plan termination

[Gary]

Say a small plan (two or three particiapnts) is terminating 12/31/2010.

The reality is that all active participants are going to receive an immediate lump sum equal to PVAB.

It seems the valuation should have an imediate decrement and turnover is 100% for that year and the assumed ret age (line 22 of SB) is essentially Not applicable due to plan termination.

How are others viewing this? Still using ARA of 62 (NRA in plan) for the SB? Other?

thanks

[david rigby]

Does it matter?

[Gary]

I believe it does make a difference.

For example say the plan act equiv is 5%.

With immediate decrement the PVAB is the greater of the lump sum using plan rate (immediately) or funding segment rates.

With deferred decrement for say 20 years (age 42 deferred to age 62) then during the deferral period it uses the segment rates (actually 3rd segment rate) and at retirement age the plan rates can kick in. This results in a lower PVAB if 3rd segment rate is greater than 5%.

Of course all calcualtions are subject to 415.

thanks