Late Late Retiree

[abanky]

The late retirement definition of the plan is basically at the participants request he may continue working, but shall start receiving payments as though he had actually retired on the normal retirement date. At the close of each plan year prior to the participant's actual retirement dated, such participant shall be entitled to a monthly retirement benefit equal to the greater of (1) the participants monthly retirement benefit as the close of the prior plan year, or (2) the participants ab determined at the close of the plan year, offset by the actuarial value of the total benefits distributions made by the close of the plan year.

pretty normal stuff.

well, the participant didn't actually start taking payments until he was 69 1/2. So the ab was actuarially increased to that point, instead of paying him past payments with interest.

My question is this for his 1/1/2011 ab, do I calculate it like this... the greater of 1) his actuarially increased benefit at 1/1/2010, or 2) his actuarially increased benefit at 1/1/2010 + his 2010 accrual - the actuarial value of his distributions.

Thank you,

Andrew

[david rigby]

Yes, you follow the document. Doesn't the doc already include an offset for the AE of payments received? Might be some generic language in one of those sections you rarely read.

Assuming there is an offset, don't forget that (in most cases) the extra year of accrual is less valuable than the 12 monthly benefits recieved, so the net benefit does not change.

[SoCalActuary]

Yes, you follow the document. Doesn't the doc already include an offset for the AE of payments received? Might be some generic language in one of those sections you rarely read.

Assuming there is an offset, don't forget that (in most cases) the extra year of accrual is less valuable than the 12 monthly benefits recieved, so the net benefit does not change.

This is generally true when the participant has more than 10-12 years of service, but it must be checked in any event. for late retirees with shorter service, the new accruals are often the most valuable.