Cash Balance Interest Crediting Rate

[Guest Actuary Bill]

I know Notice 2007-6 did not provide guidance on the maximum allowable fixed interest crediting rate a plan can provide. What do most people consider to be a safe fixed crediting rate? I think 6% might be pushing it but 5% is probably safe.

Also, can you tie the interest crediting rate to an index but provide a floor and a maximum? As an example, the interest crediting rate will be the 10-year Tresuries with a min of 2% and a max of 5%?

[AndyH]

At a conference this week, JH said there would be hybrid plan regulations this summer or fall and this would be part of those. He seemed to hint that the line will fall at or below 5% but that is merely my impression of what he was hinting at, nothing more. He also said that if a plan currently has an impermissable rate that it could move to a permissisable rate without fear of causing a cutback, but that if a current rate meets the final standards a direct change would not be allowed without some sort of transition. I think he said the regs would still be proposed, so it is not clear to me if the change would need to be made before the issuance of the upcoming proposed regs or the eventual final regs. Not much help I know but some news.

[Blinky the 3-eyed Fish]

Being the proposed legs caution using rates other than what's described, I am being conservative for now.

[AndyH]

I propose that you get some legs and climb to dry land.

[Blinky the 3-eyed Fish]

That's what happens when you type on an I Phone. I will leave it for your amusement.

By the way, I will comply with your request in a few million years or never, depending on your belief system.

[AndyH]

Will you evolve like Chaz?

[Blinky the 3-eyed Fish]

There are no surgeons in the waterways, so no.

[Guest Spock]

If I were human, I believe my response would be, LOL, if I were human.