Current 415 Maximum as Relating to Lump Sums

[LIBOR]

A DB plan determines lump sums as the greater of (1) the amount using the "applicable" mortality table and "applicable" interest rate or (2) through the year 2010, the amount determined using the PBGC interest rate at the beginning of the plan year and the "applicable" mortality table.

Assuming that for a particular participant the plan annuity benefit is less than the 415 dollar and comp limits, my understanding of current law is that the 415 Lump Sum Maximum for a current payout would be determined using '94 GAR mortality and 5.5% .

Is my understanding correct ???

[Gary]

Yes, my understanding is that you compute the lump sum based on the plan provisions, then convert the lump sum to an annuity using the 415 assumptions and determine if the resulting annuity is not greater than the 415 maximum benefit.