Calculate an EBRA for a participant over Plan's Normal Retirement Age

[Alex Daisy]

Can someone shed some light on how to calculate an EBAR for a participant over the Age of 65?

I am using a On Line Software Program called "Pensions On Line" and I do not think it is calculating it correctly for this participant who is over age 50.

[Tom Poje]

not sure what you mean when you say someone is over age 50...

1.401(a)(4)-12 definitions: testing age (4) if beyond testing age otherwise described then testing age is employee's current age.

[Alex Daisy]

not sure what you mean when you say someone is over age 50...

1.401(a)(4)-12 definitions: testing age (4) if beyond testing age otherwise described then testing age is employee's current age.

I meant to type over 65.

My question is: How do you calculate an EBRA for a participant over the Plans Normal Retirement Age?

[Jim Chad]

If testing age is 65, than you treat the employee as being age 65. Does this answer your question? or are you asking for the full formula?

If you want the full formula, send me a message through this board or email me at jchad@lettinga.com and I will send you the worksheet from my book.

[Tom Poje]

if ee is now age 67, then his APR is based on age 67 and you simply don't prohect forward any more years of work.

I am assuming you are not referring to someone who is hired at age 64 and retirement is age 65 / 5. in that case his APR is based on age 69 and you project forward 2 more years.

Jim has a good grasp on it and I imagine you can rely on his calculation if you need an example.

[J Simmons]

Tom,

Wouldn't Treas Reg § 1.401(a)(4)-12 Testing Age (3) make it simply 65 where the 65/5 results in different NRAs for different EEs, some age 65, other ages 66, 67, 68, or 69 (but then Treas Reg § 1.401(a)(4)-12 Testing Age (4) make it actual age for those over 65)?

[Tom Poje]

I'd normally say yes, but the IRS has said that 65/5 is 'uniform', so you end up with (1) the employee's testing age is the employee's normal ret age.

[J Simmons]

I'd normally say yes, but the IRS has said that 65/5 is 'uniform', so you end up with (1) the employee's testing age is the employee's normal ret age.

Thanks, Tom, I was not aware that the IRS has so said.

[Tom Poje]

if you asked me where it is said, the closest I can come at the moment is (3)(ii) under Uniform normal retirement age

the last sentence says "For example, a uniform normal retirement age could be based on the earlier of the fifth anniversary of commencement of participation and the completetion of five years of vesting service."