For a defined benefit plan, the definition of actuarial equivalence is:
Pre-retirement interest: 6%
Pre-retirement mortality: None
Post-retirement interest: 6%
Post-retirement mortality: 94 GAR, proj to 2002.

In calculating a lump sum distribution under IRC 417(e), do you use pre-retirement mortality or post-retirement only?

Has any guidance on this issue been published?

What does the document say?

And what is the death benefit?

Most of our clients' plans define the lump sum in terms of the value of the accrued benefit (which is, by definition, an amount deferred to NRA), unless the lump sum is being calculated in connection with immediate retirement (and there is then a comparison of the lump sum value of the deferred benefit and the value of the immediate benefit).

Conceptually, the pre-retirement death benefit, even if a mandated death benefit, is not part of the accrued benefit so the value of the pre-retirement death benefit would not be part of the lump sum, and discounting for pre-retirement mortality is appropriate. Of course, if the plan defines the lump-sum actuarial equivalence in a way that excludes pre-retirement mortality, you do it that way.

Most of our clients' plans do not tie the regular equivalence basis into the determination of the lump-sum equivalent, which is the sole basis for determining values for forms subject to 417(e).