pension reform 415 limits

[MR]

could someone with a small income fund for the $160,000 415 limit? for example, could someone start a plan in their 50's who earns $20,000 per year and fund for a $160,000 benefit at retirement (ie a deduction that greatly exceeds their income?

the new literature seem to indicate yes. any thoughts?

[MGB]

You still have a 100% of compensation limit overriding the $160,000. Note that it is not 100% of current compensation, it is 100% of projected compensation at the date of decrement (e.g., retirement), and then it must be at least a three-year average.

The IRS is very touchy about using an unreasonable salary scale. Assuming the NRA is 10 years from now (to be able to get the entire amount), a 6% salary scale only raises the final three-year average to a little over $30,000. Although a longer period between now and retirement would produce a higher final average, it also would produce a lower present value in funding because of the interest discount.

I am intrigued by what you are referring to in the "new literature" as implying otherwise.