Effen

I had a client who recevied a similar letter for an existing db plan. The letter promised they had overpaid by $14,000 and they could help them get the money back. I checked their records, checked with the PBGC and found no overpayments. I told the client my findings and suggested that they contact the person, get it in writting that they could recover the "excess" and go for it. They contacted the company who told them the statute of limitations had passed and they could not recover the excess payments. Moral - it's probably a sham. You (or the client) can get a complete history from the PBGC that details their payments. I have had several clients receive these letters and so far none have been legit.

I agree. Death of the participant does not seem to lift the restriction. Sorry about the mislead.

I believe death ends the top 25 restriction. In other words, if the participant dies, the spouse can receive the full benefit.You should read your document to make sure.

I agree. If you were "green" in 2008 and you froze your status for 2009, you are considered "green" for 2009 even though your actual 2009 certification said you would have been critical if you hadn't frozen your status. If your 2010 status shows you are "green" again, then you are green and you were never really critical. No, assuming they froze their status and their 2008 status was not Critical (many funds froze their status even though their status wasn't going to change to avoid updating their funding improvement or rehab plans)

The actuary needs to certify the plan's status each year. This needs to be done within 90 days of the first day of the plan year.

The other issue is the notice is stupid, and intentionally contradictory from one year to the next. The 12/31/2008 liabilities reported on the 2008 notice are estimated and based on PBGC rates (assuming they followed the guidelines). PBGC liabilities are not the same as funding liabilities since they are based on a different set of interest rates and are generally (but not always) used to determine the amount of the PBGC premium. The 1/1/09 liabilities reported on the 2009 notice are based on the plan's funding target which is on a completely different set of interest rates. The problem doesn't rest with your company giving you bad information, the problem is with our Congress and IRS who devised a notice requirement that forces your company to provide information before it is possible to calculate, and requires them to provide numbers that are labeled the same, but calculated differently from year to year. Believe me; it can actually be worse for multiemployer plans where they could be getting two different notices on the same day with different information. Remember this type of thing when you vote next! P.S. It is refreshing to know that someone actually reads these things.

Not really. Once the pen was put to paper the benefits were accrued and therefore protected under 411. You can change the provision to the exent it might impact future participants, but you can't really change what has already happened. The horse is already out of the barn. Maybe look closely at the plan language and make sure the statements were done correctly. Do the participants really have 2 years of benefit credit at the end of year one, or should it have been that they just accrued their year 1 benefit as of the first day of the first year so that end the end of the first year they still only have 1 year of benefit credit? We don't do many with past service credit, so I don't know if this is a common "problem" or not. How do others draft the past service language?

I have seen a lot of creative things in the multiemployer world, but something like that would seem to run afoul of the definitely determinable rules. Also, you would have to keep doing 204(h) notices every time the benefit decreased. I just don't see how it could work.

We are doing what is says... 37-36. I didn't think this related to their actual election. You would report what they actually elected on line 11(d) on the next year's SB. At least that is how we are doing it.

plus you owe a little penalty interest.

Neither Andy deserved your remarks.

I agree with Blinky - according to the regs, it is a material change no matter what your facts are. That said, the client still may choose to do it. If I was the client, I'm not sure I would let a material change stop me from keeping my company running. Saving significant amounts of contribution might be worth the risk. However, if the company goes into bankruptcy, expect the PBGC to ask to see all of the elections and notices that have been sent.

VEBA - there is no call for those remarks. Andy is a valuable contributor to this board. I didn’t read anything he wrote as derogatory towards you personally.

Agree w/ ATA, but recognize the actuary is often asked for a reasonable suggestion. When determining what discount rate might be reasonable, you should be looking at the yield curve, not necessarily the AA rate. Plot the anticipated benefit payments on the yield curve (not necessarily the PPA yield curve) http://www.soa.org/professional-interests/...es-pension.aspx and determine a composite rate (like a PPA effective rate) and that should be close to a reasonable discount rate. (+-.25 bps). But as Andy stated - your's is just a suggestion, the client/auditor have the ultimate authority.

