Decision Not To Request IRS Determination Letter

[Andy the Actuary]

Have a 5 person professional DB plan where age 50ish principal stands to get a lump sum of about $1.5 million -- the 415 maximum. The principal does not want to spend the money to obtain an IRS Determination Letter.

When we've requested a D-Letter on plan termination for such plans, we attach to the 6088 the benefit calculations.

The D-Letter, thus, not only serves as an insurance policy for the client but also to some extent for the actuary.

If you've been involved in such situations, have you requested the client to execute a hold-harmless agreement since they are acting against your recommendations in not requesting a D-Letter?

[Bird]

Yes...well, it's not exactly a full-blown hold-harmless agreement but I have them make the decision, in writing, with an explanation of the pros and cons.

[Andy the Actuary]

Very helpful, thank you. The pros/cons have been laid out but were not part of a signed agreement. Now, they will be.