Actuarial Adjustments

[mming]

Company owner has a DB plan, is a deferred retiree and is taking annual required minimum distributions. RMDs were calculated by the previous TPA using Treas. Reg. 1.72 tables. The amounts paid were usually significantly less than what his annual benefit was. My first question is, aren't those tables only for calculating RMDs for DC plans? I thought that just paying out the annual plan benefit in a situation like this would suffice as the RMD and no actuarial adjustments are needed. If this is correct, would his current benefit have to be actuarially increased to reflect the under-payment of his previous RMDs? All help is appreciated.

[AndyH]

What you describe is often referred to as the "account balance method". This was very common for DB plans although the IRS now says it never sanctioned such method for DB plans.

Unless a mechanical mistake was made, nobody is going back and changing prior calcs on account of this.

But is must be changed prospectively.

[mming]

Thanks for the response. Two months later I'm now forced to revisit this issue. I need to produce citations stating how RMDs from a DB plan are calculated. I've pored over 401(a)(9) and couldn't find a passage talking about paying out the annual benefit as the RMD. Does anybody know where something definitive on this topic can be found that has been issued by the government?