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What is the IRC 415(b) limit for maximum DB starting before age 55?

Guest JSW

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Two questions regarding adjustment of IRC 415(b)limits for age before NRA:

If someone retires at age 55, does the limit remain at $80,008 (with indexing for inflation) throughout retirement, or does the limit increase the next year (when the retiree is 56) to the $ amount for age 56, and each year thereafter, so that when the retiree is 62 the limit is $135,000?

What are the standards for determining the $ amount of the limit for ages before 55? Is a governmental DB plan free to use whatever standards its actuary provides?

[Note: I read Joe Hoho's reply to a previous question on 415(B) limits, but I did not understand his reference to GAM83, GATT and 5% interest rate.]


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No, the limit will not increase the next year for the limit at age 56. The idea is to have the benefit be actuarially reduced to reflect the longer payout period of an early retiree. Thus, it is based on the age when payments begin, not the age at each payout.

And the nontechnical version of "GAM83, GATT and 5% interest rate" is that it means that there are statutory restrictions on the mortality and interest rates which can be used for 415 purposes, even though a governmental plan may be using a different interest rate for funding, or for calculating the actuarial equivalence of different forms of benefit, or for the interest paid on employee contributions.

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The opinions of my postings are my own and do not necessarily represent my law firm's position, strategies, or opinions. The contents of my postings are offered for informational purposes only and should not be construed as legal advice. A visit to this board or an exchange of information through this board does not create an attorney-client relationship. You should consult directly with an attorney for individual advice regarding your particular situation. I am not your lawyer under any circumstances.

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