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DaveyDo
09-24-2010, 09:36 AM
I have a participant who started collecting mandatory 70.5 payments back in 1998. This participant was highly compensated.

The prior actuary performed the calculation and it shows that he hit the 415 3 year average pay limit. It was then converted from life to 10 C&C.

I need to match the prior calculation and do further calculations to see if he should have received an increase. He kept working until 2007.

My question is what interest and mortality factors do I use to convert the 415 limit from a life annuity?

I tried the plan factors and they did not match.
navysalad
10-04-2010, 03:41 PM
I have a participant who started collecting mandatory 70.5 payments back in 1998. This participant was highly compensated.

The prior actuary performed the calculation and it shows that he hit the 415 3 year average pay limit. It was then converted from life to 10 C&C.

I need to match the prior calculation and do further calculations to see if he should have received an increase. He kept working until 2007.

My question is what interest and mortality factors do I use to convert the 415 limit from a life annuity?

I tried the plan factors and they did not match.

My recollection is that for post-SSNRA increases to the limit, you're not allowed to use an interest rate higher than 5%. If the Plan interest rate is higher than this, you might try substituting 5% and see if you match.
IMP
10-04-2010, 04:38 PM
a few things that come to mind.

1. i don't think this relates to this person specifically since i don't think he's too old to have it make an impact, but , the certain period is limited to his expected lifetime according to the uniform lifetime table in section 401(a)(9)-9.

2. are you using the same method for AIs?

3. Limit for benefits starting after 65 is the lesser of:
........The age 65 limit actuarially adjusted using mandated assumptions (417e and 5%)
........The age 65 limit actuarially adjusted using the plan’s assumptions

eta: just reread and saw it's a 10c&c...#1 above definitely does not apply to someone age 70.5 at commencement.