Effen

How about.... because he cares deeply for the well-being of his insurance agent?

Thank you all. MGB hit it on the head. I seemed to remember reading something long ago (early 80's) that mentioned that changing actuaries within a firm was not technically a change. When Blinky mentioned 2000-40, I realized that I may have been confusing it with the rules relating to changing funding methods.

I have heard several conflicting opinions regarding changing enrolled actuaries. Is it considered a change of enrolled actuaries if: 1) A different actuary inside the same firm signs the Sch. B. 1b) If 1 is "no", what if it's a national firm and the work moves from the NY office to the LA office, so that a completely different group of people work on the case? 2) The actuary leaves one firm and joins another, but retains the case.

"You" don't have a problem; "you’re soon to be ex-client" has a problem. The accountant is correct that 25% is the maximum deduction, 404(a)(7). Depending on the timing of the contributions there may be ways to move deductions into different years, but it usually doesn't work without pre-planning. You may want to search for "flip flop". I know it sounds strange, but that’s what it’s called. I think I would do as your actuary suggested. He/she did a valuation, the client made the proper deposit, he/she properly signed the schedule B. What reason would you have to change anything? Actually, the db contribution was fully deductible. The PS contribution is not. You may want to point out that if your competitor had asked the correct questions, you’re soon to be ex-client wouldn't have these problems.

A target benefit plan is NOT a defined benefit plan! A merger, termination, transfer, conversion, explosion or whatever doesn't change that. I don't see how anyone can reasonably argue that prior participation in a target benefit plan could in any way be considered defined benefit participation.

415(b)(5) is very clear that you must have 10 years of "participation in the defined benefit plan of the employer". A target plan is not a defined benefit plan and therefore can not be used to satisify the phase in. Also, I don't believe that you are allowed to "convert" a defined contribution plan into a defined benefit plan. The plan's can be merged, but the defined benefit plan would be treated as a new plan and the target assets would be rollover assets. I think there might be some old Rev. Rulings from the mid 80's that addressed this. You would only have a db/dc combo for testing if the participants are earning benefits under both plans. Just because you had a dc plan in the past, doesn't mean that you have a db/dc combo for testing. I would treat the db plan as a new plan and ignore the previous target plan.

The theory behind letting a CI employer "walk away" without a withdrawal liability is that the jobs don't usually walk away with the employer. If one employer goes out of business, another employer will soak up whatever construction jobs the terminating employer would have worked and the workers that would have worked them. The Plan is not necessarily adversely impacted unless the amount of construction being done in the area decreases or if the union membership drops off. If I am an electrician working for company A and company A goes away, I will just go to work for company B. The fund will collect the same contribution from B that it would have received from A assuming the amount of work in the area remains constant.

Flosfor, I don't think anyone is going to touch your question on this board. Not that your question isn't valid, in fact, I think it is an excellent question, but many actuaries aren't willing to share these thoughts in a public forum. I know that most EA Meetings and ASPA Meetings have sessions related to your question, but they are generally not taped. You may want to check the outlines. The 2nd General Session at the 2002 EA Meeting was taped and dealt with Professionalism. It was a very good session. Also, you may want to contact whatever actuarial organization you belong to. Most would have someone who could offer you some advise or could at least point you in the right direction.

Thank you for your responses. I found the article very helpful. I guess this is an issue that we must continue to "bang the drum" even though no one may be listening.

I have a question that I was a little hesitant to post, but I would really like to hear your opinion. I have been an actuary for close to 20 years and during that time the issue of suspension notices and actuarial increases continues to bother me. Assume the Plan document is silent (I know it can't be silent, but somehow they get approval letters) or that it requires a Suspension Notice to be issued at NRA. I believe, as do most ERISA attorneys, that if you fail to provide the suspension notice at NRA, you must provide the greater of the age/service benefit or the actuarially increased value of the normal retirement benefit when the participant ultimately retires. (Proposed Reg. 1.411(b)). Now, this is where my question comes in. If you come across a client who has "never" given suspension notices and has "never" granted the actuarial increase, and has lots of actives and term vested older than NRA, what are the chances that this ever becomes a "problem" for them. In other words, is this something the IRS is checking on audit? Is this something the Plan or Company auditor should have caught? How do you inform the client that they potentially owe lots of people lots of money? This comment usually generates a blank stare that ends in "your insane if you think we are paying these people those benefits". This can be a bigger problem in the multi-employer world where the plan may have hundreds of terminated vested participants that never came in to collect their benefit and the Trustees have no intention of trying to find them. We are in the position of telling them that they have to find them and not only that, they have to pay them 2 times their original benefit. Has anyone ever had someone outside of the actuary raise this issue? Is this a "real" issue or is it something the IRS doesn't really care about? What would you advise your client?