Pension valuations for plan years beginning in 2004

[Gary]

Since I am beginning my first such valuations I would like to verify a couple of points.

1. OBRA '87 FFL no longer exists.

2. RPA '94 FFL 412 now uses a rate tied to corporate bond rates per PFEA. For eg. for PYB 1/1/2004 the rate used can be from 90 to 100% of 6.55%

3. RPA '94 Unfunded CL 404 - you can use either the rate in 2. above or the old rate based on the 30-year treasury which is from 90 to 105% of 5.25%.

Am I correct?

Thanks.

Also, if the funding rate is in the prescribed range, must that be the rate used for RPA '94 CL or can you just use any rate in that range? And if the rate is just above the range must you use the highest rate in the range or any rate in the range?

Thanks much.

[david rigby]

1. Yes

2. Yes

3. I would phrase it a bit differently, but OK.

4. To the best of my knowledge, no such "tie-in" is required.

The net effect is that you probably only need one 412 rate, which can be the gateway rate, and one 404 rate, which might as well be the lowest rate possible.