MAP - 21 Rates for Restricted HCE Distribution

[JAY21]

What directions are the prevailing winds blowing in with regards to using the MAP-21 interest rates for the HCE lump sum restrictions (110% funded test). I attended the ASPPA conference in LA in January and it was mentioned that "some" practioners felt it may not be unreasonable to use these rates. I know we have no guidance but what are the opinions on how aggressive this would be to use them for this purpose ? A. Go directly to Jail. B. Go to Jail but only after a good meal. C. Probably no prison time just probation D. No harm no foul. E. Other - name it ________

In all seriousness I would appreciate some opinions as I have a client who might be considering the pros and cons of this "potential" option.

[chc93]

I read somewhere that this could be a "double-edged sword". First, it's a plan administrator decision. Use MAP-21, and the HCE can get paid, but the plan probably gets more underfunded. Don't use MAP-21, HCE is restricted, HCE complains, and the plan could be subject go DOL investigation. Do I have it right?

[Andy the Actuary]

Here's some language from a Plan for which I am actuary:

"After payment to an Employee described in Subsection 16.3(B)(iii) below [an HCE] of all Benefits, the value, including
contributions made before the distribution date, of the Plan assets, determined as of the first day of the Plan Year, equals or exceeds one hundred ten percent (110%) of the value of the funding target (as defined in Section 430(d)(i) of the Code) for the Plan Year"

The FT is determined using the MAP-21 rates. We follow the Plan.

Not sure you get the same answer if the Plan is more loose in its definition of how the 110% ratio is determined.