Effen

Just a few thoughts about the "bundled" approach. Generally company "bundles" services in order to obtain more business. Prudential, NYL and Fidelity are primarily after the assets. In order to get those assets, they will offer other services. Because they are primarily asset driven you may not get the best legal and actuarial advice. I am not being critical of them, because they generally do very good work on most plans, but we take over a lot of actuarial consulting projects when the questions leave "the box". I actually have a client that has a bundled product with Principle, but use me for all of the actuarial consulting. (We’re local, more responsive and more efficient - not necessarily cheaper) Documents tend to be another problem. If you don't fit exactly into their prototype Fidelity will force you to jam your square peg into their round hole. You will need to hire your own attorney to amend their document. When they were CIGNA I found them to be a little more accommodating and didn’t force you to use their document, but I have never worked with Prudential. I tend to agree with PAX. If they are trying to "sell" you something, you should probably continue to look. A good consultant will listen to your goals and objectives and then design to plan to fit your needs. If you want to best possible service you should hire an ERISA attorney to handle the legal, and actuary to handle the liabilities and an investment consultant to handle the investing. When you go bundled you end up hiring an investment company to do your legal and actuarial consulting which may be cheaper, but could be costly in the long run. If you go bundled on price, make sure you see "all" of the expenses including the asset-based fees. It is also a good idea to have someone else look over the quote to make sure you understand it. I recently had a client that asked CIGNA to propose on their DB plan. CIGNA quoted $3K which was a fraction of their current actuaries cost. Once we looked at the asset-based fees, we realized CIGNA was actually charging close to 90K which was significantly more than the current actuary and financial consultant combined. "If it's too good to be true, it probably is"

You can contact the Railroad Board and they will send you their valuation which includes all of the q's. I don't know the link, but if you start with the Social Security site, you should be able to find it.

When we were younger, we dreamed up many "creative" ways to have junk mail sent to our friends. Obviously this was before SPAM and before we were old enough to get so much of our own junk mail. The "effen" was usually followed by a "richard" and then an address. I always liked the "effen" part, but have since dropped the "richard" See you in DC?

What do you "effen" think!

Sounds good. Since you are one of the few who use their real name, I guess we'll just look for you.

YEARS AGO (late 80's) I think there was a Regulation, Notice or RR that said that you must terminate all frozen db plans unless they didn't have sufficient assets to do so. I think it had something to do with 401(a)26 but I don't remember the specifics. Sorry I'm not more help, but this may point you in the right direction. My understanding is that frozen db plans that contain sufficient assets were suppose to be terminated. That said, I don't remember the authority or reasoning.

I was hoping we would have something final on the 1/1/04 RPA rate. Anyone know what’s happening in DC with this? I have several clients whose contribution is driven by the additional funding charges and they are very interested in this. I don't really want to release a report using 105% if it will ultimately be changed back to 120%.

I'm with you 100% and counsel is involved. When I asked the client why they never filed in the past, they produced a letter from 1993 that referenced the Notice. After I read the letter and the Notice, I started to wonder myself. The plan has well over 100 participants. It sounds like you agree that they still need to file and the amnesty program would probably be a good option.

Are you saying that 90-24 provided an exemption for only for GTL plans that weren't welfare plans? Is it possible that it isn't a welfare plan? The plan solely provides group term life benefits and the employer pays the entire premium. Also, lets assume that 90-24 provides an IRS exemption from filing. Do I still have to satisfy the DOL filing requirements? I assume I still have DOL requirements since the 5500 amnesty program is only a DOL program.

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.