Based on the following information, which of the following represents the maximum annual benefit that a participant reaching his NRA of 65 in 2012 can have?
- The participant has never participated in another plan of the employer.
- The IRC 415 dollar limit for 2012 is $200,000
I. $120,000 for a participant with 7 years of participation and 9 years of service with average compensation of $150,000 per year.
II. $9,000 for a participant with 8 years of participation and 9 years of service with an average compensation of $6,000 per year
III. $180,000 for a participant with 8 years of participation and 10 years of service with an average compensation of $180,000 per year.
A. I only
B. II only
C. I and III only
D. II and III only
E. I, II and III
- In statement I, the maximum benefit is $135,000. This is equal to the compensation limit of $150,000 x 9/10 (note that the dollar limit of $200,000 x 7/10 is larger). In statement II, it is true that the maximum benefit is $9,000. This is true even though it exceeds the $6,000 compensation due to the de minimis $10,000 benefit, which must be reduced by $1,000 due to service less than 10 years. In statement III the maximum benefit is the dollar limit of $160,000 = $200,000 x 8/10.