133 1/3 Accrual Rule

[asa23]

I am confused on this issue. Say Plan A's DB formula is Final Pay * (1% For 1st ten years, 1.25% for next 10 years, and 1.5% for next 10 years). Does this violate the rule because 1.5% / 1.0% > 133.33% or is it okay because (.01*10 + .0125*10)/20 = 1.125% and 1.5 / 1.125 = 133.33%? Thanks in advance for any answers.

[asa23]

or is it okay b/c 1.25/1.00 <1.33 and 1.5/1.25 < 1.33

[slam]

It's not okay because 1.5%/1.0% > 133%.

[albert]

I think that the Plan fails - see 411(b)-1(b)(2); example 2. There the plan formula is 1% for 1st five years, 1.33% of the next 5 years and 1 7/9 % thereafter. The Plan fails since 1 7/9>1%. In other words, the rate of accrual in any future plan year cannot exceed 133% of any previous plan year.

[phila]

[phila]

Sorry for empty message.
Please do not read Actex too much - it has so many errors so that it looks more of an amateur production. Had I paid for this, I would have requested a refund immediately.

[Smurf]

Sometimes, Phila, I feel empty, too. But most of the time I just feel blue.

[Sandman]

No, no the Actex is a great value for EA-2B. After identifying all of the errors and mistakes (my personal favorite is the problems that are listed twice, especially with different solutions) you will have learned quite a bit.

Seriously, the Actex manual is pretty bad. I think you are better off getting materials from one of the people who does seminars and using those materials. The problems that are done correctly in the Actex manual are out of date or too easy anyway.