I am not a DB number cruncher.... but I want to understand how it all works... the math. Can anyone reccomend a publication.... provide an Excel SS... anything that will help me calculate and understand a retirment benefit for a participant in a DB plan?

I ask because I have been asked questions and I want to be able to answer.

Thanks!

Here is one starter publication, if you can get by the BS and bureaucratic rhetoric.

http://pbgc.gov/publications/defined_benefit_pens.pdf

Thanks Andy... but I want to be more dangerous... I am looking for actual math and formulas. For instance...

A participant in a 412i plan funded with annuities only (and funding for the max) has "A" years of service and earns "B" comp with an account balance at 65 of "C". If the participant takes the distribution as an annuity my understanding is he is all set, the annuity pays him his monthly payment... but if he wants to take the $$ and run... how do you calc the lump sum?

Have I supplied enough info?

Am I asking to be too dangerous?

Well a 412(i) plan is not your typical DB plan and I am proud to say that I have very limited knowledge of them. But what I do suspect is there is not only math involved in your question but also profit (for the insurance company and agent). I suspect that what someone can "run away with" will be a function of what that particular contract allows for.

Someone else can possibly give you some more help but again I don't look at this as a mathematical question at all.

Thank you for your help... I guess what I am looking for is a course on "how to administer a 412i plan" Where does someone find out how to administer 412i plans? I know that they are $$ makers for insurance companies.. and the ins company has staff or software... I have been confronted as a TPA to administer a 412i plan... I want to understand how it is done.... I will continue to search and ask quesitons.

"I have been confronted as a TPA to administer a 412i plan", like, with a gun? Generally when "confronted" I either run or fight. I guess I might suggest you run!

I think you will find that most of the "math" involved in a 412i plan is considered proprietary by the insurance company doing the selling. In general, they don't want you to know, because if you did, you would never buy it.

DB funding is fairly simple, first determine how much you need at retirement. This is based on two primary assumptions. First, how much will my money earn and second, how long will I live. There are many mortality tables to help with this. Secondly, how many years will I work until I retire.

Let’s say you decided you need 10,000 per month for life commencing at age 65. Using assume 5% interest and a 94 GAR mortality Table I find that I need approximately $142 for every dollar of monthly annuity. Therefore, I need $1,420,000 at age 65.

If the person were currently age 45, they would need to contribute $43,000 every year for the next 20. If their investments do better than 5%, they will put in less, if they do worse, they put in more.

A 412i is loaded with insurance and therefore there is an added cost for the coverage. I would recommend you review some of the past messages on this board for some 412i commentary

There is a very good 412(i) article in the Sep-Oct 2003 ASPA Journal. It discusses just about everything you should be aware of before you are "confronted" to do administration.

I'm sorry, I still get a kick out of that.... I just picture some big ethnic type standing over a little squirrelly guy with a pocket protector. The big guy has the little guys calculator batteries in his hand and says "Yuz gots ta value dis benefit or yuz be sleep'n wid da fishes"