Gary

Say an active employee discovers an error in his accrued pension. What remedy is there? Could the employee file a formal claim for additional benefits, even though he has not even commenced benefits? Or is this handled more informally through letters?

A plan has a formula that is 1.5% of avg pay for each year of service, offset by 66 2/3% of Social Security Benefit ("SSB"). This formula produces an accrued benefit of 0 (zero) for many years, since the offset is so high. It would appear to violate 411 in design. However, the Plan provides that the SSB be based on pay while in the Plan only, with no projection to age 65 or prior to date of hire. Does anyone know, if this feature then makes the Plan pass 411 in design? Of course, since the SSB has relatively high minimums, the accrued benefit is still less than 0, for many short service employees. Any comments would be appreciated.

Let me get this straight. Are you saying that the Plan (prior to GATT) provides for both the PBGC rates as of ASD and as of 1/1, whichever produces larger amount? It seems if you switch to GATT, and eliminate PBGC rates all together, then in the first year, you probably would have to use the GATT rate for say two months prior to ASD and two months prior to 1/1. That is at both points in time and pay the larger amount. Then in subsequent years, you could choose the one time for establishing the rate.

The Plan does provide an early ret subsidy. For example at age 55 the ERF is .5. So looking at it from the perspective of the retiree, clearly, he would want to receive the pv of imm annuity. Plan is not explicit, other than to say the pv of his benefit. How strong a case does employee have? I personally don't recall seeing plans value lump sums for those eligible for imm benefits as the pv of deferred benefit. Of course for a term vested, it is common for it to be the pv of deferred benefit. gary

A Plan allows an emplyee to receive his early retirement benefit in the form of a lump sum. The Plan says that the lump sum is the present value of his benefit. It does not use a defined term like Accrued Benefit, for example. Do you think the lump sum s/b the present value of immediate benefit or present value of age 65 deferred benefit? That is how much is open for interpretation and/or what is correct or most logical approach? Gary

No, it is not in the SOA table manager. I have had the 71TPFC table for a while. And then a company sent me their 71TPFC Forecast table and it was significantly different than the one I have (it was more aggressive). I'm a bit puzzled at this point. Thank you, Gary

I have seen plans that use the 71 TPF&C mortality table and then I saw a Plan that uses the 71 TPF&C Forecast Mortality table for males. Does anyone know of there being two different mortality tables or are they really the same table, but one uses a more detailed title? gary

The question is "should the SS leveling option be considered a non-decreasing annuity in this case"? I don't know, but my impression is that it is a form of benefit that is typically a non-decreasing annuity (as far as I can recall), so my feeling is that this would not be subject to 417(e) rates even though coincidentally the benefit acts and looks like a term certain benefit.

A plan files a 5500, is publicly traded and is in or associated with the railroad industry or may be a railroad plan. Is this plan subject to 411 minimum accrual rules?

I would have always thought that a SS leveling option would have to be the act equiv of the normal form of benefit, under the plan act equiv assumptions. I would not have perceived that 417(e) assumptions would be relevant in this situation.

Harry, what you described, sounds like a SS Supp on top of the benefit. So I would think the base benefit (exclusive of the Supp) is a non decreasing annuity. Please let me know of any regs that support your point. gary

So Harry, what I am gathering from you is that an early retirement benefit must be at least the act. equiv. of the normal ret ben, othw. there is a forfeiture under 411. However, the act equiv would be based on plan act equiv rates as opposed to 417(e) rates. I will refer to the reg you mentioned. Curious to get your input, Gary

Reg 1.417(e)-1(d)(1) says that the PVAB of any optional form of benefit must be at least equal to the PVAB of the normal retirment benefit determined under the app interest rate and app mortality table. Reg 1.417(e)-1(d)(6) seems to imply that d(1) does not apply to say a life annuity pension form for eg. My original thought was that say a reduced early ret. benefit must be at least equal to the PVAB of the normal ret benefit under the app. factors, but based on the above it appears that this may not be the case. Any thoughts about this one? Gary

So since the Plan did not have a life annuity as normal form, it did not meet safe harbor and thus the general test was necessary. Makes sense.

So what we're saying is that if a Plan meets a safe harbor, then it is deemed non discriminatory, even if it would fail the general test (if such test were performed)? Thanks much.

pax, I agree that meeting 401(l) does not guarantee that it passes 401(a)(4). What I am trying to determine is a little background. That is, did plans amend from ss offset to 401(l) offset, in order to meet permitted disparity, in order to potentially qualify as a sa harbor? gary

with regard to rcline's response. Points well taken. Yes, it has been quite a while since these changes were mandated, but certain issues come up still and I had been doing public EE db work for many years. So it would appear that accrual rates, as you say could be done on a cross tested basis or benfits basis (as opposed to contributions basis). Did you mean benefits basis, since the cross tested method is on a allocation basis. Even though the rules took effect many years ago, many plans still use a SS offset plan. Which lead me to the question as to why some Plans maintain SS offset plans and some do not. My belief is so the Plan could pass non discrimination under a safe harbor. Look forward to hearing further comments. Now if the db plan is the only plan then isn't it true that cross testing

Is it true that a Plan does not have to comply with the max. permitted disparity of 401(l), but still qualify and pass 411 and 401(a)(4)? That is a Plan can potentially have a formula of 1% up to cov comp plus 2% above cc and sll potentially qualify? Is it also true that a company did not have to amend its SS offset Plan for TRA '86, but did so to pass 401(l) and potentially qualify for a safe harbor plan? I mean, why else would a Plan amend its SS offset Plan? Gary

Must a 204(h) notice be provided in the event that a Plan was amended for TRA '86 and changed its formula from a SS offset to a formula that met 401(l)? If 204(h) was not provided would the participant be entitled to old formula if greater (even though it was a TRA'86 change)? Why were SS offset plans amended? Is it because they would not meet 401(l)? Or because they could not meet any safe harbor test? Isn't it true that a SS offset Plan could pass 401(a)(4) and even 401(l) by having a offset that is less than the 401(l) maximum offset? gary

A Plan states that the lump sum is based on the factors published by the PBGC (this was pre GATT lump sum). My question is what is the mortality table required? Table 1 of Sec 4044 is based on the GAM83 table for males. Table 3 is based on the UP84 table. Does anyone have any thoughts at to what table is more appropriate? I am requesting interpretations of the Plan provision. I do not care to discuss what the administrator actually does. gary

I reviewed a Plan that is in the railroad industry (at least I understand it to be that way). They are publicly traded and file 5500's. So it appears to be an ERISA Plan. For some employees they have an offset based on a railroad act benefit and for certain other employees the SS offset applies. I am trying to determine if this Plan is subject to 411 accrual rules. It appears that it would be. Anyone else have comments? Gary

A plan provides that a lump sum is paid based on the PBGC male rates and factors as of 1/1 of a plan year. With respect to mortality rates, some may say this means UP 84 + 1. However, PBGC rates include a unisex UP84 table with no age adjustment. So where does the rational to use UP84+1 for males come from? If anyone knows this. Otherwise I might argue to use the GAM83 PBGC table (Table 1, Appendix A, Part 4044 of ERISA). Thanks, Gary

Anyone know where I can obtain 2000 cov comp table? Thank you, gary

A plan provides that NRD is 65 and 5 yrs participation. It also provides that if you retire at age 65 you get your full pension. However, if you terminate prior to age 65, then you can get your full pension at your SSRA. That is you would receive a reduced pension at age 65. Has anyone seen anything like this and does anyone know where in IRC that such a provision is allowed? thank you, gary

Anyone know where I can obtain IRS Announcement 95-99?