Effen

These are all good questions that should be addressed to your Fund's legal counsel.

Andy, are you thinking that the new 415 Regs permit you to use an annual factor to determine the maximum lump sum if the normal form is an annual annuity or would you be comfortable using it if it was just one of the optional forms of payment? I guess I'm struggling with 1.415(b)-1(b) ..."no adjustment is made to the benefit to account for differences in the timing of payments during a year (for example, no adjustment is made on account of the annuity being payable in annual or monthly installments). B) Other benefit forms. WIth respect to a benefit payable in a form other than a straight life annuity, the annual benefit is determined as athe straight life annuity payable on the first day of each month that is actuarially equivalent to the benefit payable in such other form"

This may help http://benefitslink.com/boards/index.php?showtopic=36253 Be careful not to pay out any top 25 HCEs

I think it depends on what the freezing amendment said. If the benefit was restricted by the 415 limit and not the formula, the fact that the formula benefit was frozen doesn't necessarily mean the persons benefit doesn't go up when the 415 limit increases. The document needs to define the benefit. When you apply the benefit formula in the document after the accruals have been frozen, what do you get? I have seen some amemdments freeze the 415 benefit and some that didn't.

In general I agree with Andy, assuming you have been paid to prepare the actuarial valuation. If they never paid you for the valuation, I don't feel you are obligated to sign the Sch. B. If they paid for the valuation, the Sch. B is simply certifying to the government the work you already did. You need to check your procedures and see if paying annual fee includes the valuation & Schedule B. Many large national firms will charge the client extra to prepare the Sch. B if they are fired after they do the val. I have had some situations where the clients pays the "extra" freight, and others where they pay me to redo the val and sign the B. I suggest that you contact the ABCD. My experience with them has been very positive getting through this type of situation. What about the PBGC filing?

My vote is with Tom Geer. Disclose all revenue & offset your fee. TPA recordkeeping is full of shady situations, that is why Congress wants more transparency. I would want to know what your competitors are doing, but I wouldn't set my policies based on their bad practices.

I don't know about HIPPA, but FWIW, we have taken SSN's off everything that we send out.

I agree with Mike & PAX. $10K deminimus is an annual benefit. The lump sum equivelant of it is not part of the deminimus.

Again, why do you think funding the plan on a termination basis would be bad? The plan will ultimately terminate, so what could be wrong with it? Although AndyH is correct that during the late 80s the IRS was attacking funding assumptions of 5% and retirement ages of 55, but that was at a time when interest rates were near 10%. They also lost many of those cases. At that time the gov. was all about taking tax deductions away in order to raise revenue. It is not the world we live in today.

hugh? Funding db plans on termination assumptions is exactly what PPA is forcing ALL plans to do. Not sure why you would think that would be a problem.

Andy, you summary regarding the funding is correct. Regarding you question of the site, did you mean the 401(a)(26) site or the PPA site? The plan is exempt from 401(a)(26) because it satisifies 1.401(a)(26)-1(b)(3). It is covered by the PBGC, frozen & underfunded. The PPA site is from the PPA summary: Based on this, it seems that as long as the plan was frozen prior to September 1, 2005, it is exempt from this restriction and can continue to pay lump sums regardless of the funded status.

Maybe I'm showing my age, but I'm not sure what you mean by "terminal funding"? I may also not have been clear about the plan. The employer did make contributions during the early years of the plan. Assets (and credit balances) were accumulated. At some point contributions were no longer required. Once the assets fell below the liabilities, they used their credit balance to satisfy minimum funding standards. They have now reached a point where the credit balance is virtually gone. As participants retire or terminate, they are paid - mostly in the form of a lump sum. Last year they reached a point where, although due to the credit balance their minimum was still $0, they didn't have enough money to pay out the next person who retired. So now, they make a contribution to the plan whenever someone needs to be paid. I don't think any rules have been violated. There are only a few people left in the plan and they are all close to NRA. I anticipate the employer will keep the plan around until the last person retires and is paid. Then, I guess, they will terminate a plan with no assets and no liabilities.

Thanks Andy, the plan satisifies one of the exemptions of 1.401(a)(26)-1.

