Effen

yes, I have seen them.

I agree with rcline. In my opinion the Schedule B IS the valuation. It is clearly required that you prepare the Schedule B, even if it is not filed. It is also clear that the filer must retain the completed Schedule B so I think you need to send it to them. If they choose not to accept it, that isn't your problem, but I think you are obligated to provide it. I think charging for the Schedule B seperately implies it is a la carte. Kind of like ordering a meal and then having them charge you extra if you want to actually eat it. It just seems a little misleading. From the EZ instructions: From the Sch. B instructions (2007):

There is lots of discussions you might want to look at. Do a search for "settlor". Also, there is a lot on the DOL web site about paying fees - do a search for settlor expenses. My understanding is that fees for necessary administrative services can be paid by the fund, however fees that are not necessary for the annual admin can not. For example, if the employer would like a study prepared to increase/decrease benefits, those fees should not be paid by the plan because they aren't "necessary". It seems to me the expenses related to a correction should probably not be paid by the trust, but there may be reasons why it would be permitted.

I agree that the COB will most likely decline during 2008 due to market value losses. However, I now believe this entire downward spiral in the market is the result of Congress continued drive to get rid of credit balances. In fact, I'm surprised AtA didn't pick up on this. Just like the Feds going after Al Capone, they realized they couldn't take credit balances away directly, so they looked for another way to destroy them. So, in PPA they got the COB tied to real market returns, then all they needed to do was cause a financial crisis so great that no investment would be safe and COB's would get reduced. Obviously the plan was hatched during the early 90s because they had to have time to give lots of cash to the financial sector to provide prop up their dubious lending practices. Then, just before everything collapsed, they passed PPA and the trap was set. They instruct the accountants that everything should be marked to market, then point out the bad dept just hanging around in the financial sector and boom, markets start to fall and COBs are reduced, and those that remain can’t be used because the AFTAP will be less than 80%. By 2010, all COBs will be gone… mmooohaa haa haaa {maniacal laughter}. It was a brilliant plan.

http://benefitslink.com/boards/index.php?showtopic=41508 Double Post - please delete one.

I'm sorry but what is PPA 302©? Do you mean the new funding rules? If so, I don't think there was any delay in the IRC Section 430 rules relating to funding for single employer collective bargained plans. Only the benefit restriction rules of IRC Section 436 have a delayed effective date based on the expiration of the current bargaining agreement.

yes Although you may not be required to actually file the schedule SB if the assets are less than $250K, you are still required to have one prepared.

I agree with David, the easiest thing would be to have the plan amended. Simply referencing 417(e) just doesn't really work in a post PPA world. When amending you need to be careful of 411(d)(6) cutbacks. We had to change several of our plans that referenced 417(e). We chose to use the 417(e) applicable mortality and the lowest of the three segment rates. That should result in higher optional forms of payment and avoid potential 411(d)(6) issues.

I'll pick up point 1 - No, you can't use actual 2008 comp in your BOY 2008 val. Just do it like any other BOY val where you use an assumption for the current year's pay. You will need to use actual 2008 comp to do discrim testing at the EOY. This probably means you need to run a 2nd valuation for testing purposes. However, you can probably re-use a lot of that work for the 2009 BOY valuation for funding. 2008 Funding and discrimination testing will need seperate runs. Q 2 - I don't think you can change the val date to EOY without IRS approval.

Unless something else has changed, you can't recognize a waiver of benefits to determine your required contribution no matter what. The wiaver concept is only useful to allow a plan to terminate. Waiving benefits to avoid a required contribution has never been permitted as far as I know.

