david rigby

Assuming your refer to a DC plan (since you use the word "discretionary"), the 2008 limit under IRC 415© is/was $46,000. So, $62K each is a problem. But, if this is a DB plan, then the answer changes.

Don't mean to be disrespectful, just trying to help us smile thru the pain: 1. "Don't worry your job is secure!" or "Your job is safe." 2. "By the way, is your laptop in your office?" 3. "We're giving you a one-time opportunity to expand your resume." 4. "Wouldn't it be great to spend more time with your family?" 5. "Where do you see your career going with us in the next year?" 6. "We're not laying you off; we're just not rehiring you." 7. "Are you going to be here this Friday? Say...around 3 p.m.?" 8. "So how's your wife's job going?" 9. "We are re-sizing our global footprint." 10. "Could you close the door, please?"

It may be possible to recognize this person as "disabled" and use a disabled mortality table for such status, but I doubt it would be reasonable to assume a qx of .9 (for example) for this one person. Just one guy's opinion.

Maybe. That is a different Q than originally posed. Any change in actuarial assumptions should be made in light of the plan demographics, as needed. Tread carefully. Presumably, the issue arose so that the company could "capture" the large demographic gain. But, what does the plan say about death benefit? If death ben = PVAB (or other large amount), then the gain might not be so much (or could be a loss), in which case the original Q becomes irrelevant.

Probably, the first question should be "Why would you want to have a church plan covered by ERISA?"

FAS 87/88/132/158 are relevant not for the plan year but for the sponsor's fiscal year. Are both 5/31/08? Since this is a small plan, one naturally wonders if this is a family business, and (most importantly) is the business using GAAP accounting rules? However, it appears the question is focused on the August evemt. Assuming 5/31/08 FY, the answer is No; the event occurred after FY end so it is not part of the FYE measurements (although it could be included in a footnote, at discretion of sponsor and auditor).

IMHO, a termination date must be affirmatively adopted (by the relevant authority) on or before its effective date. However, it is perfectly reasonable to terminate a plan today (for example), knowing that the benefit has not changed since 12/31/08, since there is no 2009 service. This is not a 12/31/08 termination date, and the 2009 plan year is fully effective.

The 415 limit is per individual, not per plan. Is that what you mean?

Code always trumps the regs. However, there are many cases in which the Code is ambiguous (intentionally so, IMHO), and one purpose of the regs is to add clarification and/or flexibility.

If a DB plan, don't forget about 401(a)(26). (Size matters.)

The POTUS never signs regulations. Most often, a regulation is issued by a Cabinet department under the authority of the Secretary of ....

Tammy, a small comment about terminology. Andy's answer correctly distinguishes between "burn" and "apply". Also, "waive" is usually a synonym for "burn".

Anyone check the ADP test?

Cop out. Just do the val. You did not create the bad news, just report it. If the sponsor is also the trustee, he/she should be talking to his ERISA attorney about the word "fiduciary". BTW, any possibility that the plan might have been frozen?

Also, the phrase "no pre-ret mortality" may be injecting some confusion. Generally, this refers to the time period between current age and normal retirment date and is (sometimes) part of the actuarial assumptions used for determining liabilities; it also might be part of the definition of actuarial equivalent for the same time period. It does not refer to the time period between NRD and (a later) retirement date.

Coming soon. Pi Day. March 14.

It may be reasonable to assume that most acturaries, most plan sponsors and most auditors will prefer the simplest method. But it also depends on how significant interim (quarterly) reporting is, and even whether or not there are other significant events included in such interim reporting. Thus, put the alternatives in front of the sponsor and auditor, and let them decide.

Data as of 27-FEB-09 (Friday) Moody's Daily Long-term Corporate Bond Yield Averages Utilities Industrial Corporate Aaa NA 5.43 5.43 Aa 6.12 6.04 6.08 A 6.38 6.80 6.59 Baa 7.85 8.63 8.24 Avg 6.78 6.73 6.76 Moody's Daily Treasury Yield Averages Short-Term (3-5 yrs) 1.18 Medium-Term (5-10 yrs) 2.60 Long-Term (10+ yrs) 3.83

Respectfully, I disagree with (1). I have recognized settlements at different points in time, and the auditor always signed off (although I may have made the suggestion first).

Caution: this is an actuarial assumption. Do not assume the valuation count equals the PBGC participant count.

Don't want to put words in Andy's mouth, but I think his use of "contractural" was a reference to plan provisions. That is, does the Plan require the purchase of an annuity?

IMHO, a definition that refers to 417e means you must use all 3 segment rates. This is a recipe for confusion and error. I suggest amending the plan to make sure only one rate (maybe the pre-PPA rate) is used.

Can you help by providing a source?

Funding Standard CarryOver Balance If all assets were distributed under a termination, does not that define the end of the final plan year? and the plan no longer exists?

Maybe, but that is (probably) a different question. I've wondered the same thing as the original question, which I restate in my own words: "When a NQ payment is being made to an employee/retiree and the payment is subject to FICA, does the FICA (and FUTA?) taxation change if a portion or survivor benefit is paid to a beneficiary?"