[Federal Register: December 17, 2003 (Volume 68, Number 242)]
[Rules and Regulations]
[Page 70141-70150]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr17de03-12]
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DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Parts 1 and 602
[TD 9099]
RIN 1545-BA78
Disclosure of Relative Values of Optional Forms of Benefit
AGENCY: Internal Revenue Service (IRS), Treasury.
ACTION: Final regulations.
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SUMMARY: This document contains final regulations that consolidate the
content requirements applicable to explanations of qualified joint and
survivor annuities and qualified preretirement survivor annuities
payable under certain retirement plans, and specify requirements for
disclosing the relative value of optional forms of benefit that are
payable from certain retirement plans in lieu of a qualified joint and
survivor annuity. These regulations affect plan sponsors and
administrators, and participants in and beneficiaries of, certain
retirement plans.
DATES: Effective Date: These final regulations are effective on
December 17, 2003.
Applicability Date: These final regulations are applicable to QJSA
explanations with respect to distributions with annuity starting dates
on or after October 1, 2004, and to QPSA explanations provided on or
after July 1, 2004.
FOR FURTHER INFORMATION CONTACT: John T. Ricotta at (202) 622-6060 (not
a toll-free number).
SUPPLEMENTARY INFORMATION:
Paperwork Reduction Act
The collection of information (requirement to disclose information)
contained in these final regulations has been reviewed and approved by
the Office of Management and Budget in accordance with the Paperwork
Reduction Act of 1995 (44 U.S.C. 3507(d)) under control number 1545-
0928. Responses to this collection of information are mandatory.
An agency may not conduct or sponsor, and a person is not required
to respond to, a collection of information unless it displays a valid
control number assigned by the Office of Management and Budget.
The estimated annual burden per respondent varies from .01 to .99
hours, depending on individual circumstances, with an estimated average
of .5 hours.
Comments concerning the accuracy of this burden estimate and
suggestions for reducing this burden should be sent to the Internal
Revenue Service, Attn: IRS Reports Clearance Officer, SE:W:CAR:MP:T:SP,
Washington, DC 20224, and to the Office of Management and Budget, Attn:
Desk Officer for the Department of the Treasury, Office of Information
and Regulatory Affairs, Washington, DC 20503.
Books or records relating to a collection of information must be
retained as long as their contents might become material in the
administration of any internal revenue law. Generally, tax returns and
tax return information are confidential, as required by 26 U.S.C. 6103.
Background
This document contains amendments to 26 CFR part 1 under section
417(a)(3) of the Internal Revenue Code of 1986 (Code).
A qualified retirement plan to which section 401(a)(11) applies
must pay a vested participant's retirement benefit under the plan in
the form of a qualified joint and survivor annuity (QJSA), except as
provided in section 417. Section 401(a)(11) applies to defined benefit
plans, money purchase pension plans, and certain other defined
contribution plans. A QJSA is defined in section 417(b) as an annuity
for the life of the participant with a survivor annuity for the life of
the spouse (if the participant is married) that is not less than 50
percent of (and is not greater than 100 percent of) the amount of the
annuity that is payable during the joint lives of the participant and
the spouse. Under section 417(b)(2), a QJSA for a married participant
generally must be the actuarial equivalent of the single life annuity
benefit payable for the life of the participant. However, a plan is
permitted to subsidize the QJSA for a married participant. If the plan
fully subsidizes the QJSA for a married participant so that failure to
waive the QJSA would not result in reduced payments over the life of
the participant compared to the single life annuity benefit, then the
plan need not provide an election to waive the QJSA. See section
417(a)(5).
For a married participant, the QJSA must be at least as valuable as
any other optional form of benefit payable under the plan at the same
time. See Sec. 1.401(a)-20, Q&A-16. Further, the anti-forfeiture rules
of section 411(a) prohibit a participant's benefit under a defined
benefit plan from being satisfied through payment of a form of benefit
that is actuarially less valuable than the value of the participant's
accrued benefit expressed in the form of an annual benefit commencing
at normal retirement age. These determinations must be made using
reasonable actuarial assumptions. However, see Sec. 1.417(e)-1(d) for
actuarial assumptions required for use in certain present value
calculations.
If a plan provides a subsidy for one optional form of benefit
(i.e., the payments under an optional form of benefit have an actuarial
present value that is greater than the actuarial present value of the
accrued benefit), there is no requirement to extend a similar subsidy
(or any subsidy) to every other optional form of benefit. Thus, for
example, a participant might be entitled to receive a single-sum
distribution upon early retirement that does not reflect any early
retirement subsidy in lieu of a QJSA that reflects a substantial early
retirement subsidy. As a further example, a participant might be
entitled to receive a single-sum distribution at normal retirement age
in lieu of a QJSA that is subsidized as described in section 417(a)(5).
Section 417(a) provides rules under which a participant (with
spousal consent) may waive payment of the participant's benefit in the
form of a QJSA. Section 417(a)(3) provides that a plan must provide to
each participant, within a reasonable period before the annuity
starting date (and consistent with such regulations as the Secretary
may prescribe), a written explanation of the terms and conditions of
the QJSA, the participant's right to make, and the effect of, an
election to waive the QJSA form of benefit, the rights of the
participant's spouse, and the right to revoke (and the effect of the
revocation of) an election to waive the QJSA form of benefit.
Section 205 of the Employee Retirement Income Security Act of 1974
(ERISA), Public Law 93-406 (88 Stat. 829) as subsequently amended,
provides rules that are parallel to the rules of sections 401(a)(11)
and 417 of the Internal Revenue Code. In particular, section 205(c)(3)
of ERISA provides a rule parallel to the rule of section 417(a)(3) of
the Code.
Under section 101 of Reorganization Plan No. 4 of 1978 (43 FR
47713), the Secretary of the Treasury has interpretative jurisdiction
over the ERISA provisions that are parallel to the
[[Page 70142]]
Code provisions addressed in these regulations. Therefore, these
regulations apply for purposes of section 205(c)(3) of ERISA, as well
as for section 417(a)(3) of the Code.
