Actuarial Equivalence for Late Retirement on Employee Contributions

[Guest crosseyedtester]

A DB plan had employee contributions which were suspended over 20 years ago. A participant over 65 is now retiring. Assuming the participant leaves the accumulated value of the employee contributions in the plan...the plan document says that the employee portion is ADDED to the accrued benefit under the plan. This is done by taking a certain percentage of the accumulated value of the employee contributions. Does the accumulated value of the ee contributions at late retirement date need to be compared to the actuarial equivalent of the accumulated value at normal retirement date? The plan document does not specifically say to treat the additional employee contribution portion like so, but the accumulated value at Late Retirement is less than the actuarially adjust value from normal retirement date.

Thanks.

[david rigby]

Assuming this plan is subject to IRC 411, you may have to determine the total benefit under the plan, and then determine the EE-provided portion using the requirements under 411. The ER-provided portion will be whatever is leftover.

[Guest Harry O]

You also need to review the suspension of benefit regulations. My recollection in that the employee-paid portion of the accrued benefit MUST be actuarially increased for late retirement even if you give the suspension of benefits notice at age 65.

[Guest crosseyedtester]

follow up regarding taxable portion...

A single participant has chosen to receive a 120 month certain only option, leaving the accumulated employee contributions in.

To calculate the non taxable portion for the participant who is 65 in 2003, would you divide by 260 as per the single life table in IRC 72, or would you divide rather by 120 since that is what the participant is actually going to receive?

Thank you.