Lump Sums Under Contributory DB Plan

[Guest Don N]

I'm looking for some guidance on the calculations involved to determine the lump sum value due a participant in a frozen contributory DB plan that is finally terminating & paying out next month ( using the Feb.2000 30-year Treasury Rate & 50/50 83GAM) ; the employee is withdrawing (i.e. electing lump sum) their entire account including the EE portion; here are the facts: employee terminates employment in '92 with a fully vested accrued benefit (AB) -life annuity normal form-and a mandatory contribution account balance of (EEC); the lump sum basis was PBGC until last year when GATT was adopted;in order to determine the accrued benefit due to EE contributions, do I first (1) accumulate EEC from '92 to today using 120% AFR and from today to NRD at 30-year Treasury or (2)accumulate EEC from '92 to last year at PBGC and then use 30-year Treasury to NRD ;and then convert the accumulated amount at NRD to an annuity using GATT assumptions ?? ; the employer portion of the accrued benefit at NRD would then seem to be AB minus the annuitized EEC account; I would then convert this employer portion to a lump sum using GATT again; my questions : which of the accumulations noted above are correct,i.e. (1) or (2) ? would a current SPD or the plan document give guidance? what would be the lump sum amount based on the EE portion of the benefit that is due to the employee at plan termination ? has the IRS provided more recent guidance since Rev. Ruling 89-60 ?

[Guest]

You need to look at the proposed regulations that were issued under section 411© two or three years ago. They will walk you through the calculation in a post-GATT world.