Regulations governing the requirements for waiver of a QJSA were
published in the Federal Register on August 19, 1988 (TD 8219; 53 FR
31837). Section 1.401(a)-20, Q&A-36, provides rules for the explanation
that must be provided under section 417(a)(3) as a prerequisite to
waiver of a QJSA. Section 1.401(a)-20, Q&A-36, requires that such a
written explanation contain a general description of the eligibility
conditions and other material features of the optional forms of benefit
and sufficient additional information to explain the relative values of
the optional forms of benefit available under the plan (e.g., the
extent to which optional forms are subsidized relative to the normal
form of benefit or the interest rates used to calculate the optional
forms). In addition, Sec. 1.401(a)-20, Q&A-36, provides that the
written explanation must comply with the requirements set forth in
Sec. 1.401(a)-11(c)(3). Section 1.401(a)-11(c)(3) was issued prior to
the enactment of section 417, and provides rules relating to written
explanations that were required prior to a participant's election of a
preretirement survivor annuity or election to waive a joint and
survivor annuity. Section 1.401(a)-11(c)(3)(i)(C) provides that such a
written explanation must contain a general explanation of the relative
financial effect of these elections on a participant's annuity.
In addition, under section 411 and Sec. 1.411(a)-11(c), so long as
a benefit is immediately distributable (within the meaning of Sec.
1.411(a)-11(c)(4)), a participant must be informed of his or her right
to defer that distribution. This requirement is independent of the
section 417 requirements addressed in these regulations.
Concerns have been expressed that, in certain cases, the
information provided to participants under section 417(a)(3) regarding
the available distribution forms does not adequately enable them to
compare those distribution forms without professional advice. In
particular, participants who are eligible for both subsidized annuity
distributions and unsubsidized single-sum distributions may be
receiving notices that do not adequately explain the value of the
subsidy that is foregone if the single-sum distribution is elected. In
such a case, merely disclosing the amount of the single-sum
distribution and the amount of annuity payments, or merely stating that
the single sum distribution does not include the subsidy that is
included in the annuity payments, may not adequately enable those
participants to make an informed comparison of the relative values of
those distribution forms, even if the interest rate used to derive the
single sum is disclosed. Furthermore, questions have been raised as to
how the relative values of optional forms of benefit are required to be
expressed under current regulations.
Accordingly, proposed regulations were published in the Federal
Register on October 7, 2002 (67 FR 62417) that would consolidate the
content requirements applicable to explanations of qualified joint and
survivor annuities and qualified preretirement survivor annuities
payable under certain retirement plans, and provide disclosure
requirements that would enable participants to compare the relative
values of the available distribution forms using more readily
understandable information.
After consideration of the comments received concerning the
proposed regulations, these final regulations adopt provisions of the
proposed regulations with certain modifications, the most significant
of which are highlighted below.
Explanation of Provisions
These regulations provide guidance regarding the required
description of the relative values of optional forms of benefit
compared to the value of the QJSA and the content of the required
disclosure of relative values. Commentators generally approved of the
increased disclosure that would result from the approach in the
proposed regulations, and these final regulations are substantially
similar to the proposed regulations.
As under the proposed regulations, the description of the relative
value of an optional form of benefit compared to the value of the QJSA
must be expressed in a manner that provides a meaningful comparison of
the relative economic values of the two forms of benefit without the
participant having to make calculations using interest or mortality
assumptions. In order to provide this comparison, the benefit under one
or both optional forms of benefit must be converted, taking into
account the time value of money and life expectancies, so that both are
expressed in the same form. While one commentator requested that the
regulations only permit comparisons to be made on the basis of present
value, the regulations do not take this approach. Instead, the final
regulations retain the examples of techniques that may be used for this
comparison that were included in the proposed regulation: expressing
the actuarial present value of the optional form of benefit as a
percentage or factor of the actuarial present value of the QJSA;
stating the amount of an annuity payable at the same time and under the
same conditions as the QJSA that is the actuarial equivalent of the
optional form of benefit; or stating the actuarial present value of
both the QJSA and the optional form of benefit. However, a specific
example has been added illustrating the use of the actuarial present
value to express relative value.
The comparisons required under the proposed regulations depended on
which form of benefit constitutes the QJSA for the participant. One
commentator noted that this would result in a different comparison for
married and unmarried participants, creating an unnecessary burden for
plan sponsors in situations where the benefit options are identical for
married and unmarried participants. Furthermore, if the plan sponsor
did not know whether a participant is married, the plan would need to
provide comparisons that covered both possibilities. In response to the
comment, the final regulations permit a plan to use a uniform basis of
comparison of relative value (i.e., either the QJSA for married
participants or the QJSA for unmarried participants) for both married
and unmarried participants, if the benefit options are the same for
married and unmarried participants. Thus, in a plan in which the
applicable QJSA form for unmarried participants is a straight life
annuity and the applicable QJSA form for married participants is a 50
percent joint and contingent annuity (and each of these forms of
distribution are available to all participants on the same terms), the
plan may choose to compare the relative value of the plan's optional
forms of benefit to the value of the straight life annuity with respect
to the required disclosure for all participants or the plan may choose
to compare the relative value of the plan's optional forms of benefit
to the value of the 50 percent joint and contingent annuity with
respect to the required disclosure for all participants.
Since disclosing the relative value of every optional form of
benefit regardless of the degree of subsidy may be too burdensome, and
may provide participants with information that appears more precise
than is warranted based on the inexact nature of the actuarial
assumptions used, the final regulations follow the proposed regulation
in providing for certain simplifications in the disclosure. Under one
simplification, two or more optional forms of benefit that have
approximately
[[Page 70143]]
the same value could be grouped for purposes of disclosing relative
value. Under the proposed regulations, two or more optional forms of
benefit were treated as having approximately the same value if those
optional forms of benefit varied in relative value in comparison to the
value of the QJSA by 5 percentage points or less when the relative
value comparison is made by expressing the actuarial present value of
each of those optional forms of benefit as a percentage of the
actuarial present value of the QJSA.
Several commentators recommended changes in this 5 percentage point
band. One commentator suggested that a band of 7.5 percentage points be
used to simplify compliance and ease the administrative burden to
plans. The commentator said that a band of 7.5 percentage points would
allow a plan to treat unsubsidized optional forms of benefit for
virtually all retiring participants as having approximately equal
value. By contrast, another commentator favored a maximum band of 3
percentage points in order for participants to receive adequate
disclosure about significant differences in value. The commentator said
that a 5 percentage point difference in value was significant enough to
be brought to the participant's attention.
These final regulations generally retain the 5 percentage point
banding rule of the proposed regulations. This rule aims to minimize
the compliance burdens for plans to the extent consistent with
providing participants with information on differences in value that
are material in light of the inexact nature of the actuarial
assumptions used.
The proposed regulations also would have allowed a plan to treat
all of its forms of benefit as approximately equal in value if the
actuarial present value of all of those forms is not less than 95
percent of the actuarial present value of the QJSA. The final
regulations permit a plan that is comparing the relative value of each
optional form to the value of the QJSA for a married participant to
treat each presently available optional form of benefit that has an
actuarial present value of at least 95 percent of the actuarial present
value of the QJSA as having approximately the same value as the QJSA.
