Which conversion table?

[david rigby]

Employee left employment on 1/1/2001. Was not aware of retirement eligibility. has now (in 2003) requested retirement with a retroactive effective date of 1/1/2001.

(1) The plan includes a minimum from a prior money purchase plan account balance. This balance (with fixed rate of interest) can be taken upon any severance of employment, without regard to $5000 limit, the balance of the accrued benefit to be paid as an annuity. The plan defines the annuity conversion of this account balance as based on the 417 conversion factor in effect at the annuity starting date. At 1/1/2001, that would be the GATT mortality table (Revenue Ruling 95-6) and 5.49%.

(2) Suppose a slightly different scenario: same as above, except there is no MP plan account balance, but the plan offers a lump sum option on the entire accrued benefit. Revenue Ruling 2001-62 refers to annuity starting dates on or after 12/31/2002. Since the participant has elected a 1/1/2001 annuity starting date, does Rev. Rul 2001-62 apply?

Is this interpretation correct? Any other comments?

[Mike Preston]

Somebody will probably come up with a cite to contradict this, but I think the Annuity Starting Date is as you have defined it. Hence, if the ASD is indeed 1/1/2001, you use the rate (and mortality table) in effect on that date, along with the other plan provisions which identify the benefit at that time. If this includes an interest adjustment since then to compensate for the time value of money, as I would expect it to, the amount distributed today will be higher than the amount you would have distributed then. But that doesn't change the ASD. If they want a current ASD they get the current rate (and mortality table) but they also get the current benefit under the terms of the plan.