I have a small plan (<20 participants) with a funding ratio of less than 5%. Due to their size AFC's never applied and they had a large credit balance so they never had to make a contribution. Benefit accruals were frozen years ago (pre 1980). Don't ask me why they still have the plan 'cause I don't know - they just don't want to terminate it. The plan also pay's lump sums, so basically, they make a contribution whenever they need to pay someone. I was thinking PPA would put an end to that since lump sums would be restricted if funding ratio was less than 60%, BUT, it seems they are exempt from that rule since the plan was frozen on 9/1/2005 (ERISA 206(g)(5)©(ii). So, I think they can keep doing the "same old same old" and continue to pay lump sums. Their required contributions will go up post PPA, and they can't use their credit balance anymore (it is gone anyway), but they can continue to pay lump sums even though their funding ratio is basically 0%. Agree?

I believe that if you don't offer a J&75 you must change the QJSA to be the J&100. In other words, you don't need to change the options offered, but you need to change the QJSA from the J&50 to the J&100. Another option is to add a J&75 and make it the QJSA.

yes, you are begging for trouble. Multi's were a different animal prior to PPA 06 and will be a very different animal after PPA 06. yes, I'm sure there are lots of interested actuaries who have experience with these types of plans.

I'm not so sure I agree. Yes there is a lot of PPA work related to multi's, but the singles have a fair amount as well. Most importantly, a multiemployer plan doesn't need to fund based on the new method and doesn't need to use the yield curve as a funding assumption. Therefore, required contributions will generally be lower. I have heard of a number of employers who are trying to change their plans from singles to multi's in order to take advantage of the differences. If you don't work on other multi's or if you haven't in the past, you probably shouldn't be bidding. Multi's are different animal. Can you split them? I think it can be done but I don't know. You would need to assign each participant's liability to one of the remaining employers which sounds like a political nightmare. Seems like you would spend a ton in legal and actuarial fees to do it.

One way might be through a VCP filing. Explain everything to the IRS, tell them what you would like to do and see what they say. The solution may require you to provide everyone who worked over 1000 hours with a full year of service, but you never know. I have seen the IRS let some things go that I never thought they would.

I agree with Mike, get the money back into the Plan ASAP. You might consider an Option 4 - assuming the VCP has been filed, prepare the 2005 Sch B using the assets in the IRA as the assets of the Trust. Add an attachment to the Sch B stating that your signature is based on the approval of a VCP filing filed on _____ and if the VCP is not approved your signiture is revoked. Make sure the PA also signs this attachment so they are aware. I also strongly recommend you contact ABCD and ask their opinion. I found them to be very helpful in situations like this.

I don't think so, but it has never been an issue. The few we have done with them the assets = liabilities.

I work with an attorney who has merged DB's into a PS several times and the IRS has never questioned them. I'm not sure it is 100% kosher, but they do it and no one seems to say boo. They use 1.411(d)-4 Q&A-3 as the basis & file a 5310-A reporting the merger to the IRS. These are generally very small plans (1 life, or husband/wife). I'm not sure if they would do it with anything bigger.

Dazed, I admire your desire to learn and make yourself into a better benefits consultant, but honestly, it seems like you are in way over your head. The fact you don't even know where to start looking for the answers to these questions tells me you are either in a shop where you don't get a lot of support, or you are just the type of person who likes to ask first and look second. These are the types of issues that can lead to law suits if your advice to the client is not correct, so be careful. You seem like you are at a stage in your career where you don't know what you don't know and that can be very dangerous. You should be asking these questions to those inside your office, and if you don't have anyone in the office who knows, you probably shouldn't be taking this assignment.

I googled "controled group" and got about a billion hits. This first one looked pretty good. http://www.employerbook.com/CGCode.html Pension Answer Book is good, CCH, RIA, BNA all have summaries I'm sure.

Any pension service will give you lots of information about controlled groups. It's a fairly major topic. Basically, if it is a controlled group, you treat the entire group as if it is one employer. Do you have a specific question?

We use ASC. Like Belgarath I'm not really the biggest user, but it seems to do the trick. They had some issues w/ most valuable accruals, but they have recently made the proper adjustments. We use it for our DCs, small DBs, cash balance, & DB/DC testing.