Terminated DB plan pre PPA

[Guest ICannotDiscloseMyIdentity]

DB plan terminated in March of 2008, just before the end of its 2007 plan year, PYE June 20, 2008.

Before the date of plan termination, the plan sponsor adopted an amendment that contained the PPA interest rates rules with an effective date of July 1, 2008 for the plan. The issue here being that PPA changed the 417(e) present value calculation starting with plan years that begin in 2008.

The plan went to the IRS and PBGC and after finally receiving the D letter at the end of 2009, they paid everyone out in early 2010 using the PPA interest rate rules.

The PBGC audited the plan and now wants the lump sums recalculated using the pre-PPA present value rules using 100% of the 30-year treasuries for 417(e) minimums.

The EA believes the calculations are right and the PBGC is wrong.

I'm an advisor stuck in the middle, what's going on here?

[John Feldt ERPA CPC QPA]

Did the PBGC cite the authority for their statement? If so, perhaps the EA can comment on that. It seems to me that the PBGC may prevail here.

I think the switch to GATT might have been handled similarly by the PBGC for plan terminations done about 10 years ago.

[FAPInJax]

The plan terminated PRIOR to PPA becoming effective. Therefore, lump sums are computed under the old law. The PBGC appears to be correct.

[Guest DFerrare]

PBGC is right. See PBGC Technical Update 07-3.

[david rigby]

The plan terminated PRIOR to PPA becoming effective. Therefore, lump sums are computed under the old law. The PBGC appears to be correct.

This is my understanding as well.