At this year’s EA meeting there was a session on VAPs. During the session they discussed how the 415 limit should be handled for VAPs (pg 1512). The example they gave (which is from the regulations) is effectively an increasing annuity and they make an adjustment to the 415 limit to decrease the limit to accommodate the increasing annuity. What happens if in the example the hurdle rate is 7.5%, instead of 4%? The plan would be providing, effectively, a decreasing annuity and the 415 limit would need to be increased to accommodate this, and may be closer to $250,000. Is this correct? What happens if the hurdle rate is 10%, the 415 limit could be $300,000.
Variable Annuity Plan - 415 Limit