Effen

Can you be more specific about what you are trying to do? Are you preparing a Notice of Plan Benefits, are you trying to calculate a lump sum, are you preparing distribution election forms, are you gathering information for an insurance company quote? Actual retirement date is always an unknown future date. If you are determining a lump sum for someone beyond NRD, you determine the monthly benefit as of the lump sum payment date, then figure out the amount of the lump sum. If the termination delays the actual payout date, you just need to recalc everything as of a new date. There is no deferral period once they are past NRD. If the plan is terminating, and you are offering a lump sum, the participant should be given the choice of an immediate lump sum, an immediate annuity (with options), or continued deferral (which must be purchased by an insurance company). OR, are you saying your plan only pays a benefit after separation from service and since they haven't terminated, they aren't entitled to a benefit under the terms of the plan? If that is true, you can amend the plan to allow for immediate payment on the termination date, or buy an annuity that will pay the benefits once they separate from service (insurance companies generally don't like this type of provision because they will need to track the participants status).

I still don't understand the question. The benefits are calculated as the the benefit commencement date. I don't think the plan termination date has any relavence. If the benefit is going to commence after NRD, it would need to be actuarially increased to reflect the missed payments, unless you gave the participant a suspension of benefits notice at their NRD. You wouldn't stop the rollup just because the plan terminated.

Many people argue that the at-risk liability is equal to the sum of the cash balance accounts, therefore a contribution to bring the assets up to the at-risk liability would be deductible. However, the at-risk liability only includes vested benefits, therefore for a non-vested participant, technically you would still need to project and discount at least a few years to account for the vesting.

A lot of people complained last year about the timing and their response was that the meetings are set almost 10 years in advance. I assume when they scheduled it, they were more concerned about Easter on April 4th. I know the timing sucks, but not even the meeting committee could have anticipated the idiocy of PPA. Although I am one of those that likes the EA meetings, there are lots of other good meetings later in the year. I hear the ACOPA and Conference meetings are very good.

This question may show my ignorance --- but why are you allocating a funding deficiency. To whom are your trying to allocate it, and why? Are you talking about the excise tax on the deficiency? If so, aren't they in Critical status so the excise tax shouldn't apply?

I don't do any floor offsets for a multitude of reasons, most have already been stated. I do work with attorneys who draft them and they are telling it has gotten very difficult for them to get a floor offset document through IRS approval process. So much so that some documents that were approved on the last go round aren't getting approved this time. The IRS has even forced them to retroactively "fix" documents they previously approved. I'm just throwing it out there. To me, floor offsets just aren't worth the aggravation.

Not disagreeing with anything that has been said so far, I would argue the valuation is "due" whenever the client wants it. If your freind would like to know how much he should contribute for 2009 and the actuary hasn't told him yet, he needs to ask the actuary why. It might be an EOY valuation as we mentioned, it might be he never gave the actuary what he needs to do the calculations, it might be the actuary just didn't get to it yet. It use to be that most small plans were EOY. PPA made this virtually impossible so many have swithed to BOY. Personally, only my small cash balance clients are still EOY.

Although multi-employer "annuity" plans may look/feel like a 401(k) plan, 99% of the time they are not. Assuming the contribution rate is negotiated, it is considered employer money and not subject to testing. Even if it really was a 401(k) and each participant decided how much they wanted to defer, do you have any HCE's in the group?

i think you heard right

We have been using funding (PPA) assumptions and haven't heard "boo" from anyone. Then again, we didn't really hear anything prior to PPA about the assumptions either. The number isn't really all that important to anyone.

I think there is more to it than that. Rules are much tighter now than before. Documents need to be specific, especially regarding lump sums and eligibility. There are also rules related to when the distuributions must be received. Sometimes they are funded with a trust, sometimes with insurance, sometimes not at all. They need to be recognized for FASB purposes I am certianly not an expert, but I know their impact shouldn't be underestimated. Probably best to find an attorney who works with them to get an idea what is involved.

Well good morning. For 1/1/2009 valuation you can use any of the 4 look back months. For 2010, you can't. Biggest issue at this point in the year would be a potential material change to your AFTAP that would potentially disqualify your plan. If the AFTAP based on the yield curve is in a different restriction category than the one you certified prior to 10/1/09, then you have a material change and your plan is disqualified. Since I assume this would happen if the employer elected to use the yield curve now, it is probably a missed opportunity. Then again, 2009 is a good faith year and it might be worth the risk. The IRS released a memo on 9/25 stating you had another "free" change on funding assumptions for 2010 valuations. Personally I think it is/was very unreasonable for the IRS to release guidance on the using the yield curve 5 days before AFTAPs had to be certified. However, the rules as currently written would most likely call this a material change and therefore probably not an option at this time.

