410(b) benefiting in a 412(e)(3)

[DMcGovern]

studying for the ASPPA DB exam and am not sure what this means & when it may occur:

the book is referring to reasons that an employee is considered as benefiting for coverage purposes if a premium in not paid for specific reasons. One of the reasons given is:

"The benefit previously accrued by the employee is greater than the benefit that would be determined under the plan if the benefit previously accrued were disregarded."

Your help is appreciated!

[SoCalActuary]

Since the 412e3 benefit is the cash value of the policy, this statement is that the cash value is larger than the normal benefit would be by following the terms of the plan. This usually occurs when the projected benefit formula is lowered, either by lower pay or by plan amendment. It may also occur if the dividends in the policy have exceeded the normal plan accumulation, such that the excess cash value covers the required premiums.

[DMcGovern]

Since the 412e3 benefit is the cash value of the policy, this statement is that the cash value is larger than the normal benefit would be by following the terms of the plan. This usually occurs when the projected benefit formula is lowered, either by lower pay or by plan amendment. It may also occur if the dividends in the policy have exceeded the normal plan accumulation, such that the excess cash value covers the required premiums.

Ahh....now it makes sense. Thank you so much!