In addition, in the case of a plan that is comparing the relative value
of each optional form to the value of the single life annuity, if all
of the optional forms of benefit presently available have actuarial
present values that are at least 95 percent, but not greater than 102.5
percent, of the actuarial present value of the presently available
single life annuity, the plan is permitted to treat all the presently
available forms of distribution as approximately equal in value.
Some commentators recommended that participants have the right to
know what actuarial assumptions were used in the plan's estimates of
relative value. The final regulations require that this information be
made available upon request if it is not provided in the notice.
Several commentators raised questions concerning whether the
methods used in disclosing relative value of a plan's optional forms of
benefit in accordance with these regulations affect the application of
the requirement at Sec. 1.401(a)-20, Q&A-16, that the QJSA for married
participants be at least as valuable as any other optional form of
benefit under the plan. While this issue is not addressed in these
final regulations, there is no requirement, or implication, that the
same actuarial assumptions used by a plan for purposes of disclosing
relative value in accordance with these regulations must be applied for
purposes of the requirement in Sec. 1.401(a)-20, Q&A-16, that the QJSA
for married participants be at least as valuable as any other optional
form of benefit under the plan.
One commentator requested that these regulations address the use of
electronic media to deliver the QJSA explanation or the QPSA
explanation. The IRS and the Treasury Department are considering the
extent to which the QJSA explanation and the QPSA explanation, as well
as other notices under the various Internal Revenue Code requirements
relating to qualified retirement plans, can be provided electronically,
taking into account the effect of the Electronic Signatures in Global
and National Commerce Act (ESIGN), Public Law 106-229, 114 Stat. 464
(2000). The IRS and the Treasury Department have invited comments on
these issues, and anticipate issuing further guidance regarding
electronic notices.
Commentators raised a number of other issues, including issues that
relate to basic QJSA rules that are not addressed in these regulations
and a request for the final regulations to include model language that
can be included in a QJSA notice. These regulations do not include
model language for several reasons, including the wide variety of
distribution alternatives found in plans (including the variety of
actuarial assumptions used to calculate optional forms of benefit), the
variations in the average participant in the plan for purposes of
understandability, as well as inclusion in the regulations of several
detailed examples showing how the information can be provided in order
to disclose relative value.
Effective Date
These final regulations are applicable to QJSA explanations with
respect to distributions with to annuity starting dates on or after
October 1, 2004, and to QPSA explanations provided on or after July 1,
2004. In the case of a retroactive annuity starting date under section
417(a)(7), when required under Sec. 1.417(e)-1(b)(3)(vi), the date of
commencement of payments based on the retroactive annuity starting date
is substituted for the annuity starting date for purposes of this
effective date.
Special Analyses
It has been determined that this Treasury decision is not a
significant regulatory action as defined in Executive Order 12866.
Therefore, a regulatory assessment is not required. It has also been
determined that section 553(b) of the Administrative Procedure Act (5
U.S.C. chapter 5) does not apply to these regulations. It is hereby
certified that the collection of information in these regulations will
not have a significant economic impact on a substantial number of small
entities. This certification is based upon the fact that qualified
retirement plans of small businesses typically commence distribution of
benefits to few, if any, plan participants in any given year and,
similarly, only offer elections to waive a QPSA to few, if any,
participants in any given year. Thus, the collection of information in
these regulations will only have a minimal economic impact on most
small entities. Therefore, an analysis under the Regulatory Flexibility
Act (5 U.S.C. chapter 6) is not required. Pursuant to section 7805(f)
of the Code, the proposed regulations preceding these regulations were
submitted to the Chief Counsel for Advocacy of the Small Business
Administration for comment on its impact on small business.
Drafting Information
The principal authors of these regulations are Linda S.F. Marshall
and John T. Ricotta of the Office of the Division Counsel/Associate
Chief Counsel (Tax Exempt and Government Entities). However, other
personnel from the IRS and Treasury participated in their development.
List of Subjects in 26 CFR Part 1
Income taxes, Reporting and recordkeeping requirements.
[[Page 70144]]
Adoption of Amendments to the Regulations
0
Accordingly, 26 CFR part 1 is amended as follows:
PART 1--INCOME TAX; TAXABLE YEARS BEGINNING AFTER DECEMBER 31, 1986
0
Paragraph 1. The authority citation for part 1 continues to read in
part as follows:
Authority: 26 U.S.C. 7805 * * *
0
Par. 2. Paragraph (c)(3) of Sec. 1.401(a)-11 is revised to read as
follows:
Sec. 1.401(a)-11 Qualified joint and survivor annuities.
* * * * *
(c) * * *
(3) Information to be provided by plan. For rules regarding the
information required to be provided with respect to the election to
waive a QJSA or a QPSA, see Sec. 1.417(a)(3)-1.
* * * * *
0
Par. 3. A-36 of Sec. 1.401(a)-20 is revised to read as follows:
Sec. 1.401(a)-20 Requirements of qualified joint and survivor annuity
and qualified preretirement survivor annuity.
* * * * *
A-36. For rules regarding the explanation of QPSAs and QJSAs
required under section 417(a)(3), see Sec. 1.417(a)(3)-1.
* * * * *
0
Par. 4. Section 1.417(a)(3)-1 is added to read as follows:
Sec. 1.417(a)(3)-1 Required explanation of qualified joint and
survivor annuity and qualified preretirement survivor annuity.
(a) Written explanation requirement--(1) General rule. A plan meets
the survivor annuity requirements of section 401(a)(11) only if the
plan meets the requirements of section 417(a)(3) and this section
regarding the written explanation required to be provided a participant
with respect to a QJSA or a QPSA. A written explanation required to be
provided to a participant with respect to either a QJSA or a QPSA under
section 417(a)(3) and this section is referred to in this section as a
section 417(a)(3) explanation. See Sec. 1.401(a)-20, Q&A-37, for
exceptions to the written explanation requirement in the case of a
fully subsidized QPSA or QJSA, and Sec. 1.401(a)-20, Q&A-38, for the
definition of a fully subsidized QPSA or QJSA.
(2) Time for providing section 417(a)(3) explanation--(i) QJSA
explanation. See Sec. 1.417(e)-1(b)(3)(ii) for rules governing the
timing of the QJSA explanation.
(ii) QPSA explanation. See Sec. 1.401(a)-20, Q&A-35, for rules
governing the timing of the QPSA explanation.
(3) Required method for providing section 417(a)(3) explanation. A
section 417(a)(3) explanation must be a written explanation. First
class mail to the last known address of the participant is an
acceptable delivery method for a section 417(a)(3) explanation.
