Actuarial Equivalence

[Penman2006]

Calendar year plan. Plan document definition of actuarial equivalence specifies the mortality table for converting to optional annuity forms as the mortality table per 415(b)(B), ©, and (D). At at 12/31/08 that table was the 1994 GAR table, but after WRERA on 1/1/09 that table is the applicable mortality table for 417(e). For benefit calculations, does that need to be handled like an amendment to the AE definition, doing the calculation under the old and new definition and taking the greater result? I hope not, otherwise any plan that defined it's annuity conversion mortality table as the 417(e) table would now be in a perpetual state of annually "amending" the definition of AE.

(I am remembering that the IRS said a plan document that had automatic increases to 401(a)(17) and 415 is an annual amendment as far as they are concerned ........ wrt the Schedule R question regarding any amendments increasing benefits during the year, and creating amortization bases, although they backed off the plan amendment base issue and eventually allowed the change to be part of the G/L.)

[david rigby]

No time to look up the details, but I recall (I think) an IRS statement that an automatic/indexed change in AE is subject to 411(d)(6).

[Mike Preston]

Yes, but.... there is an IRS announcement on this issue and they recognize that anything tied to 417(e) is not provided with 411d6 protection. I'm pretty confident of this, even though I don't have time to search for the cite at the moment.