Projecting Retirement Age

[dmb]

My client reaches his NRD on 1/1/04. He has a BOY calendar year DB plan. He will be age 67 at 1/1/04. He is considering working another three years. I remember reading something saying NRD could not be projected beyond one year, but I'm not totally sure. Can i fund for his benefit with an NRA of 1/1/07 (age 70)?? Thanks.

[Blinky the 3-eyed Fish]

I assume your question relates to performing the actuarial valuation. That being said, the assumed retirement is just that, an assumption. The assumption must be reasonable. Most often it mirrors the retirement age in the plan document, as there would generally not be a reason to differ except for certain circumstances.

This is one of those circumstances. It sounds as if it is reasonable to assume he will actually retire at 70 and that certainly can be reflected in your valuation.

[mwyatt]

And, given relative asset performance over the last three years, an assumption that someone will be working longer than they expected is unfortunately all too reasonable...

[david rigby]

Assuming this plan has the post-NRD provision of actuarial increases, the choice of this assumption can be significant. But, if the benefit is the 415 limit, it gets easier.