Most Valuable Accrual Rate

[Guest Grumpy456]

I know there have been previous discussions about how the MVAR is calculated on the message board. I don't want to rehash those discussions. I do, however, have a few more general follow-up questions.

First, the IRS is apparently about to release a TAM on this very issue:

Posted by: Mike Preston Oct 30 2006, 12:47 PM

Yes, the TAM was issued. It is being redacted and will be posted on the COPA website soon, if all

goes according to plan.

Does anyone have the address for "the COPA website" or know whether the TAM has been released (or what it says)?

Second, I don't understand why there are so many different opinions on this issue. For a plan that permits lump sum payments, some actuaries say that the MVAR is based on the 417(e) lump sum. Others say (as recently as yesterday I had a discussion with an actuary who falls into this category) that the 417(e) lump sum is irrelevant to this determination and instead the MVAR is based on the normalized lump sum (i.e., the lump sum calculated using a "standard interest rate" and a "standard mortality table" as those terms are defined in Treas. Reg. Sec. 1.401(a)(4)-12).

When I review Treas. Reg. Sec. 1.401(a)(4)-3(d)(1)(ii) in order to find out what the IRS thinks the term means, it appears clear that "[t]he employee's most valuable optional form of payment of the accured benefit is determined by calculating for the employee the normalized QJSA associated with the accrued benefit that is potentially payable in the current or any future plan year at any age under the plan and selecting the largest (per year of testing service)." I cannot find any language in the definition of MVAR as set out in Treas. Reg. Sec. 1.401(a)(4)-3(d)(1)(ii) to suggest that if the plan provides for a lump sum distribution, then the MVAR is something other than "the normalized QJSA". What is going on here? Why are there so many different opinions on this issue? The language in the Treasury Regulations seems clear enough. Why do some actuaries ignore it or contend that it has been amended in some way. If amended, where and how?

Any thoughts are greatly appreciated. Thanks so much.

[AndyH]

Well put.

Google Barry Mannilow COPA Cabana

or try:

http://www.collegeofpensionactuaries.org/

But you can't get in unless you join.

[Guest Grumpy456]

Thanks, AndyH. I found the COPA website. I would have joined, but for the "you have to be an enrolled actuary thing". Interesting, what is an actuary? For example, an "enrolled actuary" is an actuary who has "enrolled". If a brilliant guy who never got beyond second grade passes the EA exams one, two, three they catapult from being a nonactuary to being an enrolled actuary (they skip, in a way, being just an actuary, i.e., an actuary who is not enrolled). Curious? What, then, does it mean to be an actuary? Maybe I am one and can, as a result, join COPA. (tongue in cheek).

Also, I guess all "pension actuaries" are "enrolled actuaries" otherwise why include the term "pension actuary" in the name of the organization, but require someone, not to be a pension actuary, whatever that means, but instead to be an enrolled actuary. Why not the College of Enrolled Actuaries? COEA?

I should have eaten lunch today.

[Mike Preston]

I should have eaten lunch today.

Sounds about right.

[Mike Preston]

http://www.collegeofpensionactuaries.org/

But you can't get in unless you join.

There is, indeed, an private area that one must be a member to enjoy. However, most of the website is available to the public. That includes the area on articles.

Unfortunately, the MVAR TAM hasn't made it to the website, yet, but it should shortly.

mike

[Guest merlin]

For those of us who haven't yet made it to the hottest spot north of Havana, is there a cite for the TAM?

[Mike Preston]

For those of us who haven't yet made it to the hottest spot north of Havana, is there a cite for the TAM?

The copy I have is not cited. Perhaps they will give it a number of some sort when (if?) it is published.

[AndyH]

Is this elusive TAM publicly available anywhere yet?