Likewise, hand delivery is acceptable. However, the posting of the
explanation is not considered provision of the section 417(a)(3)
explanation.
(4) Understandability. A section 417(a)(3) explanation must be
written in a manner calculated to be understood by the average
participant.
(b) Required content of section 417(a)(3) explanation--(1) Content
of QPSA explanation. The QPSA explanation must contain a general
description of the QPSA, the circumstances under which it will be paid
if elected, the availability of the election of the QPSA, and, except
as provided in paragraph (d)(3) of this section, a description of the
financial effect of the election of the QPSA on the participant's
benefits (i.e., an estimate of the reduction to the participant's
estimated normal retirement benefit that would result from an election
of the QPSA).
(2) Content of QJSA explanation. The QJSA explanation must satisfy
either paragraph (c) or paragraph (d) of this section. Under paragraph
(c) of this section, the QJSA explanation must contain certain specific
information relating to the benefits available under the plan to the
particular participant. Alternatively, under paragraph (d) of this
section, the QJSA explanation can contain generally applicable
information in lieu of specific participant information, provided that
the participant has the right to request additional information
regarding the participant's benefits under the plan.
(c) Participant-specific information required to be provided--(1)
In general. A QJSA explanation satisfies this paragraph (c) if it
provides the following information with respect to each of the optional
forms of benefit presently available to the participant (i.e., optional
forms of benefit with an annuity starting date for which the QJSA
explanation applies)--
(i) A description of the optional form of benefit;
(ii) A description of the eligibility conditions for the optional
form of benefit;
(iii) A description of the financial effect of electing the
optional form of benefit (i.e., the amount payable under the form of
benefit to the participant during the participant's lifetime and the
amount payable after the death of the participant);
(iv) In the case of a defined benefit plan, a description of the
relative value of the optional form of benefit compared to the value of
the QJSA, in the manner described in paragraph (c)(2) of this section;
and
(v) A description of any other material features of the optional
form of benefit.
(2) Requirement for numerical comparison of relative values--(i) In
general. The description of the relative value of an optional form of
benefit compared to the value of the QJSA under paragraph (c)(1)(iv) of
this section must be expressed to the participant in a manner that
provides a meaningful comparison of the relative economic values of the
two forms of benefit without the participant having to make
calculations using interest or mortality assumptions. Thus, in
performing the calculations necessary to make this comparison, the
benefits under one or both optional forms of benefit must be converted,
taking into account the time value of money and life expectancies, so
that the values of both optional forms of benefit are expressed in the
same form. For example, such a comparison may be expressed to the
participant using any of the following techniques--
(A) Expressing the actuarial present value of the optional form of
benefit as a percentage or factor of the actuarial present value of the
QJSA;
(B) Stating the amount of the annuity that is the actuarial
equivalent of the optional form of benefit and that is payable at the
same time and under the same conditions as the QJSA; or
(C) Stating the actuarial present value of both the optional form
of benefit and the QJSA.
(ii) Use of one form for both married and unmarried individuals--
(A) In general. Under the rules of this paragraph (c)(2)(ii), in lieu
of providing different QJSA explanations for married and unmarried
individuals, the plan may provide a QJSA explanation to an individual
that does not vary based on the participant's marital status. Except as
specifically provided in paragraph (c)(3)(iii) of this section, any
reference in this section to comparing the relative value of an
optional form of benefit to the value of the QJSA may be satisfied
using the substitution permitted under paragraph (c)(2)(ii)(B) or (C)
of this section.
(B) Substitution of single life annuity for married individual. For
a married participant, in lieu of comparing the value of each optional
form of benefit presently available to the participant to the value of
the QJSA, the plan can
[[Page 70145]]
compare the value of each optional form of benefit (including the QJSA)
to the value of a QJSA for an unmarried participant (i.e., a single
life annuity), but only if that same single life annuity is available
to that married participant.
(C) Substitution of joint and survivor annuity for unmarried
individual. For an unmarried participant, in lieu of comparing the
value of each optional form of benefit presently available to the
participant to the value of the QJSA for that individual (which is a
single life annuity), the plan can compare the value of each optional
form of benefit (including the single life annuity) to the value of the
joint and survivor annuity that is the QJSA for a married participant,
but only if that same joint and survivor annuity is available to that
unmarried participant.
(iii) Simplified presentations permitted--(A) Grouping of certain
optional forms. Two or more optional forms of benefit that have
approximately the same value may be grouped for purposes of a required
numerical comparison described in this paragraph (c)(2). For this
purpose, two or more optional forms of benefit have approximately the
same value if none of those optional forms of benefit vary in relative
value in comparison to the value of the QJSA by more than 5 percentage
points when the relative value comparison is made by expressing the
actuarial present value of each of those optional forms of benefit as a
percentage of the actuarial present value of the QJSA. For such a group
of optional forms of benefit, the requirement relating to disclosing
the relative value of each optional form of benefit compared to the
value of the QJSA can be satisfied by disclosing the relative value of
any one of the optional forms in the group compared to the value of the
QJSA, and disclosing that the other optional forms of benefit in the
group are of approximately the same value. If a single-sum distribution
is included in such a group of optional forms of benefit, the single-
sum distribution must be the distribution form that is used for
purposes of this comparison.
(B) Representative relative value for grouped optional forms. If,
in accordance with paragraph (c)(2)(iii)(A) of this section, two or
more optional forms of benefits are grouped, the relative values for
all of the optional forms of benefit in the group can be stated using a
representative relative value as the approximate relative value for the
entire group. For this purpose, a representative relative value is any
relative value that is not less than the relative value of the member
of the group of optional forms of benefit with the lowest relative
value and is not greater than the relative value of the member of that
group with the highest relative value when measured on a consistent
basis. For example, if three grouped optional forms have relative
values of 87.5 percent, 89 percent, and 91 percent of the value of the
QJSA, all three optional forms can be treated as having a relative
value of approximately 90 percent of the value of the QJSA. As required
under paragraph (c)(2)(iii)(A) of this section, if a single-sum
distribution is included in the group of optional forms of benefit, the
90 percent relative factor of the value of the QJSA must be disclosed
as the approximate relative value of the single sum, and the other
forms can be described as having the same approximate value as the
single sum.
(C) Special rules. If the plan is comparing the value of each
optional form to the value of the QJSA for a married participant, this
paragraph (c)(2)(iii)(C) provides a grouping rule that is in addition
to the grouping rules of paragraph (c)(2)(iii)(A) of this section.
