MMC Benefits Handbook
Social Security Level Income
The Social Security level income payment form is intended to provide you with a level amount of monthly income for life by taking into consideration both the monthly income stream payable from the Plan and your estimated monthly income stream from Social Security assuming you commence your Social Security benefit at age 62. The Social Security Level Income option is payable for your life only. When you die, all benefit payments stop.
You may elect the Social Security level income form of payment provided you commence your monthly benefit payments prior to age 62, the age you first become eligible for Social Security benefits.
The monthly income stream that is payable from the Plan under the Social Security Level Income Option must be Actuarially Equivalent to the monthly income stream that would be payable to you if you elected a single life annuity at your Benefit Commencement Date. However, unlike a single life annuity, which pays the same monthly benefit amount from your Benefit Commencement Date until your death, the Social Security Level Income Option will pay a higher monthly benefit amount from your Benefit Commencement Date until Age 62, when it is assumed you will commence your Social Security Benefit, and will pay a lower or no monthly benefit amount from age 62 until your death. In this way, it can provide you with approximately level income from your Benefit Commencement Date until death from both sources of income, the Plan and Social Security.
Social Security Level Income Example: Sally
Example 1. Sally is a Retired Participant with a vested Accrued Benefit of $2,000 per month, all of which was accrued on or after January 1, 2006 and before January 1, 2017, and elects to commence her monthly benefit payments at age 55. Sally's monthly benefit after reduction for early commencement is $1,000 per month ($2,000 × 50%). See "Early Commencement: If You Commence Before Age 65." Sally's estimated social security benefit payable at age 62 is $1,800 per month. Sally selects the Social Security Level Income form of payment.
The alternate stream of benefit payments that is Actuarially Equivalent to a single life annuity of $1,000 per month commencing at age 55, provides for a monthly benefit payment of $2,095 payable from the Plan starting at age 55 until age 62, and a monthly benefit payment of $295 payable from the Plan starting at age 62 for the remainder of Sally's life. Assuming Sally commences her Social Security Benefit at age 62, She will have monthly income from the Plan of $2,095 from age 55 until age 62 and monthly income from the Plan and Social Security of $2,095 ( $295 from the Plan + $1,800 from Social Security) payable from age 62 for the remainder of Sally's life.
However, because the income stream payable from the Plan must be Actuarially Equivalent to a Single Life Annuity, it may not always be possible to achieve level income over your life, if the monthly benefit amount after reduction for Early Commencement is substantially less than your estimated Social Security Benefit payable at age 62, the amount payable to you from the Plan once you attain age 62 could be zero.
Social Security Level Income Example: Fred
Example 2. Fred is a Retired Participant with a vested Accrued Benefit of $1,000 per month, all of which was accrued on or after January 1, 2006 and before January 1, 2017, and elects to commence his monthly benefit payments at age 55. Fred's monthly benefit after reduction for early commencement is $500 per month ($1,000 × 50%). See "Early Commencement: If You Commence Before Age 65." Fred's estimated social security benefit payable at age 62 is $1,500 per month. Fred selects the Social Security Level Income form of payment.
The alternate stream of benefit payments that is Actuarially Equivalent to a life annuity of $500 per month provides for a monthly benefit payment of $1,275 payable from the Plan starting at age 55 until age 62, with no monthly benefit payment thereafter. Assuming Fred commences his Social Security Benefit at age 62, He will have monthly income from the Plan of $1,275 from age 55 until age 62 and monthly income from the Plan and Social Security of $1,500 ($0 from the Plan + $1,500 from Social Security) payable from age 62 for the remainder of Fred's life.
If you have a Spouse and wish to elect the Social Security Level Income form of payment, you must obtain your Spouse's written, notarized consent to your election. If you have a Domestic Partner and you wish to elect a Social Security level income Option, you are not required to obtain your Domestic Partner's consent.