MMC Benefits Handbook
Accrued Benefit Credited Both Before and After January 1, 2006
If you had periods of eligible service both before and after January 1, 2006, your BEP benefit will consist of two parts: a BEP benefit accrued as of December 31, 2005 and a BEP benefit accrued on or after January 1, 2006 and before January 1, 2017.
The BEP benefit accrued as of December 31, 2005 will be calculated under the BEP formula in effect prior to January 1, 2006 and will be based solely on your Benefit Service and your Final Average Salary as of December 31, 2005. See "Plan Benefit Formula for Benefit Accrued prior to January 1, 2006" for details.
The BEP benefit accrued on or after January 1, 2006 and before January 1, 2017 will be calculated under the BEP formula in effect on or after January 1, 2006 and will be based on your Eligible Monthly Pay and the Plan's benefit accrual percentage for each month that you are eligible. See "Plan Benefit Formula for Benefit Accrued on or after January 1, 2006 and before January 1, 2017" for details.
Please note that participants who met certain age and service criteria on December 31, 2005 may be eligible for a transition benefit, which may increase your benefit accrued as of December 31, 2005. See "Transition Benefit" for details.
Example – Jeanne – a participant whose benefit was accrued both before and after January 1, 2006
Jeanne was born on January 1, 1955, was hired by the Company on July 1, 1999, and terminated employment with the Company on December 31, 2006. Jeanne accrued a Retirement Plan benefit and a BEP benefit before January 1, 2006 and on or after January 1, 2006.
  • Jeanne had 90 months (7 years and 6 months) of both Benefit Service and Vesting Service as of December 31, 2006. Therefore, she was vested in her accrued retirement benefits.
  • Jeanne's Eligible Monthly Salary during the period from 7/1/1999 through 12/31/2005 was as follows:
Time Period
Unlimited Eligible
Monthly Salary
IRC-Limited
Eligible Monthly Salary
Unlimited Salary in Period
IRC-Limited
Salary in Period
7/1/1999 – 2/28/2001
$16,666.67
$16,666.67
$333,333
$333,333
3/1/2001 – 2/28/2003
$17,500.00
$16,666.67
$420,000
$400,000
3/1/2003 – 12/31/2003
$19,166.67
$16,666.67
$191,667
$166,667
1/1/2004 – 12/31/2004
$19,166.67
$17,083.33
$230,000
$205,000
1/1/2005 – 2/28/2005
$19,166.67
$17,500.00
$38,333
$35,000
3/1/2005 – 12/31/2005
$20,833.33
$17,500.00
$208,333
$175,000
Total for high 60-month period from 1/1/2001 – 12/31/2005
   
$1,121,667
$1,015,000
  • Jeanne's highest 60 consecutive months of Eligible Monthly Salary for purposes of her benefit accrued through December 31, 2005 were from 1/1/2001 through 12/31/2005. She earned $1,121,667 during that period. Under IRC limits, the maximum amount of annual compensation that could be considered for this period was $1,015,000.
  • Jeanne's unlimited Final Average Salary for purposes of her benefit accrued through December 31, 2005 is her average annual salary over her highest-paid consecutive 60 months (5 years): $1,121,667/ 5 = $224,333.
  • Jeanne's IRC-limited Final Average Salary for purposes of her benefit accrued through December 31, 2005 is her average annual salary over her highest-paid consecutive 60 months (5 years), subject to IRC limits: $1,015,000 / 5 = $203,000.
  • Jeanne's annual Covered Compensation for 2005 was $78,228.
  • Jeanne's Eligible Monthly Pay (used to determine her benefit for the Retirement Plan formula in effect in 2006 and later years) for the period from January 2006 through December 2006 was as follows:
Time Period
Unlimited Eligible
Monthly Pay
IRC-Limited
Eligible Monthly Pay
Covered Compensation (Monthly)
1/1/2006 – 12/31/2006
$20,833.33
$18,333.33
$6,869.00
How BEP benefit before January 1, 2006 is calculated:
"Unlimited" Retirement Plan Benefit - calculated without regard to IRC pay limit:
1.6% times unlimited Final Average Salary ($224,333) times 6.5 years = $23,330.67
Minus
0.4% of the lesser of unlimited Final Average Salary ($224,333) or Covered Compensation as of 12/31/2005 ($78,228) times 6.5 years = $2,033.93
Equals $21,296.74
"IRC-limited" Retirement Plan Benefit - calculated under IRC pay limit:
1.6% times IRC-limited Final Average Salary ($203,000) times 6.5 years = $21,112.00
Minus
0.4% of the lesser of Final Average Salary ($203,000) or Covered Compensation as of 12/31/2005 ($78,228) times 6.5 years = $2,033.93
Equals $19,078.07
BEP Benefit Accrued before January 1, 2006:
"Unlimited" Retirement Plan benefit of $21,296.74
Minus
"IRC-limited" Retirement Plan benefit of $19,078.07
Equals
BEP benefit of $2,218.67 Accrued before January 1, 2006
How BEP benefit on or after January 1, 2006 is calculated:
"Unlimited" Retirement Plan Benefit – calculated without regard to IRC pay limit:
1.6% times $20,833.33/month times 12 months = $4,000.00
Minus
0.4% times $6,689.00/month times 12 months = $321.07
Equals $3,678.93
"IRC-limited" Retirement Plan Benefit – calculated under IRC pay limit:
1.6% times $18,333.33/month times 12 months = 3,520.00
Minus
0.4% times $6,689.00/month times 12 months = $321.07
Equals $3,198.93
BEP Benefit Accrued on or after January 1, 2006:
"Unlimited" Retirement Plan benefit of $3,678.93
Minus
"IRC-limited" Retirement Plan Benefit of $3,198.93
Equals
BEP Benefit of $480.00 Accrued on or after January 1, 2006
Accrued Retirement benefit from the Retirement Plan:
$22,277.00 ($19,078.07 accrued before January 1, 2006 + $3,198.93 accrued on or after January 1, 2006 = $22,277.00) per year, or $1,856.42 per month, assuming for this example that payment begins once Jeanne attains age 65 in the form of a single life annuity
Accrued Retirement benefit from the BEP:
$2,698.67 ($2,218.67 accrued before January 1, 2006 + $480.00 accrued on or after January 1, 2006 = $2,698.67) per year, or $224.89 per month, assuming for this example that payment begins once Jeanne attains age 65 in the form of a single life annuity