The Reflect 417(e) Early Retirement Adjustment dialog box allows you to specify the early retirement adjustment (assumed to be) in the normal form of payment and choose the alternative actuarial equivalence methodologies to be compared to determine the final benefit.  

Specify the Plan early retirement adjustment (ERF) to be divided out of the normal form benefit when 417 ERF is applicable by selecting a Benefit Formula Component from the multi-choice list of those unhidden in the current Project. The backdoor button is available to create, modify or unhide a benefit formula component if an appropriate one is not available.

When the 417(e) ERF is applicable, this "Plan ERF" will be divided out of the normal form benefit and replaced by the 417(e) ERF before the conversion factor is applied to determine the "417(e) ERF with 417(e) AEQ" actuarial equivalence amount.  The 417(e) ERF is calculated as the ratio of a deferred to age 65 annuity divided by an immediate life annuity, with both calculated using the minimum actuarial equivalence basis. One way to think of this process is that instead of using immediate annuities with a benefit commencing early, we will instead use a deferred annuity with a benefit commencing at age 65.

Please note:  If "plan reduction factors" are specified in the Benefit Definition for calculating the maximum pension, the same factors are expected to be specified in this payment form dialog box as the "plan early retirement adjustment (ERF)" since the two parameters have the same essential meaning. The Benefit Definition parameter, however, besides being optional and only potentially applicable if the benefit is automatically limited for IRC §415(b), allows for specification of a single benefit formula component table, while the payment form parameter is more flexible, allowing any benefit formula component. Thus, a single payment form (e.g., "10 year certain annuity") can be used by multiple benefits, with the subformula or table by coded field selection used to determine the correct early retirement reduction depending on the participant's characteristics (age, location, service, status, etc).  

There are currently up to 3 alternative benefits that can be compared under this "reflect 417(e) ERF" option; they are labeled A, B and C on the dialog box.

Option A uses the Plan ERF with the Plan AEQ (actuarial equivalence). The Plan AEQ in this context is defined as the payment form conversion basis per the Conversion from Normal Form dialog. Thus, the Plan AEQ may be the Plan's actuarial equivalence (from the Plan Attributes section of the Plan Definition) or a Table lookup, or possibly an Alternative actuarial equivalence.

Option B uses the Plan ERF with 417(e) AEQ. This is the standard minimum actuarial equivalence.  If you choose to Apply minimum actuarial equivalence on the Conversion from Normal Form dialog (or Apply current law minimum lump sum on the Minimum/Maximum Lump Sum dialog) and do not check the Reflect 417(e) early retirement adjustment box, the resulting benefit will be based on the greater of options A and B. 

Option C uses 417(e) ERF with 417(e) AEQ (i.e., value of a deferred benefit). Under this option the Plan ERF is divided out of the normal form benefit and replaced by the 417(e) ERF before the conversion factor is applied. 

When the 417(e) ERF is reflected, you can Determine the maximum benefit by taking the greater of benefits reflecting: either

A and C: the greater of the plan basis and the 417(e) basis inclusive of the 417(e) ERF, or

A and B and C: the greater of the plan basis, the "standard" 417(e) basis and the 417(e) basis inclusive of the 417(e) ERF.

Another way to think of the alternatives is: option A is the plan basis, option B is the 417(e) value of an immediate benefit, and option C is the 417(e) value of a benefit deferred to Normal Retirement Age. 

The Detailed Results contain additional tables of information when minimum actuarial equivalence (or current law minimum lump sum) is applied to a benefit.

For social security level income forms, the calculation of option A is labeled "Primary conversion basis ("Plan ERF with Plan AEQ"), the calculation of option B is labeled "Minimum AEQ conversion basis ("Plan ERF with 417(e) AEQ"), and the calculation of option C is labeled "417(e) ERF basis ("417(e) ERF with 417(e) AEQ".

For lump sum payment forms, there is an additional table that details the calculation of the current law minimum lump sum factor labeled "Minimum lump sum basis", a table that details the 417(e) basis, in accordance with the A, B and/or C options selected above, labeled "417(e) ERF basis", and, if selected, a table that details the "PBGC basis".

For payment forms other than lump sums and social security level income forms, if the option to Reflect 417(e) early retirement adjustment is selected, there is an additional table that details the "417(e) ERF basis".