MMC Benefits Handbook
Plan Benefit Formula for Benefit Accrued on or after January 1, 2006 and before January 1, 2017
Example – Alessandro, a participant whose benefit has been entirely accrued on or after January 1, 2006
Alessandro was born on January 1, 1975, was hired by the Company on February 1, 2006, and terminated employment with the Company on April 30, 2011.
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Alessandro had 63 months (5 years and 3 months) of both Benefit Service and Vesting Service as of April 30, 2011. Therefore, he is vested in his accrued BEP benefit.
In March 2010, Alessandro's
Eligible Monthly Pay reaches the IRC limit on pay that may be considered for
tax-qualified plans. The example below shows how the BEP works to begin providing benefits once this limit has been reached. The example focuses on the portion of Alessandro's benefit that accrues during 2010.
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Time Period
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Unlimited Eligible
Monthly Pay
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IRC-Limited
Eligible Monthly Pay
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Covered Compensation (Monthly)
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1/1/2010 – 2/28/2010
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$20,000.00
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$20,000.00
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$8,888.00
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3/1/2010 – 12/31/2010
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$21,666.67
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$20,416.67
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$8,888.00
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How BEP benefit for 2010 is calculated:
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For the 1/1/2010 to 2/28/2010 time period (before IRC pay limit is reached)
"Unlimited" Retirement Plan Benefit - calculated without regard to IRC pay limit:
1.6% times $20,000.00/month times 2 months = $640.00
Minus
0.4% times $8,888.00/month times 2 months = $71.10
Equals $568.90
"IRC-limited" Retirement Plan Benefit - calculated under IRC pay limit:
1.6% times $20,000.00/month times 2 months = $640.00
Minus
0.4% times $8,888.00/month times 2 months = $71.10
Equals $568.90
BEP Benefit Accrued for the Period 1/1/2010 to 2/28/2010
"Unlimited" Retirement Plan benefit of $568.90
Minus
"IRC-limited" Retirement Plan benefit of $568.90
Equals
BEP benefit of $0.00
(the benefit is not yet affected by the pay limit)
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For the 3/1/2010 to 12/31/2010 time period (after IRC pay limit is reached)
"Unlimited" Retirement Plan Benefit - calculated without regard to IRC pay limit:
1.6% times $21,666.67/month times 10 months = $3,466.67
Minus
0.4% times $8,888.00/month times 10 months = $355.52
Equals $3,111.15
"IRC-limited" Retirement Plan Benefit - calculated under IRC pay limit:
1.6% times $20,416.67/month times 10 months = $3,266.67
Minus
0.4% times $8,888.00/month times 10 months = $355.52
Equals $2,911.15
BEP Benefit Accrued for the Period 3/1/2010 to 12/31/2010:
"Unlimited" Retirement Plan benefit of $3,111.15
Minus
"IRC-limited" Retirement Plan benefit of $2,911.15
Equals
BEP Benefit of $200.00 Accrued for the Period 3/1/2010 to 12/31/2010
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Total Benefit Accrued During 2010 from the Retirement Plan:
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$3,480.05 ($568.90 accrued from 1/1/2010 to 2/28/2010 + $2,911.15 accrued from 3/1/2010 to 12/31/2010) per year ($290.00 per month), assuming for this example that payment begins upon attainment of age 65 in the form of a single life annuity
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Total Benefit Accrued During 2010 from the BEP:
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$200.00 ($0 accrued from 1/1/2010 to 2/28/2010 + $200.00 accrued from 3/1/2010 to 12/31/2010) per year ($16.67 per month), assuming for this example that payment begins upon attainment of age 65 in the form of a single life annuity
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