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wally

Bad History

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Hoping for some advice.  We just took on a client earlier this year with a DB plan that had been in place for a while.  We outsource the actuarial work to several actuaries.  The actuary who previously worked on this plan has subsequently passed away this year.  In looking for another actuary to take over the case, we are finding the previous work is difficult for the takeover actuary to figure out and they are declining to take on the work.  I believe the issue relates to a freezing or capping of benefits that occurred several years ago.  Unsure how to proceed.

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1) Find out from the actuary what information is missing and have the client track it down, even if it means crawling around in the attic opening old boxes.

2) Find a hungrier actuary (not me).

3) In the case of a frozen plan there is usually a very wide margin between minimum required and maximum deductible.  Ask the (an?) actuary if they assume the highest benefits for NHCE's and lowest benefits for HCE's [all based on the history the client can find] whether the prior contributions satisfy minimum fundiing and don't violate maxium deductible rules.  If so, have the client elect to eliminate all balances and let the actuary go forward.

4) Tell the client that because your actuary didn't publish enough information each year for another actuary to duplicate the work performed and you weren't diligent enough to understand what was necessary your firm will be paying the (a?) new actuary to guide the cleanup.

Good luck.

  • Haha 1

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I had a takeover case similar to this case a few years ago, where the EA went missing in action and could not be located. The EA apparently kept all the records for this client, including the plan documents, valuations etc. The only data that we were given were the 5500ez and and 2013 Sch B.

I did a search but could never reach the EA. Theory is that he was very ill and may have passed. We wound up starting a new plan and client took a taxable distribution of the existing plan assets. We discussed VCP options but client chose not to do it. 

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