I agree that you should get a PBGC ruling - it is the only way to know for sure. I think it is fairly clear that architects are considered professional service employers. The question is does the term "landscape" change the meaning. It will ultimately come down to fact/circumstances. Is this particular "landscape architect" just a glorified pool boy, or are they really a certified architect with a specialty in landscaping. Engineers – yes, sanitation engineers – probably not. This prior ruling may or may not fit your situation. http://www.pbgc.gov/oplet/97-2.pdf

Just as a point of clarification, I believe the burn is only required to avoid benefit restrictions and not necessarily to get to the next threshold. In other words, if benefit restrictions wouldn't apply because the plan didn't pay lump sums, there would be no requirement to burn COB or PB to get the AFTAP over 80% prior post

The DOL released model funding notices for single and multiemployer plans DOL site - model funding notices

Sorry, looks like I made a bad assumption. I thought you were a service provider subbing out the work and it turns out you are a plan sponsor hiring an actuary. I think David's and SoCal's comments are on point. If you are unhappy for any reason, there are lots of options. However, if your sole criteria is price, you will most likely get what you pay for. Pension plans involve a lot of complex calculations, even if the results are fairly simple. You want to make sure it is being done correctly. Maybe ask your attorney or accountant for a recommendation of someone who can look over your actuaries work and give you an opinion. Some actuaries will do this as a professional courtesy. Referrals from your other professionals are probably the most valuable. Ask around your peer group and see who they use and what they are paying.

We have done it several times and never had any trouble with either the IRS or the PBGC. I agree that they are usually the same, but they can be different. For PBGC purposes, the DOT is simply the date used to determine the timeline of everything else. Sometimes plans are terminated before they talk to the actuaries. In those cases it may be too late to meet the PBGC timeline for advanced notice. The solution is to use a later date as the PBGC termination date.

This may be a stupid question, but if they don't want to distribute until 2010, why did they terminate the plan on 1/1/09? A couple quick points... the PBGC termination date isn't necessarily the date on the plan amendment. I believe you have have different termination dates, one for IRS purposes and one for PBGC purposes. Maybe you want to delay the PBGC termination date. If it fits within the PBGC timeline, it would be acceptable. Their timeline is fairly cut and dry. At least 30 days, but it could be as many as 180 days if the document contains the appropriate language. That is a little more tricky. I would argue that as long as the number doesn't materially change you are probably ok, but you need to be careful with those around $5,000. Make sure you get spousal consents for anyone close to $5,000 in case they go over when the rates change. I try to avoid estimates on election forms whenever possible. Whenever a number changes from the election it causes the participants to question the original calculation, even if the change was justified. If you use an estimate, make sure you election form provides an very good description of how the number may change and why.

Probably not the best venue to discuss this type of thing, but.... Are actuarial valuations required? - yes/no. You are required to have an actuary sign the Schedule SB/MB every year. In order to do that, the actuary must prepare a valuation. Now, is he/she required to provide you with a valuation report? That depends on the clients needs. We have clients who need our battleship and others that just want an email stating how much they need to put in. My opinion is that technically the SB/MB is the valuation report and that is all that is required, but it is most likely not sufficient for most clients. You also have actuarial standards that drive actuarial communications, so some actuaries take the position that if they issue any reports, it must satisify certain requirements and therefore a simple letter or email would not be sufficient. As far as billing rates I would say $150 - $350 depending on experience is certainly reasonable. You can get it cheaper, but you get what you pay for... pay me now or pay me later. The actuaries with the nation firms can have billing rates over $500. Since you said "your actuary" I assume you are subbing out your db clients to someone who simply signs the valuations. Based on my experience, this is almost always "you get what you pay for". I suggest that just like when buying term life insurance and banking the savings, if you go cheap on "your actuary", make sure you put your savings into your E&O coverage.

I think WRERA causes us to redo a lot of 2008 valuations. Whoever signs the 2008 SB would be responsible. If actuary A refuses to redo and signs the SB, then I think actuary B has a problem. I suppose worse case would be that actuary B would need to redo 2008 and footnote the 2009 SB showing why the COB/PB are different than previously reported. Just like with credit balances, Holland always said if you certify the credit balance on the Schedule B, you are accepting all prior work as valid. If you know it was not correct, you have an obligation to fix it. Who pays for this is a different question. Granted, if actuary A is retireing he doesn't have much incentive to do the right thing, but certifying something you know is incorrect seems like bad answer for a lot of reasons. It is a shame that there will be added costs due to WRERA, but that is the cost of relief. Tell the client to thank his Congressmen at the next election.

Lots of issues. Take a look at 1.414(l) Are type of plans are these? multi-employ? bargained? single employer?

