Gary

pax me fax is 770.798.9936 gary

Pax I don't believe I know your email address. Gary

Accrued Benefit is defined as "as of any date the retirement benefit under Article V" The retirement benefit is 1.5% FAP * credited service less 2/3PIA (payable at age 62). So it is clear that the gross benefit is a unit credit accrual and the offset is a flat benefit with NO service proration. What do you think?

The Plan says "Effective 1/1/89, the max SS offset allowed for any year of service will be the lesser of the 1)the max offset permitted by law or 2) the specified Plan offset". I believe that would have to do w/ the .75% per year or no more than 50% of gross benefit (although I am not sure if this part is in 401(l)). This person terminated at age 32 with a lump sum that was based on the gross benefit payable from age 60 to 62 (at a reduced level) and then based on the net benefit (inclusive of offset) from 62 and beyond. The result was a benefit of 264 per month from 60 to 62 and a benefit of zero from age 62. But since they have a min ben of 100 per YEAR, that was the age 62 ben. This seems ridiculous, since if the lump sum were greater than 3,500 and the person was to take a normal ret ben at 65, she would receive zero,except for that trivial minimum benefit. Look forward to further comments on such a benefit. Of course I don't know if being a railroad plan has any impact (as of yet). Once again the formula is 1.5% FAP less 2/3 PIA (not prorated for service, which appears to be one flaw).

Anyone know how I could obtain rev rul 71-446? And is there a website where one can pull up rev procs, rev rulings, IRS notices, etc.?

I agree with you Pax

pax, I understand what you're saying. My point is that what happenned in my example was that this person essentially accrued a benefit of 0 in 6 yrs of svc. 1.5% of FAP*6 does not accululate to too much and that makes sense. But to have a benefit of 0 (except they provide a minimum benefit of $ 100 per YEAR). Clearly doesn't seem large enough to have any impact w/r/t 401(a)(4). So my point is, something seems wrong with an offset of 2/3 of SSB, that does not prorate for service. They do have in their provisions that the SSB is based on COmp while employed by the Co., but they didn't apply it that way. So I still wnat to address the 2/3 SSB on its own merits. And the post 1989 disparity minimum requirements (which it doesn't seem to meet and is stated as a requirement in the PLan). Of course we know that 401(l) can fail and still pass 401(a)(4). But the formula doesn't seem to pass 401(a)(4) and doesn't meet the apparent minimum 401 (l) post 1989 requirements. Look forward to your thoughts. gary

A plan provides a gross accd ben of 1.5% of FAP * CS (unreduced at age 62), and an offset of 2/3 of the age 62 soc sec benefit. Clearly a short service employee based on the formula above could have an offset larger than the gross benefit. This seems ridiculous. However, we don't see too many SS offset plans nowadays and I'm not sure of the restrictions. I've seen things like limited to 50% of gross benefit, prorations for service/proj svc, etc. The Plan also says eff 1/1/89, the offset shall not be greater than what is allowed by law. My first reaction is that that means no more than say the 0.75% of cov comp per year, with adjustments for commencement prior to SSRA and differing SSR ages. Any thoughts on what is specifically in violation w/r/t this formula and more importantly how this can be researched in greater detail. Of course my understanding is that a plan need not pass integration to pass non discrimination, but this seems a bit out of hand. PS this is a company that is a railroad company and I don't know if that is relevant in this situation. Look forward to getting help.

What are the SS bend points for 2000? Is it true that when doing a 2000 PIA calc, the most recent NAtional Average Earnings available are for 1998 (that is two years behind)? Does anyone know when the NAE are published and where all this info can be found?

Your responses seem reasonable, but my understanding is that all different options s/b actuarially equivalent. For eg. if normal form is 10 c&c, then a life annuity would be a larger benefit.

A cash balance plan preserves an early ret. subsidized benefit. The CB plan allows for lump sums, prior plan did not. A person who retires early w/ subsidized annuity benefit wants a lump sum. Must it be required that the person get PVAB of early ret benefit (under 417) or could they pay a lump sum equal to PVAB of deferred to age 65 benefit (under 417)? It would seem that they s/ get PVAB of immediate annuity. Any thoughts?

