I question the calculation of an Employer early ret benefit for an individual.

Facts:

Gross AB = $ 1,000

ERF age 55 = 0.75

net early ret payable = 500

Arguement:

EE AB determined with projection of account to age 65 = 200

Net AB = 1000 - 200 = 800

Net early ret ben = 800 * 0.75 = 600

Result:

Allege that the net early ben is too low.

Plan apparently computed offset based on an immediate annuity using accum cont at time of benefit payment.

Any thoughts, observations?

gary

There is only one way to calculate the minimum amount. That results in $600. The plan can do other things (like the immediate annuity calculation) if it produces more, but if not, it is still overridden by the minimum mandatory calculation. The law specifies a calculation at NRA.

MGB,

your response makes total sense to me.

to clarify my understanding of the rules.

i believe you must determine the minimum as
1. computing the net accd benefit at age 65.

2. then the early ret benefit must be at least the act equiv. of this normal ret age 65 benefit. and act equiv. presumably would be the erf factors or application of the plan interest and mortality.

3. if there are both erf factors in the plan and act equiv interest and mort assumptions, then on what basis would an act equiv of age 65 be the required minimum?

my initial reaction is that if there are erf factors for early ret then they must be what is applied.

look forward to hearing vack.

thank you.