical way that the participant could choose a 50% j&s and if it had any impact to alt payee benefits and the general logistics of this scenario. I realize that the specific terms of the QDRO could and probably would ompact this, but I was curious if there was a way of handling this that might occur frequently.

Say a participant chooses a 50% j&s pension, since he is remarried. Say his gross pension = 1,000 and his ex spouse is to receive $ 500. Would this result in the participant receiving a 50% j&s based solely on his $ 500 pension, as if there was no other pension and would his ex wife still be entitled to her $ 500, however she chooses to receive pension? Any thoughts?

The Plan document should make it clear if the lump sum is based on the deferred normal retirement benefit or the subsidized immediate benefit. My experience is that if you are eligible for an immediate benefit, the lump sum is usually based on the present value of the immediate benefit. And if you are eligible only for a deferred vested benefit the lump sum is usually based on the deferred normal ret. benefit. It sounds like you are actually eligible for a normal retirement benefit anyway, thus I am pretty sure that your lump sum is based on your immediate benefit. Is there anything else you need? With the interest rate, mortality table, monthly annuity, participant's age at benefit commencement, calculating the present value is easy. That is, not time consuming.

A plan changes lump sum interest rate from PBGC rate to 120% PBGC rate for distributions over 25,000. Is there a deadline as to when this change can occur without having to be concerned over 411(d)(6) cutbacks? Or another way of putting it. Is there a point in time when making this change would require anti cutback provisions applied to accrued benefits? i.e. where the accd ben must be based on 100% PBGC rate and not 120% PBGC rate. And where wearaway issue can apply.

A plan is 1.5% of avg pay less 2/3 soc sec annuity. The Plan fails 401(l) as many individuals have a zero accrued benefit in the early years. However, for 411(B) (minimum accrual) purposes can the offset be ignored?

I like to look at it as 1000* (N65/D50) (when pre-ret mortality)

Can a Plan compute the soc. sec. benefit (used for purposes of the offset) on the basis or method that assumes that the person terminates due to disability? That is, the soc. sec. benefit would be computed differently. As I was told, in the determination of AIME, the denominator would no longer be the typical 35 years, but would be based on years up to time of disability. i.e. a much lower number in the denominator.

A plan provides a pension of 1.5% of avg pay per year and offsets it by 2/3 of the age soc sec benefit (with no pro-rate or unit accrual on the offset). As a result the accd benefit is less than zero for short service employees. The offset is computed based only on compensation with the employer. Does anyone have knowledge or thoughts as to if the Plan can meet 411(B)(1) by doing the test just based on the gross benefit or must the offset be included in the test?. That is as a gross benefit only, it clearly passes 411(B), but tested based on the benefit including the offset, it would fail. One case (allegedly) supporting the concept of ignoring the offset in the testing is rev ruling 76-259. This ruling, however, refers to offsets of benefits from profit sharing plans. Look forward to any comments.

Thanks Roman. Gary

Can anyone help me get my hands on a copy of revenue ruling 76-259? Thank you.

A plan provides a lump sum distribution based on gatt assumptions. However, if lump sum is less than 3,500, it provides a lump sum based on 6% and 71GAM for females, if it results in a larger lump sum. If plan provides for this, would it not be required to provide lump sums over 3,500 on this basis as well? Isn't this a 1.417(e)-1(d) requirement?

As a supplement to what has been said. My understanding is that if a Plan had not been amended for GATT by 2000, then beginning in 2000 GATT had to apply as well. That is, until an amendment for GATT, Plan would have to use max of GATT and PBGC (assuming that was in current plan). And when Plan was amended to replace PBGC with Gatt, then only GATT would apply, preumably incorporating the one year transition requirements for a change in the timing of the applicable interest rate.

Keith, I would like to be able to determine roughly the value of annuity and lump sum distributions in a given year. I liked your ambulance quote (It was witty). How did you mean it in this context, though?

