Effen

You might be thinking of the funded status for multiemployer plans (Endangered, Seriously Endangered, and Critical). Those had to be filed with DOL and they are public on the DOL web site. AFTAPs did not have to be filed with IRS, although as myatt stated, they will eventually become public once the Sch. SB are released into public domain.

What if we changed Xerxes facts slightly 1/1/2008 Results FT = 10,000,000 AVA = 9,000,000 FSCB = 1,000,000 Funded Ratio = 90%, so NOT exempt from restrictions in 2008. AFTAP = 80% If I do not certify a 2009 AFTAP by 4/1/2009 am I deemed to waive my $1,000,000 FSCB so that my 2008 AFTAP becomes 90% so that 90% - 10% = 80% and restrictions don't apply on 4/1/2009? Or, do I need to get the sponsor to elect to waive it so restrictions don't apply I guess the question is does the deemed waiver reach back into the past year if the current year hasn't been certified?

"Yarp"

I think the difference between (1) & (2) would be a document issue. The document would need to define what options are available to the participant and would need to define how each is determined. I think I would recommend that only option (2) would be available, with the added option of an immediate annuity w/ no lump sum conversion. Basically defer the option on the annuity piece or take the annuity, but if you take the annuity, you won't be able to convert it to a lump sum later. Again, I'm not saying this is the only way, it just seems to make the most sense to me and would be the easiest to work with in the future.

I know some of these have been asked before, but I'm looking for consensus. 1) Lets say my 2008 AFTAP is 75% and my 2009 AFTAP is 65%. I gave the appropriate notice in 2008. Do I need to give another notice in 2009 even though nothing changed? The statute says the notice is required "after the plan has become subject to a restriction". I was subject to the restriction in 2008, nothing new in 2009, so it seems that no additional notice is required. Agree? 2) Lets say my 2008 AFTAP was 85% and the 2009 AFTAP is 75%. My plan only pays lump sums less than $5,000 and therefore the restrictions have no practical impact. Do I still need to give a notice? I think the conservative answer would be yes, but does everyone still agree?

Personally I think it will be a document issue. The attorney's we work with are basically telling us to pick something, document it, and then when appropriate they will amend the plans to fit what we have decided. My thinking is that this participant is still entitled to $1000/ month at 65 and an unreduced at 62. (I assume he would also be entitled to some immediate annuity since you offered him a lump sum.) Either way, once restrictions are lifted why wouldn't you just determine the lump sum value of the $1,000 based on your normal procedures? If the plan's lump sum provisions include the value of the subsidy then (b) {using a62}, if not, probably (a). I don't like © or (d) because they could potentially violate 417(e). I guess I wouldn't look at it like he received 50% of his lump sum. I would look at it like he received the value of 50% of his annuity as a lump sum and therefore he is still entitled to 50% as an annuity. The lump sum value of that would be determined if and when it becomes payable in that form.

This was posted on the COPA board today. Not sure it will help, but rumors are always fun to discuss....

One reason would be the need to use of multi decrement fully iterative systems to determine plan liabilities. Typically firms that do only small plans use software designed for small plans (ASC, DATAIR, etc.) Firms that do work for larger plans use software designed for larger plans (Proval, Lynchval, etc.). These larger plan systems are generally fully iterative. In other words the liability for any expected decrement can be isolated in any future year. Therefore, when the client asks you to determine the value of a change in the early retirement or disability factor you can determine the true cost of the change. In addition, you can change the retirement scale to account for the increased or decreased utilization. Also, keep in mind that you are required to have assumptions that are independly reasonable. In other words, if the plan has a disabiilty benefit you are suppose to have a reasonable disability assumption. It is difficult to know your assumptions are reasonable if you can't isolate them. I know the small plan software providers will argue their systems will do it, but they generally use approximation techniques and do not do it directly. Another more basic reason is what SoCal pointed out. If you only deal with small plans you won't know what you don't know regarding larger plans. You will be getting a different type of question from various levels inside the company. The president of the company, the CFO, the auditor and the lawyer could all ask you the same question, but each would have a different reason for asking and you would need to know how to talk to all of them. No, the math and funding concepts aren't really any different, but the application and information required can be dramtically different.

I agree, different animal, different problems. Just becuase you are a good rabbit hunter doesn't make you a good deer hunter. You should take a look at the actuarial standards of practice and make sure you are qualified to do the work under the standard. Any you probably should increase your E&O coverage.

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.