First, I'm not a lawyer, but how can he abrogate a contract? Isn't that a bargaining issue? It sounds like you are saying he wants the fund to treat him like he never abrogated the contract and accept his contributions for the last 4 years, but I don't see how that exempts him from withdrawal, unless he is going to continue to be a contributing employer, in which case he never withdrew. The payment of the 4 years of contributions is completely separate from the withdrawal liability. I still don't see what the fund is getting out of this as satisfaction of the withdrawal liability. Let’s say I have a club and you wanted to join. You agree to pay me $X each year and $Y of you leave the membership. At some point you decide you don't want to be in the club, so you just stop paying me. I annually remind you that you owe me $X and that if you don't pay, you will owe my $Y as well. Finally, four years later you say you will pay me the $X for the four years as satisfaction of the $Y. I say, no, you owe me BOTH $X and $Y. I may be willing to forgive the $X (assuming you never used the club during the time), but the $Y must be paid. Then again, Trustees can do whatever they want, but I agree with the goalie, it would probably be a breach of fiduciary duty to accept it, unless the 4 years of contributions was more than his withdrawal liability. Obviously, this is a fight for the lawyers.

Are you saying they would continue to pay into the plan during the course of their current agreement and then stop? Why would the workers want money withheld from their wages and sent to the fund without getting any benefit for it? Why would the plan let the employer walk away at the end of the contract? I think you might be able to do anything the trustees accept, but why would they accept this?

You’re missing the fact that I don't remember everything I "know" and sometimes I post before I think. I agree, the 2008 should not recognize the 436 freeze, unless that plan is actually amended to freeze the benefit indefinitely. I am still perplexed about the 2009, is the 1/1/2009 FT based on the actual accrued benefit or what the benefit would have been if the plan wasn't frozen?

I don't know if this was the original intent, but if no AFTAP was certified (including the 2007 proxy) wouldn't the plan be frozen as of 4/1/2008? Either way, my question related to the 2008 valuation. In the old days we always had the opportunity to recognize a mid-yr change for valuation purposes, or not. So now, post PPA what if today (1/26/2009) we take over a calendar year plan where no AFTAPs were ever done? What should we value for the 2008 valuation? Should we: a) just do the 1/1/2008 valuation not recognizing any freeze because on 1/1/2008 no certification was necessary and therefore we prepare the 2008 valuation as if all knowledge is instantaneous and it is 1/1/2008. b) Recognize that it is now 1/26/2009 and no AFTAP was certified and therefore the plan was frozen on 4/1/2008 even though no one was notified and no action was taken. It seems like under the old procedures both answers may have been valid. Even on the original question, if we assume the plan certified the 2007 before 4/1/2008 and that cert was > 70% and therefore the plan really wasn't frozen until 10/1/2008 when no final AFTAP was done, should the 2008 valuation be revised to reflect the freeze assuming it would impact the benefit earned during 2008? What if we were good little actuaries and prepared the val on 3/1/2009 and based on the AFTAP we knew the plan would be frozen on 10/1/2009. Should the 2009 valuation always recognize the 10/1 freeze? This will probably be very common in 2009.

Be careful. If it is truly a "choice" between ER PS$ or DB accruals, you probably need to provide LOTS of information, including similarly situation employee examples or the election might not be valid. There were some Regs released around 5 years ago and maybe they only applied if the DB was a cash balance, but you should probably give them a look. Generally the IRS takes the position that there is no reason why anyone would waive out of a free benefit unless they were misled by their rotten stinking lying employer. Proceed with great caution.

You act like you are surprised by his statement? Did you think he, or anyone, will let the PBGC fail? Just like Social Security and Medicare - won't fail. What do you expect him, or any politician, to say... "Today we have decided to let the PBGC eventually fail". From their website - "The PBGC pays monthly retirement benefits, up to a guaranteed maximum, to more than 640,000 retirees in 3,860 pension plans that ended. Including those who have not yet retired and participants in multiemployer plans receiving financial assistance, PBGC is responsible for the current and future pensions of about 1,305,000 people." These people are all about getting re-elected. They aren't going to make 1.3 million voters unhappy. Prepare for higher premiums, higher taxes, older retirement ages, lower benefits and yes, maybe more onerous distress termination rules.