Current Liability and 415

[AndyH]

If a participant is at the 415 dollar limit, with an implied 5.50% interest rate for 415 lump sum purposes, and the current liability rate is below 5.50%, is the maximum deductible contribution based upon RPA CL affected by the 5.50% 415 limit (net of the mortality difference of course as well), or is a higher deduction allowed on CL calculated below 5.5% without regard to the lump sum 415 limit?

Of course an annuity purchase may be more expensive than a 5.50% 94 GAR lump sum.

[rcline46]

My opinion is that funding assumptions have (almost) nothing to do with distributions. Therefore the relationship between current liability and maximum lump sum rates is non-existent.

In english please - don't try to tie them together.

[MGB]

There is no question or ambiguity here whatsoever. You are NEVER allowed to recognize anything but the current liability interest rate (whether it is higher or lower)...even in determining the future lump sum amount (i.e., ignore all other interest rates for all purposes - you can only value the annuity benefit).

[AndyH]

No disagreement, just a double check on procedure. Thanks for the comments.