Under this special rule, the relative value of all optional forms of
benefit that have an actuarial present value that is at least 95
percent of the actuarial present value of the QJSA for a married
participant is permitted to be described by stating that those optional
forms of benefit are approximately equal in value to the QJSA, or that
all of those forms of benefit and the QJSA are approximately equal in
value. In addition, if a plan is comparing the value of optional forms
of benefit to the value of the single life annuity and all optional
forms of benefit have actuarial present values that are at least 95
percent, but not greater than 102.5 percent, of the actuarial present
value of the single life annuity, the plan is permitted to describe the
relative value of all optional forms of benefit by stating that all the
optional forms of benefit are approximately equal in value, or that all
of those forms of benefit and the single life annuity are approximately
equal in value.
(iv) Actuarial assumptions used to determine relative values. For
the purpose of providing a numerical comparison of the value of an
optional form of benefit to the value of the immediately commencing
QJSA under this paragraph (c)(2), the following rules apply--
(A) If an optional form of benefit is subject to the requirements
of section 417(e)(3) and Sec. 1.417(e)-1(d), any comparison of the
value of the optional form of benefit to the value of the QJSA must be
made using the applicable mortality table and the applicable interest
rate as defined in Sec. 1.417(e)-1(d)(2) and (3) (or, at the option of
the plan, another reasonable interest rate and reasonable mortality
table used under the plan to calculate the amount payable under the
optional form of benefit); and
(B) All other optional forms of benefit payable to the participant
must be compared with the QJSA using a single set of interest and
mortality assumptions that are reasonable and that are applied
uniformly with respect to all such optional forms payable to the
participant (regardless of whether those assumptions are actually used
under the plan for purposes of determining benefit payments).
(v) Required disclosure of assumptions--(A) Explanation of concept
of relative value. The notice must provide an explanation of the
concept of relative value, communicating that the relative value
comparison is intended to allow the participant to compare the total
value of distributions paid in different forms, that the relative value
comparison is made by converting the value of the optional forms of
benefit presently available to a common form (such as the QJSA or a
single-sum distribution), and that this conversion uses interest and
life expectancy assumptions. The explanation of relative value must
include a general statement that all comparisons provided are based on
average life expectancies, and that the relative value of payments
ultimately made under an annuity optional form of benefit will depend
on actual longevity.
(B) Disclosure of assumptions. A required numerical comparison of
the value of the optional form of benefit to the value of the QJSA
under this paragraph (c)(2) is required to include a disclosure of the
interest rate that is used to develop the comparison. If all optional
forms of benefit are permitted to be grouped under paragraph
(c)(2)(iii)(A) of this section, then the requirement of this paragraph
(c)(2)(v)(B) does not apply for any optional form of benefit not
subject to the requirements of section 417(e)(3) and Sec. 1.417(e)-
1(d)(3).
(C) Offer to provide actuarial assumptions. If the plan does not
disclose the actuarial assumptions used to calculate the numerical
comparison required under paragraph (c)(2) of this section, then, the
notice must be accompanied by a statement that includes an offer to
provide, upon the participant's request, the actuarial assumptions used
to calculate the relative value of optional forms of benefit under the
plan.
[[Page 70146]]
(3) Permitted estimates of financial effect and relative value--(i)
General rule. For purposes of providing a description of the financial
effect of the distribution forms available to a participant as required
under paragraph (c)(1)(iii) of this section, and for purposes of
providing a description of the relative value of an optional form of
benefit compared to the value of the QJSA for a participant as required
under paragraph (c)(1)(iv) of this section, the plan is permitted to
provide reasonable estimates (e.g., estimates based on data as of an
earlier date than the annuity starting date, a reasonable assumption
for the age of the participant's spouse, or, in the case of a defined
contribution plan, reasonable estimates of amounts that would be
payable under a purchased annuity contract), including reasonable
estimates of the applicable interest rate under section 417(e)(3).
(ii) Right to more precise calculation. If a QJSA notice uses a
reasonable estimate under paragraph (c)(3)(i) of this section, the QJSA
explanation must identify the estimate and explain that the plan will,
upon the request of the participant, provide a more precise calculation
and the plan must provide the participant with a more precise
calculation if so requested. Thus, for example, if a plan provides an
estimate of the amount of the QJSA that is based on a reasonable
assumption concerning the age of the participant's spouse, the
participant can request a calculation that takes into account the
actual age of the spouse, as provided by the participant.
(iii) Revision of prior information. If a more precise calculation
described in paragraph (c)(3)(ii) of this section materially changes
the relative value of an optional form compared to the value of the
QJSA, the revised relative value of that optional form must be
disclosed, regardless of whether the financial effect of selecting the
optional form is affected by the more precise calculation. For example,
if a participant provides a plan with the age of the participant's
spouse and that information materially changes the relative value of an
optional form of benefit (such as a single sum) compared to the value
of the QJSA, then the revised relative value of the optional form of
benefit and the value of the QJSA must be disclosed, regardless of
whether the amount of the payment under that optional form of benefit
is affected by the more precise calculation.
(4) Special rules for disclosure of financial effect for defined
contribution plans. For a written explanation provided by a defined
contribution plan, a description of financial effect required by
paragraph (c)(1)(iii) of this section with respect to an annuity form
of benefit must include a statement that the annuity will be provided
by purchasing an annuity contract from an insurance company with the
participant's account balance under the plan. If the description of the
financial effect of the optional form of benefit is provided using
estimates rather than by assuring that an insurer is able to provide
the amount disclosed to the participant, the written explanation must
also disclose this fact.
(d) Substitution of generally applicable information for
participant information in the section 417(a)(3) explanation--(1) Forms
of benefit available. In lieu of providing the information required
under paragraphs (c)(1)(i) through (v) of this section for each
optional form of benefit presently available to the participant as
described in paragraph (c) of this section, the QJSA explanation may
contain the information required under paragraphs (c)(1)(i) through (v)
of this section for the QJSA and each other optional form of benefit
generally available under the plan, along with a reference to where a
participant may readily obtain the information required under
paragraphs (c)(1)(i) through (v) of this section for any other optional
forms of benefit that are presently available to the participant.
