417(e) Mortality Table

[abanky]

These are questions, I think I know the answers for, but I need back up

for the 2008 Plan year, does that mean the 2008 Applicable Mortality Table as described in RR 2007-67? Yes

for the 2008 Plan year, any db plan that defines actuarial equivalence mortality as: the "applicable mortality table" means the table referenced in IRC Section 417(e), must use the 2008 AMT as AE? Yes

Does anyone see anything wrong with these statements?

does anyone see anything wrong with having a rotating mortality table for AE?

[Guest KennyH]

See RR 2007-67

[SoCalActuary]

These are questions, I think I know the answers for, but I need back up

for the 2008 Plan year, does that mean the 2008 Applicable Mortality Table as described in RR 2007-67? Yes

for the 2008 Plan year, any db plan that defines actuarial equivalence mortality as: the "applicable mortality table" means the table referenced in IRC Section 417(e), must use the 2008 AMT as AE? Yes

Does anyone see anything wrong with these statements?

does anyone see anything wrong with having a rotating mortality table for AE?

Other than the general complaint about intrusive govt interference, no, I see nothing wrong with your conclusions.

[abanky]

how are people with cash balance plans with AE interest defined as 417(e) proceeding? Changing definition of credited interest?

[Mike Preston]

My plan is to change 417(e) to first segment rate of 417(e) rates and see if that flies. Do you think it will?

[abanky]

we were thinking of the 30 Year trs or the corporate bond, or just a flat rate like 5%.

Wouldn't the 2008 plans need to be amended before 1/1/2008 for this change?

[Guest Grant]

Can we do a flat rate like 5% That was not clear to me from the law or the Notice.

Or do we have to define some minimal index, with a minimum of 5%?

[abanky]

Why wouldn't we be able to set the AE at a flat rate? As long as the benefits paid off are paid at no lesser then 417(e).

[Mike Preston]

The goal is to eliminate whipsaw.

[Andy the Actuary]

My plan is to change 417(e) to first segment rate of 417(e) rates and see if that flies. Do you think it will?

Because the yield curve could become inverted (or is that perverted), you might want to use the least of the 3 segment rates. Presumably, you are using greater than the minimum but want to avoid computational complication?

By the way, have you given thought to whether or not linear interpolation for non-integral ages still makes sense if you are using the 3-segment approach? We have to balance practicality with theoretical accuracy. Now, I know for sure that nothing makes sense. Congress comes up with the segmented yield curve because it's more accurate and then IRS Rev. Rule 2007-67 will allow you to use an interest rate that could be 16 months out of date (i.e., look back month of August, calendar year stability, annuity start date = december).

[Mike Preston]

Seems to me that if I'm concerned solely about exceeding a market rate that only the first segment rate is a true "not greater than market rate" indicator.