Insurance related 74-307/100X

Hi

Did not have to deal with one these in years.

A few situations cannot determine if calculations right/wrong for incidental maximums. Insurance is whole life so would apply 66.66% for 74-307

Plan NRA is 62

Participant was age 35 on 1/1/2021 - effective date of the plan. Total 27 YOP to NRA

Participant got insurance effective 1/1/2023 at age 37. Total 25 YOP to NRA

Participant average compensation is 20k/month - 415 lump sum at NRA 3M (made up)

Benefit formula is 75% of average compensation i.e. projected benefit at NRA is 15k/month - PVAB at NRA based on plan AE assumption 2M (made up)

1. To determine 100X, one should use formula benefit at 15k/month so face amount maximum is 1.5M, correct?

2. To determine ILP theoretical contribution under 74-304, law requires participation years. The LRM language (where document reflects the same) is "using the individual level premium funding method from the age at which participation commenced to NRA".

3. Based on literal reading of the law, for 74-307, I need to calculate starting from age 35 i.e. 27 YOP, correct?

4. For 74-307, the lump sum I have to use is the 2M figure (not the 415 figure), correct?

Thank you

Hi Jakyasar,

That is my understanding of how the calculation works.  Attached is a little spreadsheet that I use when I am forced to calculate a premium based on 74-307.  Definitely not a fan of insurance in a qualified plan. 

Rev Ruling 74-307.xlsx

Thank you for your s/h which is exactly what I have.

You and me both not fans of insurance in pension plans.