ProAdmin can automatically handle many calculations with respect to the U.S. Internal Revenue Code (IRC) section 415(b) benefit limits (the annual benefit, or dollar, limit and the 100% of average compensation, or salary, limit) and the service-related dollar limit under the Canadian Income Tax Act (ITA).   ProAdmin applies the limits separately to the benefits at commencement for each Benefit Definition contained in the Plan Definition.  See the Technical Reference article entitled U.S. Internal Revenue Service Section 415 Limits for details.

ProAdmin compares the amount determined by the Benefit Formula to the specified limit at commencement. This section of the Benefit Definition defines which Limit, if any, automatically applies to the benefit formula. The options are:

• None indicates that the benefit is not limited.

• U.S. 415(b) indicates that the 415(b) maximum dollar limit should be applied to the benefit. The calculation of this limit is is based on the U.S. Maximum Benefits assumptions set up under the Regulatory Data topic of the Plan Definition.

• Canadian ITA indicates that the ITA service-related dollar limit maximum should be applied to this benefit. The calculation of this limit is based on the Canadian Maximum Benefits assumptions set up under the Regulatory Data topic of the Plan Definition.

If the U.S. 415(b) maximum pension limit is applicable, the option to Adjust limit for {all} or {lump sum) payment forms option becomes available. If one of these options is not selected, ProAdmin calculates the annuity benefit maximum limit and applies it to the Benefit Definition results. If the Adjust limit for lump sum payment forms option is selected, two maximum benefit limits are calculated using the applicable actuarial equivalence assumptions: a straight life and QJSA annuity limit and a lump sum limit, where the lump sum limit reflects the Applicable interest rate for lump sum conversion specified under Regulatory Data > U.S. Maximum Benefits. If the lump sum payment form is the Normal form, the lump sum limit is applied directly to the Benefit Formula and any optional form conversions are made starting with this limited lump sum. If the lump sum payment form is an optional form, the Benefit Formula is limited by the straight life annuity limit, but the payment form calculations for the lump sum form(s) start with an unlimited benefit and apply the lump sum limit to the calculated plan lump sum. 

If the Adjust limit for all payment forms option is selected, as many maximum benefit limits are calculated as are determined to be needed for the referenced payment forms using the applicable actuarial equivalence assumptions specified under Regulatory Data > U.S. Maximum Benefits and the plan actuarial equivalence assumptions specified in the Plan Attributes.  Each form (except the life annuity or QJSA default and the lump sum forms) will have a generic name of "StdForm x" or "JS Form x", and will calculate and apply a payment form factor equal to the lesser of the statutory basis and plan basis ratio of a straight life annuity to the payment form value, where the statutory values are computed using 5% interest and applicable mortality. In this scenario, the benefit definition displays the life annuity projected benefit and the payment form detailed results apply the maximum after the plan payment form value has been derived. 

Note: There are many reasons, on a member by member basis, why the 415 limit calculations may not be exactly correct. The known "issues" with ProAdmin's approach under its Adjust limit for all payment forms option are noted below.  Please feel free to contact us if you have any specific input on any of these issues.

• Several payment forms are not currently handled directly, so they default to the treatment as if the 415 limit was not adjusted for payment forms. These include Pop-ups (with or without a non-spouse beneficiary), Social Security level income options, certain-only forms, custom JS forms, forms deferred or temporary to years and months, and forms that use a field for the spouse percentage.
• Life insurance payment forms are limited by the "lump sum form(s)" limit.
• J&S payment forms where the beneficiary fraction is specified by a Plan Constant are limited by the "life annuity or QJSA default" with a warning issued.
• The plan actuarial equivalence assumptions are reflected based on the Plan Attributes, but individual payment forms may use a different basis to convert from the normal form

If the U.S. 415(b) maximum pension limit is applicable, the Plan reduction factors parameters become available. Specifying these factors allows you to adjust the 415 dollar limit for early commencement.  The plan reduction factors will be compared to the statutory factors calculated with the actuarial assumptions indicated under the Regulatory Data topic of the Plan Definition.  The plan reduction factors will be normalized to age 62 before comparing to the statutory factors. In other words, the value at commencement will be divided by the value at age 62 and the lesser of this factor and the statutory factor will be used to reduce the 415(b) dollar limit. Choose the Table: from the Benefit Component Tables library to adjust the 415 limit for early commencement.  If the selected table is service-dependent, the Service: multi-choice field allows you to select an entry from the Service Definition Set library that defines the appropriate service for determination of the reduction factors. For more information on how ProAdmin calculates the benefit limit, see the Technical Reference article entitled U.S. Internal Revenue Service Section 415 Limits.

If the U.S. 415(b) maximum pension limit is applicable, the Plan increase factors parameter is also available.  For ease of specification, this parameter references a late retirement benefit formula component from which ProAdmin will extract the calculated increase factors.  The only late retirement components that will be available in the list are those where the calculation is performed at commencement (i.e., all components that perform the calculation annually will be excluded). Specifying these factors allows you to adjust the 415 dollar limit for late commencement.  The final adjustment will be the lesser of the plan increase factors normalized to age 65 and the statutory factors calculated with the actuarial assumptions indicated under the Regulatory Data topic of the Plan Definition.  Choose the Late Retirement Component: from the library to adjust the 415 limit for late commencement.  For more information on how ProAdmin calculates the benefit limit, see the Technical Reference article entitled U.S. Internal Revenue Service Section 415 Limits.

According to the 2014 Gray Book, Question 32, the accrued benefit at normal retirement age is limited by the 415(b) maximum benefit limit. The plan benefit payable at commencement is the accrued benefit (limited by 415(b)) reduced for early retirement and the selected optional form, and then limited by the 415(b) limit at commencement age. Effectively, the 415(b) limits are applied at two ages. In ProAdmin, to limit the accrued benefit payable at normal retirement age, use #MAXBEN in your benefit formula to check the benefit before application of any early retirement factors.  For example, you might code your benefit definition to look like this:

[Benefit #MIN (#MAXBEN 65)] * ERF

Selecting the radio button to apply the U.S. 415(b) limit for this definition will compare the plan benefit at commencement age to the 415(b) limit at commencement age.