Pension plan receives approval for new retirement-rate assumptions
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This page covers one taxpayer's ruling from 2016, which can't be cited as precedent. Ezel answers your situation under the current Code and IRS guidance, with citations.
Plain-English summary
A single-employer defined benefit pension plan requested approval to change its retirement-rate assumptions for the plan year beginning January 1, 2015. The IRS approved separate age-based assumptions for management employees with less than 25 years of service, management employees with at least 25 years, and other non-union employees. The ruling addressed only the acceptability of the new assumptions and any necessary transition method. It did not approve the calculations or determine whether the plan met other Code requirements.
Ruling snapshot
- Question: May the pension plan use the proposed retirement-rate assumptions for the 2015 plan year?
- Outcome: approved
- Key authorities: IRC § 430(h)(5); ERISA § 303(h)(5)
Full text (IRS public release)
Significant Index No. 0430.00-00
DEPARTMENT OF THE TREASURY 201652031
INTERNAL REVENUE SERVICE
WASHINGTON, D.C. 20224
TAX EXEMPT AND
GOVERNMENT ENTITIES OCT 19 2016
DIVISION
SE:T:EP:RA:A2
Re:
(EIN: - , Plan No. )
Dear
This letter constitutes notice that approval has been granted for the change in
retirement rate assumptions as described below. The ruling applies for the plan year
beginning January 1, 2015. This ruling is made in accordance with section 430(h)(5) of
the Internal Revenue Code (Code) and section 303(h)(5) of the Employee Retirement
Income Security Act of 1974.
In issuing this ruling, we have considered only the acceptability of the new assumptions
and, as necessary, the method by which the transition is to be made between the prior
and the new assumptions. Accordingly, we are not expressing any opinion as to the
accuracy or acceptability of any calculation or other material submitted with your
request. Please note that this letter addresses only specific issues arising under
section 430 of the Code and the approval granted herein should not be read to imply
that the Plan as it stands satisfies the requirements of other sections of the Code.
The retirement rates that have been approved are as follows:
FT Management
Age Less than 25 years 25 or more years
55 5.00% 20.00%
56 5.00% 30.00%
57 5.00% 15.00%
58 5.00% 15.00%
59 5.00% 10.00%
60 5.00% 10.00%
61 5.00% 10.00%
62 10.00% 15.00%
63 10.00% 15.00%
64 10.00% 15.00%
65 20.00% 25.00%
201652031
FT Management - continued
Age Less than 25 years 25 or more years
66 30.00% 25.00%
67 50.00% 100.00%
68 50.00% 100.00%
69 100.00% 100.00%
70 100.00% 100.00%
1/1/2015
Other Non-Union
Age Rates
55 5%
56 5%
57 5%
58 5%
59 5%
60 5%
61 5%
62 10%
63 10%
64 10%
65 20%
66 30%
67 50%
68 50%
69 100%
70 100%
When filing Form 5500 for the plan year beginning, please indicate on line 24 of the
Schedule SB by checking the “Yes” box that a change in non-prescribed assumptions
has been made for the current year. You should also include a copy of this letter as an
attachment to the Schedule SB labeled: “Schedule SB, line 24 — Change in Non-
Prescribed Actuarial Assumptions.”
If you have any questions regarding this matter, please contact
(ID# ) at ( ).
Sincerely yours,
David M. Ziegler, Manager
Employee Plans Actuarial Group 2
cc:
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