(2) Financial effect and comparison of relative values--(i) General
rule. In lieu of providing a statement of the financial effect of
electing an optional form of benefit as required under paragraph
(c)(1)(iii) of this section, or a comparison of relative values as
required under paragraph (c)(1)(iv) of this section, based on the
actual age and benefit of the participant, the QJSA explanation is
permitted to include a chart (or other comparable device) showing the
financial effect and relative value of optional forms of benefit in a
series of examples specifying the amount of the optional form of
benefit payable to a hypothetical participant at a representative range
of ages and the comparison of relative values at those same
representative ages. Each example in this chart must show the financial
effect of electing the optional form of benefit pursuant to the rules
of paragraph (c)(1)(iii) of this section, and a comparison of the
relative value of the optional form of benefit to the value of the QJSA
pursuant to the rules of paragraph (c)(2) of this section, using
reasonable assumptions for the age of the hypothetical participant's
spouse and any other variables that affect the financial effect, or
relative value, of the optional form of benefit. The requirement to
show the financial effect of electing an optional form can be satisfied
through the use of other methods (e.g., expressing the amount of the
optional form as a percentage or a factor of the amount payable under
the normal form of benefit), provided that the method provides
sufficient information so that a participant can determine the amount
of benefits payable in the optional form. The chart (or other
comparable device) must be accompanied by the disclosures described in
paragraph (c)(2)(v) of this section explaining the concept of relative
value and disclosing certain interest assumptions. In addition, the
chart (or other comparable device) must be accompanied by a general
statement describing the effect of significant variations between the
assumed ages or other variables on the financial effect of electing the
optional form of benefit and the comparison of the relative value of
the optional form of benefit to the value of the QJSA.
(ii) Actual benefit must be disclosed. The generalized notice
described in this paragraph (d)(2) will satisfy the requirements of
paragraph (b)(2) of this section only if the notice includes either the
amount payable to the participant under the normal form of benefit or
the amount payable to the participant under the normal form of benefit
adjusted for immediate commencement. For this purpose, the normal form
of benefit is the form under which payments due to the participant
under the plan are expressed under the plan, prior to adjustments for
form of benefit. For example, assuming that a plan's benefit accrual
formula is expressed as a straight life annuity, the generalized notice
must provide the amount of either the straight life annuity commencing
at normal retirement age or the straight life annuity commencing
immediately.
(iii) Ability to request additional information. The generalized
notice described in this paragraph (d)(2) must be accompanied by a
statement that includes an offer to provide, upon the participant's
request, a statement of financial effect and a comparison of relative
values that is specific to the participant for any presently available
optional form of benefit, and a description of how a participant may
obtain this additional information.
(3) Financial effect of QPSA election. In lieu of providing a
specific description of the financial effect of the QPSA election, the
QPSA explanation may provide a general description of the financial
effect of the election. Thus, for example, the description can be in
the form of a chart showing the reduction to a hypothetical
participant's normal
[[Page 70147]]
retirement benefit at a representative range of participant ages as a
result of the QPSA election (using a reasonable assumption for the age
of the hypothetical participant's spouse relative to the age of the
hypothetical participant). In addition, this chart must be accompanied
by a statement that includes an offer to provide, upon the
participant's request, an estimate of the reduction to the
participant's estimated normal retirement benefit, and a description of
how a participant may obtain this additional information.
(4) Additional information required to be furnished at the
participant's request-- The generalized notice described in paragraph
(d)(2) of this section must be accompanied by a statement that includes
an offer to provide, upon the participant's request, information
described in this paragraph (d)(4)(i) and (ii), and a description of
how a participant may obtain this additional information.
(i) Explanation of QJSA. If, as permitted under paragraphs (d)(1)
and (2) of this section, the content of a QJSA explanation does not
include all the items described in paragraph (c) of this section, then,
upon a participant's request for any of the information required under
paragraphs (c)(1)(i) through (v) of this section for one or more
presently available optional forms (including a request for all
optional forms presently available to the participant), the plan must
furnish the information required under paragraphs (c)(1)(i) through (v)
of this section with respect to those optional forms. Thus, with
respect to those optional forms of benefit, the participant must
receive a QJSA explanation specific to the participant that is based on
the participant's actual age and benefit. In addition, the plan must
comply with paragraph (c)(3)(iii) of this section. Further, if as
permitted under paragraph (c)(2)(v)(B) of this section, the plan does
not disclose the actuarial assumptions used to calculate the numerical
comparison required under paragraph (c)(2) of this section, then, upon
request, the plan must provide the actuarial assumptions used to
calculate the relative value of optional forms of benefit under the
plan.
(ii) Explanation of QPSA. If, as permitted under paragraph (d)(3)
of this section, the content of a QPSA explanation does not include all
the items described in paragraph (b)(1) of this section, then, upon a
participant's request, the plan must furnish an estimate of the
reduction to the participant's estimated normal retirement benefit that
would result from a QPSA election.
(e) Examples. The following examples illustrate the application of
this section. Solely for purposes of these examples, the applicable
interest rate that applies to any distribution that is subject to the
rules of section 417(e)(3) is assumed to be 52\1/2\ percent, and the
applicable mortality table under section 417(e)(3) and Sec. 1.417(e)-
1(d)(2) is assumed to be the table that applies as of January 1, 2003.
In addition, solely for purposes of these examples, assume that a plan
which determines actuarial equivalence using 6 percent interest and the
applicable mortality table under section 417(e)(3) and Sec. 1.417(e)-
1(d)(2) that applies as of January 1, 1995, is using reasonable
actuarial assumptions. The examples are as follows:
Example 1. (i) Participant M participates in Plan A, a qualified
defined benefit plan. Under Plan A, the QJSA is a joint and 100
percent survivor annuity, which is actuarially equivalent to the
single life annuity determined using 6 percent interest and the
section 417(e)(3) applicable mortality table that applies as of
January 1, 1995. On October 1, 2004, M will terminate employment at
age 55. When M terminates employment, M will be eligible to elect an
unreduced early retirement benefit, payable as either a single life
annuity or the QJSA. M will also be eligible to elect a single-sum
distribution equal to the actuarial present value of the single life
annuity payable at normal retirement age (age 65), determined using
the applicable mortality table and the applicable interest rate
under section 417(e)(3).
(ii) Consistent with paragraph (c) of this section, Participant
M is provided with a QJSA explanation that describes the single life
annuity, the QJSA, and single-sum distribution options under the
plan, and any eligibility conditions associated with these options.
Participant M is married when the explanation is provided. The
explanation indicates that, if Participant M commenced benefits at
age 55 and had a spouse age 55, the monthly benefit under an
immediately commencing single life annuity is $3,000, the monthly
benefit under the QJSA is estimated to be 89.96 percent of the
monthly benefit under the immediately commencing single life annuity
or $2,699, and the single sum is estimated to be 74.7645 times the
monthly benefit under the immediately commencing single life annuity
or $224,293.
