non-PBGC interest rate in plan - must give greater of PBGC rate or non

[EGB]

DB plan - originally effective 1970 - collectively bargained - plan contained a non-PBGC rate when GATT was effective (Dec. 8 1994). It appears to me that the options for such a plan at that time were are as follows: (1) Implement a PBGC rate on December 8, 1994 to avoid using GATT immediatley and implement GATT within the remedial amendment period; (2) keep the non-PBGC rate and give greater of GATT (or PBGC through the remedial amendment period) and non-PBGC rate from Dec. 8, 1994 forward. That is, if a plan contained a non-PBGC rate at the time GATT was implemented, it either had to immediately change to a PBGC rate or give the greater of GATT (or PBGC through the remedial amendment period) or the non-PBGC rate. Is this correct? If so, are there any exceptions for a collectively-bargained plan that would allow it to keep a non-PBGC rate through the remedial amendment period and then move to GATT? Any help would be appreciated.

[Guest]

I not sure I understand the relevence of your question. GATT / PBGC are only minimums! You can use any rate which provides a lump sum at least as great as that which the GATT / PBGC rate would produce (ignoring 415 implications). No one is forcing you to change to GATT rates for all lump sum calc, it's just a lowering of the minimums to a level that doesn't have the redudancy of the PBGC rates.

If your Plan contains a "non-PBGC" or "non-GATT" rate, I think your stuck with it, at least as it applies to the benefit which had accrued at the time you took it out, otherwise you violate IRC 411(d)(6). I don't think that it matters when you put the "non-PBGC" rate in, if it's in the Plan, you have to live with it.

Also, I know of no excemption for collectively bargained plans.

[Gary]

I agree with what Keith said. Even prior to GATT you were still required to use the PBGC rates as a minimum (per 417(e)). Once Gatt rates are required then they are the minimum requirement, instead of the PBGC, unless collectively bargained plans have some different rules. And the plan non-PBGC rates are required to be preserved for all accrued benefits up to the time that the plan is amended to remove such rate.