The Pension Benefit Guaranty Corporation (PBGC) has issued the present values of its maximum guarantees for 2019.
The values apply to benefits with annuity starting dates in 2019. The values for the 2019 table were developed using the Internal Revenue Code Section 417(e) segment rates for August 2018 (3.10%, 4.15% and 4.46% respectively) for plan years beginning in 2019 and the Section 417(e) applicable mortality table for 2019.
The Pension Protection Act of 2006 (PPA) set the table for the maximum guarantee values. Under Section 103(a) of the PPA, there are situations in which the amount of benefit that can be paid in certain prohibited payment forms (e.g., a lump sum) is limited. Specifically, Internal Revenue Code Section 436(d)(3) and ERISA Section 206(g)(3)(C) provide that if the “adjusted funding target attainment percentage” is at least 60% but less than 80%, the plan may not pay a prohibited payment to the extent the payment exceeds the lesser of:
- 50% of the amount of the payment that would be paid if the restriction did not apply, or
- the present value, determined by the PBGC annually as in accordance with PBGC Technical Update 07-4, of the maximum guarantee with respect to the participant under ERISA section 4022.
The 2019 table also is available as a two-column spreadsheet on the PBGC website.
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