I know David Ziegler issues the approvals for amortization extensions and such. I have also had good luck with Carol Zimmerman. You can get phone/email address from the SOA site since they are both actuaries.

That fact that the normal form is a J&100 really has nothing to do with whether or not the plan can pay a lump sum. Also, the normal form is defined in the plan document, not the valuation. Read the plan doc. If it allows for a lump sum, then you can pay it. If it doesn't, you can amend it as part of the termination so that it can be paid. How many participants are in the plan?

Wow, I will assume that you guys aren't really dating yourselves, but that you just listen to a lot of Sirius 118.

Did you have additional funding charges in 2007?

I suspect part of the reason for the higher passing mark is the quality of the students. FM & MLC exams are generally taken by students thinking about an ASA or FSA. EA-1 is typically taken by students who don't have such high asperations. But I agree with ananky. An ASA will server you better in the long run. What value is an EA 15 years from now when most of the db plans are gone?

Reluctantly I think I agree. This was confirmed in today's CCA Audio cast. However, since the Regs are not effective until 2010, you might want to think about using a "good faith" compliance arguement for 2009. I agree that it is an unreasonable result since the sponsor technically has until the filing of the 5500 to select the assumptions and asset method. However, due to 436 considerations, this deadline is effectively pushed up to the first day of the 10th month.

In the old days Jordan and Kellison were the old and new testament. If you know those, you will do fine. When I took it, I liked Parmenter's book more as a supplement to the other two. Sometimes Parmenter's explanations were a little easier to understand. Other than the text books, the best way to study is by using old exams. They are all available on the Joint Board web site. You can also buy solutions to the exams through various vendors, or you may be able to buy used ones from previous students. Also, try to form a study group with other in your area. Maybe someone who past more recently can comment on the other text books.

Interesting, I can't seem to find exactly what I was looking for, but here a two that might help. old post old post 1 - I don't really like the PBGC's response, but at least they are saying you must use rounded ages - according to the poster. If you search "annuity starting date" you will find a lot of threads that dance around the issue. To me, I just don't see how you can argue that basing the lump sum on some date/age in the past doesn't violate 411(d)(6), when you are clearly paying someone less than the value of their accrued benefit.

Ultimately this is a plan design question, although at this point, most plans have not been amended to account for it. Our position has been that if restrictions are in place the participant can either elect an immediate annuity, or defer their decision. If they elect the immediate annuity, then that cannot be changed at a later date. In other words, if < 60% they can have the annuity or defer. If they elect the annuity, it cannot be changed to a lump sum at a later date when the AFTAP increases. If AFTAP > 60%, but less than 80%, they can have an a) annuity, b) 1/2 annuity and 1/2 lump sum, c) 1/2 lump sum and defer election on other 1/2. If they take a or b, then they cannot convert that annuity at a later date to a lump sum. The only way they can have a lump sum at a later date is by deferring their election. I acknowledge that others feel differently, however whatever you do it must be in the plan document. If the plan sponsor wants to let the participant have a 2nd bite at the apple, and your plan provided for that option, I think it would be ok. I just haven't been recommending it, primarily due to adverse selection and administrative complexities. I think 2010 might produce some irritated participants due to rising 417(e) rates. Let’s say a participant wanted 1/2 lump sum and deferred the election on the other half. Now let’s say that the lump sum value of 1/2 of the AB is $10,000 in 2009. If the AFTAP increases so that the restrictions are lifted in 2010, and the 2nd half of the annuity is valued, it might only have a value of $9,500. That won't seem "fair" to a lot of participants. Nothing we can do about it, other than being ready with an explanation.

Apparently he has to die.

They do seem unreasonably high to me as well, so I think your "scam" radar is working fine. Obviously there are lots of creative solutions to allow higher than expected contributions, so I'm not going to say it is obviously illegal, but I would want to know more.

I wouldn't read it that way - how could you have 1000 hours of service on a given day? I think it just means that if they are a participant at any point during the year, and have not terminated, then they get the contribution. Since he was a participant on the first day of the year, he met the requirement as long as he didn't terminate during the year. It would not be uncommon for a "standard brokerage plan" document to be generous with contributions. Just remind him how much he saved on his document by using a prototype when you bill him your time to interpret it, and add to that the extra he has to contribute to the plan because of it. Penny wise, pound foolish

Based on what you quoted, I would probably say they would be entitled to the contribution because he has obviously met the eligibility requirements (since he is a participant) and he has not terminated. I see three options: 1) give him the allocation based on the above interpretation 2) let the sponsor make an interpretation based on the document - after all, it is his plan, not yours. Since it is a one life plan your chances of getting sued for following his interpretations seems fairly remote. (If there were other participants I might think differently.) 3) contact the document provider and ask them for an interpretation of their document