415 limit after SSRA with high pay

[John Feldt ERPA CPC QPA]

Suppose the following:

Participant is age 72 on 1-1-2012 and has over 10 years of service

Participant has a consecutive 3-year comp history with each year over $500,000

New plan is established 1-1-2012 (has never had a DB plan)

415(b)(1)(B): 100% x 3-yr avg comp = $245,000

Assume:

$195,000 limit x AE increase factor = $350,000 (for this example)

What is his maximum accrued benefit for 2012 for 415 purposes?

Is it 1) the lesser of:

415(b)(1)(A)

$350,000 x 1/10

with the result limited to $245,000 or

415(b)(1)(B) $245,000 x 10/10

Or, is it 2) the lesser of

415(b)(1)(A)

$245,000 x 1/10

or

415(b)(1)(B) $245,000 x 10/10

Or something else altogether?

edited for typo

[SoCalActuary]

Choice 1

[Effen]

Agree, #1