Effen

You can not change assumptions once the Sch. B has been filed. Are you saying they just didn't file the Sch B with the rest of the filing?

I have a new client with 500 people in a Group Term Life Plan that has never filed a Form 5500. The plan has been around since '95. At first I thought they had a problem, but it seems to me that Notice 90-24 provides an exemption. Does anyone think they should be filing? If so, why? Does anyone think they are exempt?

Has this issue been formally resolved? Specifically, is the DC limit for a Plan Year Ending 1/31/04 $41,000?

412(i) Regs

I don't think there is any prohibition on a company borrowing money to make a contribution. Ignoring party-in-interest stuff, could this be deemed a loan?

I agree

I'm with you. 83gam sex distinct for RPA CL & PBGC premiums. 94 GAR for lump sums and 415 limits.

There is a very good 412(i) article in the Sep-Oct 2003 ASPA Journal. It discusses just about everything you should be aware of before you are "confronted" to do administration. I'm sorry, I still get a kick out of that.... I just picture some big ethnic type standing over a little squirrelly guy with a pocket protector. The big guy has the little guys calculator batteries in his hand and says "Yuz gots ta value dis benefit or yuz be sleep'n wid da fishes"

Great Stuff! Thanks

OK, I'm feeling a little stupid, but I'm not quit grasping what the intent of this "multi-employer relief" is. It seems like they are letting multi-employers use a 15-year amortization period for gains and losses, but they already use a 15-yr period. How will this provide relief? Are they saying you get a fresh 15 years on any of the last 3 loss bases? Following is Sec. 5 from the bill: F) AMORTIZATION HIATUS- `(i) IN GENERAL- If a multiemployer plan has a net experience loss for any plan year beginning after June 30, 2002, and before July 1, 2006-- `(I) the plan may elect to have the 15-year amortization period under paragraph (2)(B)(iv) with respect to the loss begin in any plan year selected by the plan from among the 3 immediately succeeding plan years, and `(II) if the plan makes an election under subclause (I) for any plan year, the net experience loss for the year shall, for purposes of determining any charge to the funding standard account, or interest, with respect to the loss, be treated in the same manner as if it were a net experience loss occurring in the year selected by the plan under subclause (I) (without regard to any net experience loss or gain otherwise determined for such year). Notwithstanding the preceding sentence, a plan may elect to have this subparagraph apply to net experience losses for only 2 plan years beginning after June 30, 2002, and before July 1, 2006. `(ii) RESTRICTIONS ON BENEFIT INCREASES- An amendment which increases the liabilities of the plan by reason of any increase in benefits, any change in the accrual of benefits, or any change in the rate at which benefits become nonforfeitable under the plan shall not take effect for any plan year in the hiatus period, unless-- `(I) the funded current liability percentage (as defined in subsection (l)(8)(B)) as of the end of the plan year is projected (taking into account the effect of the amendment) to be at least 75 percent, `(II) the plan's actuary certifies that, due to an increase in contribution rates, the normal cost attributable to the benefit increase or other change is expected to be fully funded in the year following the year in which the increase or other change takes effect, and any increase in the plan's accrued liabilities attributable to the benefit increase or other change is expected to be fully funded by the end of the third plan year following the end of the last hiatus period of the plan, or `(III) the plan amendment is otherwise described in subparagraph (A) or © of subsection (f)(2).

"I have been confronted as a TPA to administer a 412i plan", like, with a gun? Generally when "confronted" I either run or fight. I guess I might suggest you run! I think you will find that most of the "math" involved in a 412i plan is considered proprietary by the insurance company doing the selling. In general, they don't want you to know, because if you did, you would never buy it. DB funding is fairly simple, first determine how much you need at retirement. This is based on two primary assumptions. First, how much will my money earn and second, how long will I live. There are many mortality tables to help with this. Secondly, how many years will I work until I retire. Let’s say you decided you need 10,000 per month for life commencing at age 65. Using assume 5% interest and a 94 GAR mortality Table I find that I need approximately $142 for every dollar of monthly annuity. Therefore, I need $1,420,000 at age 65. If the person were currently age 45, they would need to contribute $43,000 every year for the next 20. If their investments do better than 5%, they will put in less, if they do worse, they put in more. A 412i is loaded with insurance and therefore there is an added cost for the coverage. I would recommend you review some of the past messages on this board for some 412i commentary

I have always ignore them.... but I doubt that is technically correct. If you prepared the 1099, what would you do with it, since by definition, these are people you can't find?

