Funding Target

[Gary]

Say a one participant owner plan.

We assume he takes a lump sum at retirement, which for this example we'll say he is age 60 and will retire with lump sum at age 62 for valuation.

The plan act equiv for lump sum is the greater of 5% or the 417e rates.

For valuation purposes it would appear that for:

417e calculation we use the PPA funding segment rates and the applicable mortality table to determine FT.

For 5% lump sum we sould use PPA funding segment rates for deferral period from age 60 to age 62 and then 5% at time distribution commences to determine FT.

With the greater FT of 417e and 5% calculations above prevails.

Of course the lump sum is limited to 415 lump sum to give the final qualified FT.

Any other views?

In conclusion the valuation system does not handle the above matter it only does one of the calculations (i.e. with the PPA funding segment rates) subject to 415.

Thanks.