I know of freeerisa.com, but the 5500 or sch b does not necessarily give all data I am looking for. For eg. I would like to be able to obtain the number of employees who left (during prior year) as a term vested and of those how many received lump sums and how many are deferring benefits. Also I would like to know the number that retired (during prior year) and how many took a lump sum and how many took an annuity. And how many new participants entered the plan during prior year. Anyone know where this info can be obtained?

A cash balance plan pays the account balance as a lump sum dist. Of course pension law requires the lump sum to be at least the pv of normal ret accd ben. The plan uses the 30 yr for interest vredits and the 30 yr (as of a different month) to determine lump sums. If the 30 yr for int credits is greater than 30 yr for lump sums, then could or should minimum lump sum be based on account bal proj to ret by int credit rate and then discounted by lower lump sum int, thus resulting in a lump sum greater than account bal? In other words no pre ret mortality. Again the plan does not give any specifics for the calc of lump sum other than to say it is the account bal.

I believe you can have pensions accrue much like they do in accordance with proposed reg 1.411(B)-2 with respect to accruals after normal retirement age. Basically they continue to accrue benefits and at the end of each year they are entitled to the greater of the prior year's benefit or the new gross accrued benefit offset by the actuarial equivalent of the benefits received during the prior year.

A pension i am reviewing uses Moody's Aaa monthly bond ratesas the interest rate for lump sums. Does anyone know where I can find historic data for these rates? Thank you. Gary

Thanks Pax Is it from age 20 - 111, where the q at age 110 and 111 is 1.0?

I need a copy of the 71 TPF&C mortality table. My hard drive crashed and I cannot retrieve my file. Does anyone know where I can obtain one or can anyone help me with this? The SOA table manager does not contain this table. Thank you, GAry

A cash balance plan defines act equiv to be 30 yr treasury and gatt for lump sums and 71GAM, 7%, otherwise They say that to convert cash balance account to annuity you divide by an annuity factor based on the 30 year treasury rate, but give no specific mortality table. Question is - what mortality table s/b used or is most reasonable? If the 71GAM is used, this results in a lower annuity factor and thus a larger accrued benefit and potentially larger lump sum. i.e. larger than account balance.

Larry What service do you use? Is it TAG something or other? gary

This was in connection with a termination that occurred in the 1990s, that is why PBGC is still used in this case. You refer to 2619.44. What you say w/r/t this section makes sense, but I thought this section was superceded by 4044 and that it cannot even be found in current books on the code and regulations?

When a Plan defines act equiv for a lump sum based on the PBGC male purchase rates what mortality table are they referring to? I mean it really isn't specific, if I were to play devil's advocate. For example PBGC Table 1is considered the healthy male mortality table and is based on the GAM83 table for males. The PBGC table for lump sums is Table 3, which is the UP84 unisex table. That is Table 3 is neither a male or a female table. The Plan uses the UO84 table with a 1 year set forward as the male table. While I believe this to be true, I am not sure where there is actual documentation supporting this assertion. Curious to hear any thoughts out there. Thanks.

Thanks for your response Harry O. I am reviewing pension for a former employee who recevied a distribution from CB Plan. The Plan defines interest credits to be based on 1 yr treasury with a minimum of 4%. However, since the Plan's inception in 1992, they have used 8% for annual interest credits, by means of an ad hoc annual amendment. Should 8% be used to project balance to 65 for this terminated employee? That is, should the 8% be considered part of plan provisions as a permanent amendment? Is this a case of a 411 forfeiture? Or is the Plan sponsor correct? Plan Administrator says no, since the 8% is not part of Plan, but only a temporary provision. And the lower rate stated in the Plan s/b used.

A cash balance plan doc says interest credit is 4%. However, every year since its inception they have added an ad hoc amendment to provide for an interest credit of 8%. Should this now be a permanent plan feature or amendment? i.e. any precedent? Or could this be considered a 411 forfeiture in accordance w/ 96-8? Any comments out there?