I guess I slipped into a prophetic trance and was channeling a response from sometime in 2014

Sorry, I feel like I'm on a different boat. Maybe someone else can chime in. I'm confused by your use of the term "balancing item"? What are you balancing? My thought is post PPA the TNC needs to include some expense for the cost of the death benefit. As I said, this is NOT the premium amount since the premium has an investment component in it. I don't think the FT includes any of the value of the insured death benefit since it is not a liability the plan will pay and is covered by the insurance. Therefore the only impact of insurance is a higher TNC. I think the main question is how do you handle the cash values. I believe the consensus is that you add the market value of the insurance (cash surrender value?) to the trust assets and those are your assets used to determine your minimum and maximum contributions. In other words, the min/max should be the same regardless of whether the policies are term, whole life or universal life. The cost of the death benefit is the same, the only reason the premiums are different is due to the investment component of the policy. Therefore, you need to break out everything other than the cost of the death benefit and treat it like an investment, not a cost. The incidental death benefit rules didn't change when PPA was past. They are not impacted by the PPA funding rules. Keep it to the 100X and you won't have any trouble. If you are trying to pound a square peg into a round hole to "sell" more insurance, I can't really help you. Maybe Ned will chime in and give you a few tips.

That is my understanding. You have one more "free" switch in 2010.

Yes, there are definitely rules for elapsed time. Keep in mind the base method for crediting service under the law is counting hours. Any other method (i.e. elapsed time) is just an approximation that can't produce an answer worse than counting hours. Therefore, even under elapsed time you still need to guarantee that someone who completes at least 1000 hours still must receive at least a 50% accrual. There is a lot written about crediting service. Search what ever service you are using or check out 1.410(a)-7 for more details.

You need to look at the plan and see how it counts service. It can be years, months, days, etc. My experience with elapsed time plans is that it usually accrues over days. In other words, if they are employed on the 2nd day of the year, they have earned 2/365 of an accrual. If they are employed on the 60th day, they have 60/365. You need to be careful with elapsed time because it ignore periods of no service. In other words, if you work the first and last day of a year, you probably earned the entire year. Not every plan is the same, but I'm pretty sure you can't require anyone to work all 365 days to get any accrual. I'm thinking you at least need to provide 50% accrual for 50% of the year, but I'm not positive.

I think you might have several issues with your funding, even though you didn't ask about that. The TNC should include an expense for the cost of the death benefit - this is generally NOT the premium, but it should be something. In other words, if your TNC doesn't include the expense, than it isn't really a TNC. You might want to look at these past threads. http://benefitslink.com/boards/index.php?s...nce+PPA+funding http://benefitslink.com/boards/index.php?s...nce+PPA+funding Anyway, to answer your question I wouldn't go past 100X projected. Anything else in the post PPA world leads to potential fights related to interpretations of the law, and in general the IRS had deeper pockets and more incentive to win.

Just so I understand, does your $100,000 TNC include the $30,000 premium? Is the $30,000 the pure cost of the insurance or does it have an investment component in it? "The option that gives the largest premium is (b)." Is the amount of the premium flexible? I don't understand how one option could produce a larger premium? Isn't the premium the premium? You gave your TNC & FT, but not the assets or the shortfall. Are you including the CV in your assets?

As you already know if you have read the Jeffersonian debates on this board, I say your document is faulty and should be fixed, or "interpreted" differently. The only correct answer (in my book) is to give interest to the date of distribution...anything else violates 411(d)(6) and is a reduction of the participant's accrued benefit.

It could be "legit", but we probably need more information. Can you look in your SPD and tell us exactly what the formula is. Also, why do you think "the employer contributes on those earnings above $35000"? What kind of contributions does he make? How do you know he contributes on those earnings? Is this a defined benefit or a defined contribution plan? Is this a collectively bargained plan? Non-profit employer? Multiemployer plan? Hourly only plan? Salaried only plan? Can you give us a few more details?

Thank you. So I guess that means we have absolutely no guidance on how to handle a potential status change as a result of the new law? This is just insanity!

I think I printed a copy of the Senate version before Obama signed it. Towards the end, there was a section titled Section 315 Transition Rule for Certifications of Plan Status. Section (b)(2) of this section said if you wanted to change a past certification as a result of the new law you had to do so within 75 days after the enactment of the Act. I printed the CCH version after it was signed, which was labeled Senate version as approved by the House and signed by the President; however, this section seems to be gone. Did they delete the 75 day requirement before it was signed?