Whipsaw Eliminated

[Penman2006]

How come nobody is talking about whipsaw being eliminated with the enactment of PPA'06 (immediately). I have not had to do any cash balance distributions recently, but someone has......what is being done? What if, for arguement sake, a plan had a 3% interest crediting rate, would you just pay out that cash balance amount, forget about 417(e)? Are distributions being held up until guidance is issued and we are told what "reasonable rate of interest" means? How can you do that? Help!

[Effen]

I don't think you can ignore your plan's language. If you wrote the plan to avoid a whipsaw problem, seems to me you would need to amend that language out before you can ignore the whipsaw. Therefore, I don't see how the law change impacts current distributions.

FWIW, I think most people on this board probably used the 417(e) rate as a crediting rate and therefore designed the plan around the whipsaw issue. Therefore, for right now, if it aint broke, don't fix it.

I think this topic will heat up once people start thinking about plan design/amendment issues. Personally, I just haven't had time to think about it.

[Penman2006]

Thanks Effen. I have only one CB plan that does not use the 417(e) rate as the interest crediting rate, but that plan has fairly frequent terminations so I need to get a handle on this.