PBGC Issues Applicable Present Values for 2017 Plan Years

The Pension Benefit Guaranty Corporation (PBGC) on Dec. 2 posted a table showing the applicable present values for 2017 plan years.

The table provides the present value of PBGC maximum guaranteed benefits under Internal Revenue Code Section 436(d)(3)(A)(ii) and ERISA Section 206(g)(3)(C)(i)(II).

Those portions of the Internal Revenue Code and ERISA provide that if the "adjusted funding target attainment percentage" is at least 60% but less than 80%, a plan generally may not pay a prohibited payment to the extent the payment exceeds the lesser of:

1. 50% of the amount of the payment that would be paid if the restriction did not apply, or

2. the present value, determined under PBGC guidance, of the maximum guarantee regarding a participant under ERISA Section 4022 — a figure determined each year by PBGC in accordance with methodology provided in Technical Update 07-4.

The 2017 values apply to benefits with annuity starting dates in 2017. The PBGC developed the 2017 table using the Internal Revenue Code Section 417(e) segment rates for August 2016 (1.39%, 3.27%% and 4.18% respectively) for plan years beginning in 2017 and the 417(e) applicable mortality table for 2017. The table shows the present values of PBGC maximum guarantees for participants ages 25-85.

Along with the 2017 table, the PBGC provides tables for the PBGC maximum guarantees for 2008-2016 as well.