A plan provides a pre-retirement death benefit equal to the minimum qualified pre-retirement survivor annuity under IRC section 417 plus a $10,000 immediate lump sum. These benefits are provided at no charge to the participants. Consider the following statement with regard to the PBGC Premium Funding Target: The full value of the pre-retirement death benefit is included in the Premium Funding Target for each participant who has completed the plan's vesting requirements on the Unfunded Vested Benefit valuation date. Is the above statement true or false?

Question

Quizplus · Accepted Answer

The PBGC Premium Funding Target includes the present value of all benefits under the plan except for ancillary benefits that are not directly related to retirement, such as certain pre-retirement death benefits, unless they are provided at the participant's election and with an actuarial reduction. Since the described pre-retirement death benefit is provided at no charge to participants and is not an elected benefit with an actuarial reduction, it would not be included in the Premium Funding Target.

A Plan Provides a Pre-Retirement Death Benefit Equal to the Minimum