nancy Posted March 1, 2013 Posted March 1, 2013 I have a plan that is terminating that has never paid lump sums. They have now decided to offer lump sums to all participants including the retirees. I'm finding that when I caluclate the lump sums on retirees over the age of 80 (and there are several) that the present value of the plan benefit at 417(e) is greater than the 415 100% of pay limit at 5.5%. When I discovered this on one retiree that I actually had enough data to calculate, I was quite surprised. Of course, this was a takeover plan and many of these participants retired before we took over the plan. I'm now trying to find enough data to verify I'm not over paying anyone. This seems like an unintended consequence, those affected by 415 are not the HCEs, but older retirees. Any thoughts?
Andy the Actuary Posted March 1, 2013 Posted March 1, 2013 Does IRS Reg. 1.415-5(b) help? The material provided and the opinions expressed in this post are for general informational purposes only and should not be used or relied upon as the basis for any action or inaction. You should obtain appropriate tax, legal, or other professional advice.
nancy Posted March 1, 2013 Author Posted March 1, 2013 That may help. Thanks for the reference. Looks like the plan needs to have the language, I'll need to talk to the attorney.
david rigby Posted March 2, 2013 Posted March 2, 2013 For some other discussion, use the Search feature with the phrase "retirees don't like change" I'm a retirement actuary. Nothing about my comments is intended or should be construed as investment, tax, legal or accounting advice. Occasionally, but not all the time, it might be reasonable to interpret my comments as actuarial or consulting advice.
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