Lump Sum factor for participants at 415 limit

[drakecohen]

Would 415(b)(2)(E)(ii) apply to adjusting all optional forms of benefit including lump sums or does it not apply to lump sums? I am getting conflicting opinions.

Here is the wording (also attached):

(ii) For purposes of adjusting any benefit under subparagraph (B) for any form of benefit subject to section 417(e)(3), the interest rate assumption shall not be less than the greatest of -

(I) 5.5 percent

(II) the rate that provides a benefit of not more than 105 percent of the benefit

that would be provided if the applicable interest rate (as defined in section

417(e)(3)) were the interest rate assumption, or

(III) the rate specified under the plan.

Example:

High 3-year average salary/annual benefit: $100,000

Participant age: 70

Plan interest rate: 5%

AMT15 mortality table

(i) 5.5% factor - 10.2

(II) 417(e)(3)/1.05 = 11.4

(III) plan 5%: 10.5

Would the maximum lump sum payable be $1,020,000 = 10.2 x $100,000

or does this section not apply to lump sums?

Related question: any limits on the mortality table that can be used? For example, instead of AMT15 can GAR94 set back 30 years be used for (i) and (iii) above?

415b.pdf

[david rigby]

Have you asked your actuary this question?

By the way, what is "AMT15"?

[Calavera]

i) and ii) should use Applicable Mortality (that is what AMT probably stands for)

iii) should use plan's mortality

So if maturity value of 10.2 correspond to the applicable mortality, 415 lump sum is $1,020,000