Actuarial Increase starts when?

[rcline46]

Ok, my brain is drawing a blank. Plan was frozen in 1990, person attained NRA (age 62) in 2003 and is still working.

To do the AE increase, do I start at age 62 or do I start at age 65?

Same question if we do a suspension of benefits.

Thank you from the brain frozen.

[FAPInJax]

Generally, AE increases start at the NRA. They are meant to compensate for not beginning annuity payments.

A benefit suspension notice tells the participant that they will NOT be getting Ae increases but will continue to get the formula benefits (in this case the frozen benefit). However, the benefit suspension ceases at age 70 1/2 and AE increases commence at that point.

[AndyH]

To be specific, 4/1 following 70 1/2 is the requirement I believe in the SOB scenario subject to the document of course.

[My 2 cents]

Ok, my brain is drawing a blank. Plan was frozen in 1990, person attained NRA (age 62) in 2003 and is still working.

To do the AE increase, do I start at age 62 or do I start at age 65?

Same question if we do a suspension of benefits.

Thank you from the brain frozen.

If the plan's NRA is age 62, age 65 is of no significance. If you are not doing suspension notices, the actuarial increase commences immediately upon attainment of NRA. If you are doing suspension notices, the suspension notice must be issued in the month in which the person attains NRA.

Normally, you have to compare the actuarially increased benefit each year to what you would get based on continued accruals (with the larger amount establishing the amount that will have to be actuarially increased for the following year's comparison), but that comparison is moot if the plan was frozen before the person reached NRA.

[rcline46]

Thanks all. The benefit went from 1879 to 5031, which seems reasonable to me considered the AE rate was 5.5%.

[My 2 cents]

Thanks all. The benefit went from 1879 to 5031, which seems reasonable to me considered the AE rate was 5.5%.

Is that monthly or annual? Don't forget to watch out for the IRC Section 415 100% of average pay limitation!

[rcline46]

That is monthly, his pay muchly exceed the $200,000 level so 415 is not an issue.