(iii) The QJSA explanation indicates that the single life
annuity and the QJSA are of approximately the same value, but that
the single-sum option is equivalent in value to a monthly benefit
under the QJSA of $1,215. (This amount is 45 percent of the value of
the QJSA at age 55 ($1,215 divided by 89.96 percent of $3,000 equals
45 percent).) The explanation states that the relative value
comparison converts the value of the single life annuity and the
single-sum options to the value of each if paid in the form of the
QJSA and that this conversion uses interest and life expectancy
assumptions. The explanation specifies that the calculations
relating to the single-sum distribution were prepared using 5.5
percent interest and average life expectancy, that the other
calculations were prepared using a 6 percent interest rate and that
the relative value of actual annuity payments for an individual can
vary depending on how long the individual and spouse live. The
explanation notes that the calculation of the QJSA assumed that the
spouse was age 55, that the amount of the QJSA will depend on the
actual age of the spouse (for example, annuity payments will be
significantly lower if the spouse is significantly younger than the
participant), and that the amount of the single-sum payment will
depend on the interest rates that apply when the participant
actually takes a distribution. The explanation also includes an
offer to provide a more precise calculation to the participant
taking into account the spouse's actual age.
(iv) In accordance with paragraph (c)(3)(ii) of this section,
Participant M requests a more precise calculation of the financial
effect of choosing a QJSA taking into account that Participant M's
spouse is 50 years of age. Using the actual age of Participant M's
spouse, Plan A determines that the monthly payments under the QJSA
are 87.62 percent of the monthly payments under the single life
annuity, or $2,628.60 per month, and provides this information to M.
Plan A is not required to provide an updated calculation of the
relative value of the single sum because the value of single sum
continues to be 45 percent of the value of the QJSA.
Example 2. (i) The facts are the same as in Example 1, except
that the comparison of the relative values of optional forms of
benefit to the value of the QJSA is not expressed as a percentage of
the actuarial present value of the QJSA, but instead is expressed by
disclosing the actuarial present values of the optional forms and
the QJSA. In addition, the Plan uses the applicable interest rate
and the applicable mortality table under section 417(e)(3) for all
comparison purposes.
(ii) Accordingly, the QJSA explanation indicates that the QJSA
has an actuarial present value of $498,089, while the single-sum
payment has an actuarial present value of $224,293 (i.e. the amount
of the single sum is $224,293) and that the single life annuity is
approximately equal in value to the QJSA. The explanation states
that the relative value comparison converts the value of single life
annuity and the QJSA into an amount payable in the form of the
single-sum option (even though a single-sum distribution in that
amount is not available under the plan) and that this conversion
uses interest and life expectancy assumptions. The explanation
specifies that the calculations were prepared using 5.5 percent
interest and average life expectancy, and that the relative value of
actual annuity payments for an individual can vary depending on how
long the individual and spouse live. The explanation notes that the
calculation of the QJSA assumed that the spouse was age 55, that the
amount of the QJSA will depend on the actual age of the spouse (for
example, annuity payments will be significantly lower if the spouse
is significantly younger than the participant), and that the amount
of the single-sum payment will depend on the interest rates that
apply when the participant
[[Page 70148]]
actually takes a distribution. The explanation also includes an
offer to provide a more precise calculation to the participant
taking into account the spouse's actual age.
Example 3. (i) The facts are the same as in Example 1, except
that, in lieu of providing information specific to Participant M in
the QJSA notice as set forth in paragraph (c) of this section, Plan
A satisfies the QJSA explanation requirement in accordance with
paragraph (d)(2) of this section by providing M with a statement
that M's monthly benefit under an immediately commencing single life
annuity (which is the normal form of benefit under Plan A, adjusted
for immediate commencement) is $3,000, along with the following
chart. The chart shows the financial effect of electing each
optional form of benefit for a hypothetical participant with a
$1,000 benefit and a spouse who is the same age as the participant.
Instead of showing the relative value of these optional forms of
benefit compared to the value of the QJSA, the chart shows the
relative value of these optional forms of benefit compared to the
value of the single life annuity. Separate charts are provided for
ages 55, 60, and 65 as follows:
Age 55 Commencement
------------------------------------------------------------------------
Amount of
distribution per
Optional form $1,000 of Relative value
immediate single
life annuity
------------------------------------------------------------------------
Life Annuity.................... $1,000 per month.. n/a.
QJSA (Joint and 100 percent $900 per month Approximately the
survivor annuity). ($900 per month same value as the
for survivor Life Annuity.
annuity).
Lump sum........................ $74,764........... Approximately 45
percent of the
value of the Life
Annuity.
------------------------------------------------------------------------
Age 60 Commencement
------------------------------------------------------------------------
Amount of
distribution per
Optional form $1,000 of Relative value
immediate single
life annuity
------------------------------------------------------------------------
Life Annuity.................... $1,000 per month.. n/a.
QJSA (Joint and 100 percent $878 per month Approximately the
survivor annuity). ($878 per month same value as the
for survivor Life Annuity.
annuity).
Lump sum........................ $99,792........... Approximately 66
percent of the
value of the Life
Annuity.
------------------------------------------------------------------------
Age 65 Commencement
------------------------------------------------------------------------
Amount of
distribution per
Optional form $1,000 of Relative value
immediate single
life annuity
------------------------------------------------------------------------
Life Annuity.................... $1,000 per month.. n/a.
QJSA (Joint and 100 percent $852 per month Approximately the
survivor annuity). ($852 per month same value as the
for survivor Life Annuity.
annuity).
Lump sum........................ $135,759.......... Approximately the
same value as the
Life Annuity.
------------------------------------------------------------------------
(ii) In accordance with paragraph (d)(4)(i) of this section,
when Participant M requests specific information regarding the
amounts payable under the QJSA, the joint and 100 percent survivor
annuity, and the single-sum distribution and provides the age of M's
spouse, Plan A determines that M's QJSA is $2,628.60 per month and
the single-sum distribution is $224,293. The actuarial present value
of the QJSA (determined using the 5.5 percent interest and the
section 417(e)(3) applicable mortality table) is $498,896 and the
actuarial present value of the single life annuity is $497,876.
Accordingly, the specific information discloses that the single-sum
distribution has a value that is 45 percent of the value of the
single life annuity available to M on October 1, 2004. In accordance
with paragraph (c)(2)(iii)(C) of this section, the QJSA notice
provides that the QJSA is of approximately the same value as the
single life annuity.
Example 4. (i) The facts are the same as in Example 1, except
that under Plan A, the single-sum distribution is determined as the
actuarial present value of the immediately commencing single life
annuity. In addition, Plan A provides a joint and 75 percent
survivor annuity that is reduced from the single life annuity and
that is the QJSA under Plan A. For purposes of determining the
amount of the QJSA, if the participant is married the reduction is
only half of the reduction that would normally apply under the
actuarial assumptions specified in Plan A for determining actuarial
equivalence of optional forms.
