Defined Benefit Administrator

[Guest DBDude]

Without getting into a technical discussion about commutation factors and the way the 3 segment rates parce the lump sum, I ask the question about a person Age 40 so that the calculation is a normal lump sum calculation like.

Accrued Ben x v^25 x a65

Question: For a participant who is not impacted by 415(b), is the lump sum the greater of the Actuarial Equivalence defined in a plan document and the lump sum based on the new mortality table in 08' and the Segment 3 applicable rate i.e. 417(e)(3)?

Question 2: For a participant who is impacted by 415(b) is the lump sum the smaller of the Actuarial Equivalence and the Lump Sum using the segment rates [417(e)(3)]

Our plans have less than 100 participants so I thought there was a 105% of some rate to use, but is not applicable for the work I do. I wanted to know the 3rd possible calculation for my own curiousity.

Please someone advise me.

DBDude

[SoCalActuary]

I don't have the link handy, but look for Mike Preston's extensive treatment of this issue earlier this month.

[Mike Preston]

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