In service NR distribution

[abanky]

NRA is 55 in this db plan

the definition of late retirement is paid as though he had actually retired plus additional accrued benefit

my question is... must he take it as an annuity or can he take a lump sum (or partial)

Thank you,

Andrew

[rcline46]

The payment options must be defined in the plan document. Look there to see what can be done.

However, if a benefit WAS taken at age 55 and you are looking at increases after 55 - you now have MASD - multiple annuity starting dates. Good luck.

[abanky]

The plan allows for all the standard annuity forms plus lump sum.

Say the participant is turning 57, his NR benefit is 1000 and for simplicity sake the participant accrues $50 per year of participation.

What he wants to do is take out 100% PVAB of the life benefit or partial payment of his PVAB.

If he takes 100% of his PVAB, then at 12-31-08 would his ab be $50?

am i over simplifying this?

[Guest Ron Sevcik]

If I am understanding your question correctly, at 12-31-07 he is age 57 and has an accrued benefit by formula of $1,000. If nothing happens, as 12-31-08 he will be 58 and have an accrued benefit by forumla of $1,050. My opinion would be that if any amount is withdrawn during 2008, his accrued benefit at 12-31-08 would then be $1,050 minus the actuarial equivalent at his current age of the amount withdrawn. My guess is that if he takes out the full value of his accrued benefit, his accrued benefit at 12-31-08 will be zero because the actuarial equivalent will be greater than $1.050.

[ak2ary]

I agree that the minimum the plan could be written to give him is zero...that doesn't mean that the plan couldn't be written to give him the additional accruals on top of the actuarial increase...I've seen it done, usually by accident.

So like most questions on this board it comes down to "what does the plan document say?" You have to be really careful here, because the plan may say in one section that the benefit is the 1000 plus the additional 50 and since he has already been paid the 1000 you think he gats the 50. But, as Ron correctly points out; in most cases you'd be wrong. The plan also has a section that deals with the remaining accrued benefit following an initial payment and, usually it says you reduce the entire accrued benefit by the actuarial equivalent of the benefits that have already been paid and, as Ron describes, the answer is prolly zero.

So iffin I was you I would read it, then read it carefully, then read it again, then decide what it says.