Section 4. If as a result of actuarial increases to the benefit of a participant who…

commencement of benefits beyond normal retirement age, the Accrued Benefit of such participant would exceed the limitations under section _____ of the plan for the Limitation Year, immediately before the actuarial increase to the participant’s benefit that would cause such participant’s benefit to exceed the limitations of section _____ of the plan, payment of benefits to such participant will be suspended in accordance with section _____ of the plan, if applicable; otherwise, distribution of the participant’s benefit will commence.

(Note to reviewer: The first two blanks in the preceding paragraph should be filled in with the section number of the plan corresponding to the Code § IRC 415 limitations in LRM #40. The third blank in the preceding paragraph should be filled in with the section number of the plan corresponding to the suspension of benefit rules in LRM #55.)

(Note to reviewer: The sponsor may include language that provides for a reduction to the post-normal retirement age benefit accrual otherwise required under Code § IRC 411(b) (1)(H) to the extent permitted under Proposed Treas. Reg. § 1.411(b)-2(b)(4). But see LRM #51 for special rules on the interaction of certain actuarial increases with Code § IRC 411(b)(1)(H).)

Sample Adoption Agreement Language:

A. Except as provided in section _____ of the plan, actuarial equivalence will be determined based on the following interest and mortality assumptions:

(Note to reviewer: The blank above should be filled in with the plan section corresponding to section 3 of this LRM #42, and any other plan sections for which a different set of actuarial assumptions is used.)

1. Interest rate: _________%

Mortality table (must be standard mortality table as described in Treas. Reg. § 1.401(a) (4)-12 if the plan provides for permitted disparity under Code § IRC 401(l)):

Preretirement: _________________

Post-retirement: _________________

Note that for plan years that begin on or after the effective date specified in Treas. Reg. §. 1.411(a)(13)-1(e)(2)(ii)(A) or Treas. Reg. §. 1.411(a)(13)-1(e)(2)(ii)(B) as applicable (generally, for plan years beginning on or after January 1, 2017, or as late as January 1, 2019 for certain collectively bargained plans), if the accrued benefit attributable to the Cash Balance Formula is determined using assumptions that are not considered reasonable – including assumptions that produce a subsidized accrued benefit – the Cash Balance Formula is not considered a lump-sum based formula. If that is the case, the lump sum payment must be no less than the present value of the accrued benefit using the applicable interest and mortality rates under Code § IRC 417(e)(3) (see section _____ of the Adoption Agreement).

(Note to reviewer: The blank above should be filled in with the section of the Adoption Agreement that corresponds to section 3 below.)

(Note to reviewer: Additional sections may be added to the Adoption Agreement to provide

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for the use of different assumptions for different purposes, as long as the objective criteria for applying each set of assumptions is defined in a way that is definitely determinable and not subject to employer discretion.)

2. With respect to benefits determined under a Cash Balance Formula, Actuarial Equivalence will be applied to:

( ) The Participant’s Hypothetical Account Balance

( ) The Participant’s Accrued Benefit in the normal form commencing at Normal

Retirement Age

3. With respect to benefits determined under a Cash Balance Formula, lump sum payments and other benefits payable in a form that would normally be subject to the minimum present value requirements of Code § IRC 417(e)(3)

( ) Will

( ) Will not

be determined using the applicable mortality table and applicable interest rate under Code § IRC 417(e)(3), if this produces a benefit greater than the Hypothetical Account Balance (if the benefit is paid in the form of a lump sum payment) or the benefit determined using the actuarial equivalence assumptions specified in item 1 above (if the benefit is paid in a form other than a lump sum payment).

(Note to reviewer: The following optional provision allows the Adopting Employer to indicate, in a manner that satisfies the definitely determinable benefits requirement of Treas. Reg. § 1.401-1(b)(1)(i), that actuarial equivalence will be determined with reference to a specified insurance or annuity contract. This option is not available in conjuctionc onjunction with a Cash Balance Formula.)

Instead of specifying the interest and mortality assumptions, the plan may determine actuarial equivalence by reference to a specified insurance or annuity contract.

To provide that actuarial equivalence under the plan will be determined by reference to a specified insurance or annuity contract, leave the preceding interest rate and mortality table elections blank and enter information about the contract below.)

The interest and mortality assumptions specified in the following insurance or annuity contract:

Contract name/number: __________________

Company that issued the contract: ____________________

Date of issuance: ____________________

If the insurance or annuity contract specifies different interest and mortality assumptions for different purposes under the contract, the assumptions that will be used to determine actuarial equivalence under the plan are those assumptions specified under the contract for purposes of determining: ______________________ (e.g., the amount of benefits payable in different forms under the contract or the cash surrender value of the contract).

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Any change in the insurance or annuity contract, including the substitution of a different contract, that results in a change in the interest and mortality assumptions used to determine actuarial equivalence under the plan shall be treated as an amendment of the plan for purposes of section _____ of the plan.

(Note to reviewer: The blank above should be filled in with the plan section number corresponding to LRM #66.)

B. For purposes of the time for determining the applicable interest rate, the stability period under the plan is:

( ) one calendar month

( ) one Plan Quarter

( ) one calendar quarter

( ) one Plan Year

( ) one calendar year

C. The lookback month, relating to the stability period under the plan, is the:

( ) first

( ) second

( ) third

( ) fourth

( ) fifth

calendar month preceding the first day of the stability period.

D. For purposes of applying the limitation on benefits under section ___ of the plan, the applicable mortality table under Rev. Rul. 2001-62, 2001-2 C.B. 632 is effective for benefits with annuity starting dates occurring during the first year beginning on or after January 1, 2009, unless an earlier date is elected below:

Effective date: ___________ (Date must fall within a year beginning on or after January 1, 2008, and on or before January 1, 2009.)

Sections B through D must be filled in even if the plan contains only a Cash Balance Formula for which benefits are not determined using the applicable interest and mortality rates, because these assumptions are used to apply the benefit limits under Code § IRC 415.

(Note to reviewer: The first blank above should be filled in with the plan section number corresponding to LRM #40.)