Amending plan actuarial to 2%

Hi,

Thank you as always. Someone mentioned to me that he was on a conference call with an actuary that works for the PBGC. The actuary suggested, as a remedy for overfunding (since the 417 (e) rates have gone up to the 5% range and lump sums have gone down) to amend the plan's equivalence to the 2% range and this would help raise the liabilties and reduce the overfunding. 

Is this reasonable to use an interest rate that is quite low,  for the plan equivalence,  and is considerably lower than the current 417(e) rates? Can it be justified?

This could help solve many overfunded plans, and especially owner only plans (that don't mind raisingvthe liabities fir themselves). Thank you.  

Lowering AE to 2% for lump sums simply raises the "value" of the benefit.  It does not impact the maximum lump sum which is still restricted by 415 limits.  The 417(e) rates are just the statutory minimum basis.  You can always pay more if you want, as long as you don't exceed the 415 maximum.    

You could also just raise the accrued benefit for the same effect. 

Really no point to do it in an "owner only" plan as their ultimate benefit is restricted to the amount of assets in the plan.  You really only need to monitor the 415 maximum and insure the assets stay under that amount.  If the value of the assets exceed 415 maximum, lowering the AE to 2% won't help.