(ii) In lieu of providing information specific to Participant M
in the QJSA notice as set forth in paragraph (c) of this section,
Plan A satisfies the QJSA explanation requirement in accordance with
paragraph (d)(2) of this section by providing M with a statement
that M's monthly benefit under an immediately commencing single life
annuity (which is the normal form of benefit under Plan A, adjusted
for immediate commencement) is $3,000, along with the following
chart showing the financial effect and the relative value of the
optional forms of benefit compared to the QJSA for a hypothetical
participant with a $1,000 benefit and a spouse who is three years
younger than the participant. For each optional form generally
available under the plan, the chart shows the financial effect and
the relative value, using the grouping rules of paragraph (c)(2)(ii)
of this section. Separate charts are provided for ages 55, 60, and
65, as follows:
Age 55 Commencement
------------------------------------------------------------------------
Amount of
distribution per
Optional form $1,000 of Relative value
immediate single
life annuity
------------------------------------------------------------------------
Life Annuity.................... $1,000 per month.. Approximately the
same value as the
QJSA.
[[Page 70149]]
QJSA (joint and 75 percent $956 per month n/a.
survivor annuity for a ($717 per month
participant who is married). for survivor
annuity).
Joint and 100 percent survivor $886 per month Approximately the
annuity. ($886 per month same value as the
for survivor QJSA.
annuity).
Lump sum........................ $165,959.......... Approximately the
same value as the
QJSA.
------------------------------------------------------------------------
Age 60 Commencement
------------------------------------------------------------------------
Amount of
distribution per
Optional form $1,000 of Relative value
immediate single
life annuity
------------------------------------------------------------------------
Life Annuity.................... $1,000 per month.. Approximately 94
percent of the
value of the
QJSA.
QJSA (joint and 75 percent $945 per month n/a.
survivor annuity for a ($709 per month
participant who is married). for survivor
annuity).
Joint and 100 percent survivor $859 per month Approximately 94
annuity. ($859 per month percent of the
for survivor value of the
annuity). QJSA.
Lump sum........................ $151,691.......... Approximately the
same value as the
QJSA.
------------------------------------------------------------------------
Age 65 Commencement
------------------------------------------------------------------------
Amount of
distribution per
Optional form $1,000 of Relative value
immediate single
life annuity
------------------------------------------------------------------------
Life Annuity.................... $1,000 per month.. Approximately 93
percent of the
value of the
QJSA.
QJSA (joint and 75 percent $932 per month n/a.
survivor annuity for a ($699 per month
participant who is married). for survivor
annuity).
Joint and 100 percent survivor $828 per month Approximately 93
annuity. ($828 per month percent of the
for survivor value of the
annuity). QJSA.
Lump sum........................ $135,759.......... Approximately 93
percent of the
value of the
QJSA.
------------------------------------------------------------------------
(iii) The chart disclosing the financial effect and relative
value of the optional forms specifies that the calculations were
prepared assuming that the spouse is three years younger than the
participant, that the calculations relating to the single-sum
distribution were prepared using 5.5 percent interest and average
life expectancy, that the other calculations were prepared using a 6
percent interest rate, and that the relative value of actual
payments for an individual can vary depending on how long the
individual and spouse live. The explanation states that the relative
value comparison converts the single life annuity, the joint and 100
percent survivor annuity, and the single-sum options to value of
each if paid in the form of the QJSA and that this conversion uses
interest and life expectancy assumptions. The explanation notes that
the calculation of the QJSA depends on the actual age of the spouse
(for example, annuity payments will be significantly lower if the
spouse is significantly younger than the participant), and that the
amount of the single-sum payment will depend on the interest rates
that apply when the participant actually takes a distribution. The
explanation also includes an offer to provide a calculation specific
to the participant upon request, and an offer to provide mortality
tables used in preparing calculations upon request.
(iv) In accordance with paragraph (d)(4)(i) of this section,
Participant M requests specific information regarding the amounts
payable under the QJSA, the joint and 100 percent survivor annuity,
and the single sum.
(v) Based on the information about the age of Participant M's
spouse, Plan A determines that M's QJSA is $2,856.30 per month, the
joint and 100 percent survivor annuity is $2,628.60 per month, and
the single sum is $497,876. The actuarial present value of the QJSA
(determined using the 5.5 percent interest and the section 417(e)(3)
applicable mortality table, the actuarial assumptions required under
section 417) is $525,091. Accordingly, the value of the single-sum
distribution available to M on October 1, 2004, is 94.8 percent of
the actuarial present value of the QJSA. In addition, the actuarial
present value of the life annuity and the 100 percent joint and
survivor annuity are 95.0 percent of the actuarial present value of
the QJSA.
(vi) Plan A provides M with a QJSA explanation that incorporates
these more precise calculations of the financial effect and relative
value of the optional forms for which M requested information.
(f) Effective date. This section applies to QJSA explanations with
respect to distributions with annuity starting dates on or after
October 1, 2004, and to QPSA explanations provided on or after July 1,
2004. In the case of a retroactive annuity starting date under section
417(a)(7), when required under Sec. 1.417(e)-1(b)(3)(vi), the date of
commencement of the actual payments based on the retroactive annuity
starting date is substituted for the annuity starting date for this
purpose.
Sec. 1.417(e)-1 [Amended]
0
Par. 5. In Sec. 1.417(e)-1, paragraph (b)(2) is amended by removing
the language ``Sec. 1.401(a)-20 Q&A-36'' and adding ``Sec.
1.417(a)(3)-1'' in its place.
PART 602--OMB CONTROL NUMBERS UNDER THE PAPERWORK REDUCTION ACT
0
Par. 6. The authority citation for part 602 continues to read as
follows:
Authority: 26 U.S.C. 7808.
0
Par. 7. In Sec. 602.101, paragraph (b) is amended by adding an entry
for ``Sec. 1.417(a)(3)-1'' in numerical order to the table to read in
part as follows:
Sec. 602.101 OMB Control numbers.
* * * * *
(b) * * *
------------------------------------------------------------------------
Current OMB
CFR part or section where identified and described control No.
------------------------------------------------------------------------
[[Page 70150]]
* * * * *
1.417(a)(3)-1............................................. 1545-0928
* * * * *
------------------------------------------------------------------------
Mark E. Matthews,
Deputy Commissioner for Services and Enforcement.
Approved: December 3, 2003.
Gregory Jenner,
Deputy Assistant Secretary (Tax Policy).
[FR Doc. 03-31033 Filed 12-16-03; 8:45 am]
BILLING CODE 4830-01-P
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