What do you mean by "good"? Do you think the IRS will "bless" them or "kill" them?

LOL !! Did you hear the one about the kid who was doing poorly in math at the public school so his mother decided to send him to catholic school? After his first day of school he came right home and headed to his room to study his math. Second day, same thing...... This continued for the next 6 weeks when he brought home his first "A" in math. The mother was very excited and asked her son what was it about the catholic school that helped him so much. Was it one of the nuns? Was it the father? Did the other students help him? The boy looked at his mom and said, "no, it wasn't any of those things" "Then what was it", asked the mother. "Well", said the boy, "when I went on the first day and saw that guy nailed to the plus sign, I knew they weren't kidding around with their math."

one can only hope!

Ya know Blink, your right. But actually the "wolf" was a bad thing for the towns people. I'm hoping the regs are a good thing for the industry. Maybe I feel more like a street preacher, yelling at the multitude to repent. But that would make the IRS God, which has some merit, but I don't like the comparison. Maybe I'm more like the big brother who warns his little sister that "mom is going to get you when she finds out", but when mom does find out, she doesn't seem to care and sister just sticks her tongue out at you.

I have been trying to catch up on my reading as I am VERY behind. In the Mar-Apr 2003 ASPA Journal in an article written by Brian Graff and Danea Kehoe the following was stated: "Treasury's Benefits Tax Counsel, William Sweetnam, Esq. warned that guidance on 412(i) plans is of 'paramount importance.' James E. Holland ... suggested the government may soon issue two types of guidance: a notice warning of the government's concern about these plans and then later, more substantive guidance laying out proposed rules aimed at shutting down abusive practices." "By the time you read this article, it is quite possible the notice outlining IRS's recent concerns respecting certain 412(i) plan designs - referred internally within the IRS as 'yellow-light' notice - will have already been issued." Then in the Sep-Oct 2003 ASPA Journal, Larry Deutsch wrote, "Further guidance should be available soon, possibly even available already as you are reading this article." My questions is, has this pending guidance ever been issued? If not, what is causing the delay? Both Larry Deutsch and Brian Graff are certainly Washington insiders and were clearly expecting its release almost a year ago. I'm starting to feel like the boy who cried "wolf".

Seems to me any reasonable method would be fine. Some sort of time-weighted rate of return. That said, why would someone want to do this? Does the db document account for rollovers? Does the employer want the hassle of tracking them? Is the participant willing to give up all investment control? Seems a little strange, unless it's the owner who is doing it.

... assuming he has been properly diagnosed as an insomniac and he wasn’t actually just a kleptomaniac who just liked the pretty blue cover!

What I thought was simple is fast becoming confusing. I have always used the SOA site for these rates and they don't match anything said yet? Moody's® Long-Term Corporate Bond Yield – Month End Close (Click the link that says "Moody's Content Agreement" This shows the 6/30/03 rate as 5.83% and the 12/31/03 rate as 6.01% I think we need to be careful, when you say "6/03", does that mean 6/1 or 6/30? The Aa rates change daily.

That is exactly what they were doing - using a cash balance plan as a vehicle to provide a match from a 403(b) plan. It just seems strange that 401(k)s and 403(b)s are so similar, yet this tactic is expressly forbidden in 401(k)s and permitted in 403(b)s. It just doesn't make any sense.

I know that you can not tie a defined benefit accrual to participation in a 401(k) plan (1.401-1(e)(6)), but I couldn't find anything specifically precluding it with a 403(b) Plan. In other words, can a cash balance plan be used to provide the match for a 403(b) plan?

I know that you can not tie a defined benefit accrual to participation in a 401(k) plan (1.401-1(e)(6)), but I couldn't find anything specifically precluding it with a 403(b) Plan. In other words, can I have a defined benefit formula that is partially tied to participation in a 403(b) Plan? ie: 1% of compensation per year of service, plus .5% per year of service if contributing to the 403(b) plan

Other than expected benefit payments and contributions, are other actuaries planning on "disclosing" the asset information? From the press release.... "For the first time, companies are required to provide financial statement users with a breakdown of plan assets by category, such as equity, debt and real estate. A description of investment policies and strategies and target allocation percentages, or target ranges, for these asset categories also are required in financial statements." Do any of you feel this falls on the actuaries to disclose in their reports? It seems to me that the accountant is best qualified to prepare this. Any thoughts?

Thanks MGB. I just registered for the 2004 EA meeting and look forward to hearing your session.