Effen

New vesting schedule applies to the entire accrued benefit of anyone who worked more than 1 hour after 1/1/2008. You can't have different vesting schedules for different pieces of benefit.

Gee, why do I feel like I just got yelled at by June and Ward Cleaver. Gary knew, or should have known after almost 800 posts, that discussing fees on this board is a no no. If he was a new poster, I'm sure the reaction of the group would have been different. Personally I think Carrots was the best of the bunch.

We typically prefer money.

dmb, I'm not clear. Are you saying you have a client that provides post retirement death benefits and they need a FAS 106 valuation or Are you saying you are working with a qualified db plan that has post retirement death benefits as a benefit? If it is the first, your FAS 106 report will look a lot like a FAS 158 report. Post retirement death benefits are fairly common as part of a post retirement medical plan or as a stand alone. I would just value the benefit and pretty much ignore the contracts. In other words, if the death benefit is $10,000 I think the plan's liability is just based on the $10,000. If they are insuring this risk it is just a vehicle used to fund the benefit, but it doesn't really impact the plan's liability. I have seen some people use a group term rates to set the liability, but this probably wouldn't be appropriate for a post retirement group since the group term rate is probably a composite and would include actives as well. In other words, the group term rate wouldn't properly reflect the post retirement group.

WOW! I'm going to read that one, it is a lot shorter than the one I printed

FWIW, if any of your clients jumped on the yield curve after the IRS released the 9/25 newsletter, don't forget that you can use the alternative method for PBGC premiums as well. This can dramatically reduce their premiums. However, you need to do this before the due date of the comprehensive filing date, or you have missed your chance. If your client has already paid their premium, as long as they amend their filing before 10/15, they can still take advantage of the alternative method.

I spoke to a few others, including some actuaries with the "big boys" and everyone seems to think we need to do them. We have been doing them for our clients. Also, if you are doing the full 5500 for your client, be careful of the Schedule R. LOTS of new attachments that aren't obvious unless you read the instructions. They are asking for an incredible amount of information.

OK, but since my AFTAP is greater than 60%, as long as the amount of the retro payments was less than 50% of the present value of the benefits, I can still pay it, right?

Does anyone know if retroactive disability payments would be subject to benefit restrictions? I have a plan where the AFTAP is 65%. The plan pays an immediate disability benefit commencing when social security deems a person disabled. Sometimes social security takes years to make this determination. For example, the participant might receive a letter in 2009 stating they were disabled in 2007. In this situation the plan would retro pay disability benefits back to 2007. (disability is pure subsidy - not a retirement benefit) I know the regs say "any payment", but I was wondering if for some reason ancillary disability payments might be exempt.

Are you thinking that the PS CAN'T elect to change the funding target after the 10th month if it changes the range? That seems a little harsh, but I understand your position. I seem to recall hearing Holland say that the numbers on the SB had to match the AFTAP. I was just assuming that you could re-cert the AFTAP when you finalized the val, but your position could also be logical. I was thinking they could change it, but they might have to live the AFTAP. Keep in mind the due date for the PS to select the assumptions for the funding target is the due date of the 5500. That is 12.5 months after the AFTAP was due. Also, I did speak to the PBGC about the impact if the PS changes from segment rates to the yield curve after the premium due date. Their response was that they discussed it internally and decided that they would issue a refund or credit. I know this doesn't mean much, but it does mean that some at the PBGC think the funding target can be changed after the premium due date.

I guess the basic question is "what is the impact of a change in the funding target after the 9th month of the plan year?" I guess you could say changes after 10/1 won't impact the AFTAP, but they would impact the required contributions and/or PBGC premiums. The PBGC told me you can request a refund if the PS elects to use the yield curve for fuding and PBGC purposes after your premium filing due date. However, before you do remember you are stuck with the yield curve for 5 years for PBGC purposes. Just another bit of PPA timing stupidity.

If the change is "material" I think I have a problem, however as I read (2) it seems to say that a change is material if it results in the plan being more of less restricted than it was being operated. In my case the plan was operating in accordance with a presumed AFTAP of 72% and were properly restricting benefits to 50% of the lump sum and properly notified the participants. However, they didn't want to impose the complete restriction until absolutely necessary, so they asked me not to certify the final until 9/30. So, I certified on 9/30 a final 2009 AFTAP of 55%. However, the PS took no action based on this AFTAP (except to sign an election to use the yield curve). So on 10/2 I re-certify the AFTAP at 73%, therefore no change in the previous restriction. (Except for the 2 days.) Since the plan never "operated" in accordance with an more or less restrictive AFTAP, I'm thinking it isn't a material change and therefore it should be ok? P.S. I agree that if I would have not certified on 9/30 the plan would be deemed to be 60% and the client is SOL until at least 1/1 (or maybe 4/10).

