Actuarial Equivalence Defined

[Guest Sabadee!]

We are having an internal disagreement regarding actuarial equivalence in reference to the QOSA 75% requirement. We have the 75% option already, but it is based on a reduction formula which doesn't match the document's stated table.

One position (position #1) is that if a reduction formula is stated in the document (no table reference), it is by default actuarially equivalent. Even though the reduction formula provides a greater reduction than the plan's defined table would provide, this person is certain that since it is a written formula, it satisfies the requirement of actuarial equivalence to the life annuity. They are leaning on a 1979 revenue ruling which seems more relevant to defining "definitely determinable" than actuarial equivalence.

The opposing position (#2) is that in order to be actuarially equivalent, the reduction would need to correspond to the plan's defined table.

All opinions are welcome.

[Effen]

I think the J&75 can be what ever you define it to be as long as it is the most valuable form of payment (I guess equal or greater to the value to the J&50?)

You will still need to demonstrate the relative value of the option using some reasonable table in order to comply with the relative value regulations. If it isn't equal in value to the J&50, it probably isn't a valid QOSA.