A plan provides a life annuity for retirees and upon death 50% of gross benefit(benefit is reduced at age 65) to surviving spouse. Much like a 50% j&s. However, if the person does not have a spouse he gets a life annuity. It would appear that a person w/out a spouse (or one choosing a life annuity) should get an annuity that is increased in order to be the actuarial equivalent of the normal form w/ a spouse. I am most concerned with opinions related to the case where an individual does have a spouse, but wants a straight life annuity. i.e. should it be increased? Any thoughts?

I would think plans could have early ret subsidies. I have one plan that preserves the old formula accrued benefit at time of conversion and allows the participant to take that AB and receive it at an early ret date as a subsidy. However, they require that the lump sum be based on the PVAB of the age 65 benefit.

It makes sense that the AB would be grandfathered in 1994. Doesn't the prior plan provisions specify how the PIA offset is to be determined? I would follow the plan provisions.

A plan is anended to a cash balance plan a few years ago. All that exists are amendments and resolutions, but no restated document. The current docs are w/r to the prior traditional pension plan. The conclusion is that the plan has been significantly changed with extensive papre trails of changes, but no doc. Is there a law against this, when it is to such a large extent? The amendments and resolutions are barely comprehensible due to how lengthy and confusing they are. Any comments out there?

Plan provides opening balace using a relatively high interest rate. As a result there is signinficant wearaway. Are there specific rules against this or is it just tough luck to the employee? This is w/r to a cash balance plan

A participant retires with: Cash Balance Account = 200,000 Final Salary = 125,000 Account Conversion factor = 10 He has option of receiving an annuity of 200,000/10 or 20,000 per year, or He can get 125,000 as a lump sum (can receive up to final salary as lump sum) and the remaining 75,000 as an annuity of 75,000/10 or 7,500 per year. This is the desired option, so analysis below is based on this option. There seems to be issues w/r/t not addressing 417(e). It appears that 417(e) must be addressed in some way. The two ways I see are: 1. convert account balance to an annuity, compute 417(e) lump sum and if higher than account balance (say it's 250,000), let that be the basis to compute the annuity portion in addition to the lump sum of 125,000. i.e. an annuity based on additional 125,000 or 12,500 per year. 2. compute an equivalent annuity from the 125,000 lump sum received (using 417(e)) and offset it from the gross annuity (based on entire CBA). If this is greater than the annuity portion of 7,500, than this is what the participant should get. Any comments on this?

I would imagine an ad hoc increase could apply to TVs as well and be drafted much like for retirees.

In your case it appears that the 25 year issue is not relevant. The only apparent and certain concern is 415.

Anyone know where I can get a copy of the 2000 Covered Compensation table and the plan limits for 2000 (eg. db limit, compensation limit, soc sec wage base, etc.)?

A plan provides that a cash balance account ("cba") can be paid out as follows: cba = 200,000 final salary = 100,000 lump sum is limited to 100,000 an the remaining 100,000 is converted to an equivalent annuity. My problem is, what about 417(e). It seems either an equivalent pvab under 417(e) need be determined and if it is greater than 200,000, say 250,000, then 100,000 paid in cash and remaining 150,000 converted to an annuity. Or at least the 200,000 should be converted to an annuity and the 100,000 cash payment should be offset from the gross annuity as an equivalent offset annuity using 417(e). So for eg if 100,000 as an annuity under 417(e) is 10,000 and the 200,000 is 25,000 then the remaining annuity s/b 15,000. It seems something s/b done to incorporate 417(e). Any thoughts?

Ee terminates 2/2/93. Plan amends lump sum factors from PBGC rates to 120 % PBGC rates (for dist > 25,000) on 5/1/93 (adopted 5/11/93). Payout is 6/1/93. Should ee be entitled to PBGC rates since her termed < 5/1/93? Is this change a 411(d)(6) violation? The 417 (e) law prior to GATT said that if a plan adopts plan amendment related to 417(e) and PBGC rates, before end of 1989 plan year it is not a 411(d)(6) cutback. Of course this plan amendment took place in 1993. Appreciate any comments. Gary

They can be found in the 411 IRS proposed regs (I think, off the top of my head)

A person retires at age 65 with a cash balance account of 100,000. His equivalent annuity is 1,000 per month. If he chose a lump sum, it would appear to me that the lump sum would be the greater of 100,000 or the pv of 1,000 per month using 417(e)(at a minimum). Any comments out there?

Actually, I the actuary think he may have been shortchanged, since the lump sum is just based on the account balance, and not 417(e) as a minimum. Any thoughts w/r to handling this situation?