4/1/2009 Plan sponser elects to use non-tranistional segment rates for 1/1/2009 val. I see AFTAP will be 55%, but wait until 9/30 to certify since prior year was 82%. Benefit restrictions came in 4/1/2009, participants notified of 50% LS restriction. 9/14/09 IRS says you can use yield curve for 2009 and switch back to segment rates for 2010 9/30/09 I cert AFTAP at 55% based on non-transitional segment rates. 10/2/09 PS elects yield curve for 2009 valuation. AFTAP based on yield curve is 75%. 10/2/09 I re-certify AFTAP at 75%. Since no notices were ever sent notifing participants of complete restriction, is this a material change? I'm thinking my 10/2 cert is the AFTAP and it's not material. I think if it would have happened after the 100% lump sum restriction notice was sent, then I might have a material change and I would have been stuck with the 55%, although the proposed regs seem a little contradictory. What if the PS made this election on 9/14/2010? I think How do you handle changes in the funding target after 10/1 of the current year?

Just to further clarify what David is saying, the funding rules currently in place allow a plan sponsor to contribute and deduct (if otherwise permitted) an amount that would in essance result in the plan being 150% funded. Also, as a point of confusion, contributing the minimum required contribution is generally not sufficient to ensure the plan is 100% funded. Contributing the minimum ($0) does not mean the plan is 100% funded and contributing the maximum ($150) would probably result in the plan being overfunded by approximatley 50% (ie:150% funded). Overfunding might make sense if the client wants to prefund for the future, but wouldn't make sense if the plan is nearing its end or benefits were frozen. The large range provides employers with flexibility to fund when times are good, and not be overly burdensom when times are bad (I know, lots of screaming in the back ground, but we are talking theory....) This should be a consulting opportunity for your actuary and if he/she needs to explain how the numbers work for your plan. You need to understand the implications of the contribution and only your actuary can help you. If he/she can't/won't, find one that will.

prior post Here is a prior thread. FWIW, I am not telling my clients to re-notify, unless they have new participants coming in. I think that would meet "good faith" for now.

Sure, it happens all the time. A company may be making quarterly deposits towards 2009 before they have completed their 2008 final payment. As long as they designate which year the deposit is for, there is not problem. PPA had some ordering rules that you might want to look at, but I don't think they change what I said.

Thanks for the heads up Andy. Its nice that they gave us 5 whole days to redo our 2009 AFTAPs! Honestly though, this is a good thing, even if my changing AFTAP might cause the plan to be disqualified, or was there relief on that?

I agree, the benefit restrictions become effective on certification date. Also, keep in mind that WRERA lets you use the prior year's ratio for the purpose of the accrual freeze, so you might only be dealing with a lump sum restriction.

I guess maybe you could stretch this to say if we don't actually file the EZ then you don't need to prepare the SB, but I think you are just creating problems for yourself. As AtA said, how do you intend to demonstrate if contributions were sufficient? Also, thinking ahead, what if the assets eventually cross over the $250K, how will you know justify your starting positions if you never prepared an SB? I guess you could argue that if they elect to forfeit any COB and they never elect to create PFB then the history doesn't really matter anymore, but what about possible funding deficiencies? We are currently looking at take over situation of a plan like yours where no schedule B's were done because they weren't required. Without schedule B's, how do we even know if an actuary worked on it, let alone agreed with it. We have good reason to suspect that on this particular case the TPA felt that since no B's were required, they didn't need to pay no high priced stink'n actuary so they just did the vals on Datair, which as we know "if it came out of the computer, it must be right". So now what? Our only choice is to redo all prior vals and pass the bill on to the TPA so they don't get sewed by the sponsor. Although you might not be explicitly required by the instructions, I think basic professionalism would require it.

Instructions seem pretty clear to me.

I would determine his AB immediately before the amendment, then immediately after the amendment and he gets the greater. I think you need to ask the client what they want, then make sure the amendment provides for it. As long as you don't reduce the participant's benefit from what is was immediately preceeding the amendment, I think you are ok. That said, if you are doubling the multiplier, I would expect that he would get an increase, but you don't need to calc what his benefit would have been at 65 under the new formula and then roll that up. Just check his new formula benefit against his current rolled up benefit and that becomes his current accrued benefit.

I agree with Andy on both fronts. It's ok, it's not aggressive (assuming the assumption is really valid). In fact, I would use 100% assumed at 55 and not 99.99%, if I felt it was reasonable. As long as your plan provides an unreduced ben at 55, with no in-service distribution until 65, I think you are ok. If your participant actually retires at 55, he is entitled to a full benefit. Now, you might want to make sure you can justify your assumption. Getting the participant to sign something telling you they intend to retire at 55 wouldn't be a bad idea.

I don't know if there is a real answer, but we took the position that we were only going to prepare the old SAR type notice. Primarily because the plan terminated in 2007 and therefore we did not prepare a 2008 SB. Since we didn't prepare an SB, we don't have any of the information to put in the new AFN. I figured this was a good faith effort.

Not if it is > $5,000. Benefit restrictions apply to spouses & alternate payees as well.

I agree as much as you can without any instructions. I think what they want on line 38 is the amount that could be added to the PFB if the PA elects. In your example, that would be $50K. Keep in mind if the PA wants to add the $50K to the PFB, they have to elect to do that before the due date of this 5500.