I am working on a benefit calculation for a plan that is frozen. A participant is retiring at age 68 (normal retirement age is 65). The plan's definition of actuarial equivalence is pre-ret mortality- none, post-ret mortality - 84 UP, pre- and post-ret interest is 6%. Which method should be used to calculate the actuarial adjusment for late retirement?

1. (a65/a68)*(1.06)^3

2. N65/N68

I guess it comes down to how to interpet the definition of post-retirement actuarial equivalence. Does the post-retirement assumptions apply to post normal retirement age or the period following actual retirement from employment?

If the participant died before starting the benefit payment, what happens?
Is the benefit gone/forfeited, either wholly or in part?

If no forfeiture on death, and benefit is essentially equivalent to PVAB, then method 1 is used.

Don't forget that the late retirement adjustment for 415 limits does not use 6%, although you said this
was a frozen plan, so it probably does not matter.