415 dollar limit post 65

The 2007 415 regs state  the 415$ limit post 65 is the lessor of the age 62-65 $limit increased by the lessor  of the statutory factors or the ratio of the (benefit at the asd)/(benefit at age 65)* 62-65$ limit. the "benefit" used is to be exclusive of post 65 accruals. Suppose someone enters the Plan at 65. then this second ratio at any asd will be 0/0. If this ratio is 1 then there is no adjustment to the $ limit post age 65 since 1 is less than the statutory increase. If it is infinite(/0) then we use the statutory(5%&applicable qx)increase since it is clearly the lessor. Alternatively,  is the reg just poorly written since in all thereg  examples the participant  had an accrual at 65; so just use the lessor of the plan's ae and the statutory basis which is what seems to make sense and what everyone has espoused for years? Note the 10 yr reduction would of course apply thru 74 and am not considering here forms other than a straight  life annuity.

Sorry, don't have time to deal with this, except:

1. 0/0 is not infinite.  It is "undefined". 
2. The only thing that might be on point in the Gray Book (and I'm not sure it helps you) is Q&A 2014-33:

QUESTION 2014-33

Section 415: Actuarial Increase for Participant Hired after Age 65

A plan provides for actuarial increases for participants who work past age 65 (plan’s NRD). Consider a participant hired at age 66 on January 1, who retires at age 71 on January 1 five years later. How is the actuarial increase in the §415(b) limit determined for this participant?

a) Actuarially adjust the §415(b) limit from age 67 to age 71, using the lesser of the statutory assumptions of §415(b)(2)(E) or the actuarial equivalent factors under the plan for determining post NRD increases. The actuarial increases apply after a benefit is earned during the first year of employment (i.e., from age 66 to age 67).

b) Actuarially adjust the §415(b) limit from age 66 to age 71, using the lesser of the statutory assumptions of §415(b)(2)(E) or the actuarial equivalent factors under the plan for determining post NRD increases. The actuarial increases apply from date of hire.

c) Actuarially adjust the §415(b) limit from age 66 to age 71. Since no plan actuarial increase factor applies before age 67, the §415(b) limit is adjusted from age 66 to age 67 using the statutory assumptions of §415(b)(2)(E), and then from age 67 to age 71 using the lesser of the statutory assumptions of §415(b)(2)(E) or the actuarial equivalent factors under the plan for determining post NRD increases.

d) Actuarially adjust the §415(b) limit from age 65 to age 71, using the lesser of the statutory assumptions of §415(b)(2)(E) or the actuarial equivalent factors under the plan for determining post NRD increases. The actuarial increases apply from age 65.

e) Actuarially adjust the §415(b) limit from age 65 to age 71. Since no plan actuarial increase factor applies before age 67, the §415(b) limit is adjusted from age 65 to age 67 using the statutory assumptions of §415(b)(2)(E), and then from age 67 to age 71 using the lesser of the statutory assumptions of §415(b)(2)(E) or the actuarial equivalent factors under the plan.

RESPONSE

Response (d) is correct. Regulation §1.415(b)-1(e)(2)(i) calls for the use of plan adjustments from age 65 to current age. While literally the regulation calls for a zero/zero ratio in this situation because there is no accrual at age 65, the intent was to isolate the plan’s basis for increases on the assumption that the benefit at age 65 is nonzero.

Copyright © 2014, Enrolled Actuaries Meeting

Thanks for the 2014 grey book post..I had guessed the correct answer although I had not nearly a creative enough of a mind to come up with 4 possible other ways to do it. The response item at the end of the answer is the issue in a nutshell. Actually, I had read the 2104 grey book a while back but clearly this response did not stay on my personal hard drive.