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Old 02-15-2018, 12:35 PM
mdMoose mdMoose is offline
Join Date: May 2009
Posts: 10
Default Question regarding MVAR's

I was hoping someone could explain how the Most Valuable Allocation Rate is developed when cross testing a cash balance plan.

For the Normal Allocation Rate, I projected the cash balance to retirement age using the interest crediting rate of 2.80% (30-yr treasury rate) and then converted to a life annuity using the Planís Actuarial Equivalence (also 2.80% and the 2017 applicable mortality table (post-retirement only). I then converted this benefit accrual to a lump sum using the standard interest and mortality table (8.50% and UP1984) and then discount it to their current age at 8.50%. This amount is divided by testing compensation to determine the Normal Equivalent Allocation Rate.

Now because this plan pays immediate lumps sums, I am getting conflicting directions on how the most valuable equivalent allocation rate should be determined.

Any help would be appreciated.
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Old 02-27-2018, 06:55 PM
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Rick_G Rick_G is offline
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I answered this at the EA exam subforum:
Rick Groszkiewicz

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