david rigby

If you found some links, I (and many other readers) would appreciate seeing them in a post.

I agree with SoCal. I would also review all assumptions.

.... subject to the terms of the plan itself.

Some historical rates from Moody's: http://benefitslink.com/boards/index.php?s...st&p=141944 I've seen a range of rates, from 5.5% to 6.25%. Both ends of that range are unusual, with 5.75-6.0% more common. However, any prevailing external rate is only a proxy. A more precise method is to measure each plan's liability duration and compare to an external table, such as the one published by Citicorp. Still more precise is to perform cashflow matching of the plan's expected payments, and determine the discount rate by matching high quality bonds to the payment stream(s).

... providing the plan administrator does so on a non-discriminatory basis.

Would the marriage to #3 automatically invalidate the beneficiary designation of #2? Might be a question for the plan administrator. The most important advice here is "The plan fiduciary then needs to hire competent counsel."

I agree with Effen. I assumed the orginal post meant the existence of a FFC. Flosfur: is there a full funding credit?

Yes. Be sure you apply the "wipe-out" to this year's bases. You still may have a new base next year. And, don't forget to wipe out any Reconciliation Account.

If you are referring to an actuarial increase triggered by Internal Revenue Code section 411, note section 411(e), which exempts governmental plans from all of 411. However, there may be plan provisions, or state/local statute, that require such treatment.

Thanks. Although verification is still needed, I believe the plan covers only the subsidiary (possibly the parent has no employees). If that is the case, I think 10.05 does not apply since the plan is not currently maintained by multiple members of the controlled group. However, a simple amendment could probaby cover the parent, so that 10.05 does apply. Agree?

IRS Rev. Proc 2005-66, http://www.irs.gov/pub/irs-irbs/irb05-37.pdf (dealing with the new staggered remedical amendment cycle), includes subsection 10.07, permitting the use of the parent corporation's EIN/cycle when there is more than one plan in the controlled group. Can one determine, if there is only one 401(a) plan, that use of the parent's EIN/cycle is not permitted? Have I overlooked something?

There is a proposed change, to be effective in 2007. However, as far as I know, it is still proposed as of today. http://www.irs.gov/irb/2005-51_IRB/ar15.html

It used to be more common that the match was based on company earnings, but less common now.

Is it possible that the prior TPA resigned because this client is a black hole?

Interesting. Apparently, "ezactuary" does not know what the "U" stands for in the UP-1984 table. For accuracy, use the site mentioned by SoCal: http://library.soa.org:8080/xtbml/jsp/index.jsp The table you ask about is number 831.

SoCal is correct that this is a decision to be made by the auditor. However, I've done this once, when a sponsor was considering going public. The method employed was to use an adoption date ("transistion date") as of 3 years ago, and show three years of financial statements. Depending on the reason for the transistion, other methods may be valid.

I agree that it would be unfair. However, we are talking about the IRS here. The W-2 instructions for that box refer to IRS Publication 590, IRS Notice 98-49, and IRS Notice 87-16. Notice 87-16 is the most significant of the three; Q&A16 supports the analysis given by SoCal, but read carefully. The user may wish to have legal or tax advisor provide input on the proper interpretation.

Generally, I agree with SoCal. However, I'm not sure that "effectively moved your valuation date" is the same thing as actually changing your valuation date. Nevertheless, altering your expectation about benefits to be paid is not only practical, but needed; since the EA expects annuitiues to be purchased during the coming 12 months, that should be included as an assumption.

Perhaps the DOL website or the Bureau of Labor Statistics?

Who knows? But do you really want to be taking specific investment advice from an internet discussion board? The best advice has already been given: seek out good mutual funds. If you want to invest in energy stocks, there are mutual funds that do that.

This is an assumption that the IRA investment cannot have negative returns.

Go back to first principles. See paragraph 45 in FAS87, and Q&A62 in the FAS87 Guide to Implementation. To quantify, you can use the "building block" approach, by identifying the expected rate of return for each asset class, and then weight those by the actual amounts in each class. Note that this usually produces a range, rather than a single number. The goal is not "...to justify the use of the rate the client has selected", but to select a rate that is reasonable, based on actual investments. Make sure both the plan sponsor and the auditor do not think of this rate as "what you expect to earn in the next 12 months."

December 29, 2006 (Friday) MOODY'S DAILY LONG-TERM CORPORATE BOND YIELD AVERAGES Utilities Industrial Corporate Aaa NA* 5.46 5.46 Aa 5.75 5.68 5.72 A 5.95 5.89 5.92 Baa 6.18 6.51 6.35 Avg 5.96 5.89 5.93 MOODY'S DAILY TREASURY YIELD AVERAGES Short-Term (3-5 yrs): 4.67 Medium-Term (5-10 yrs): 4.69 Long-Term (10+ yrs): 4.87 MOODY'S DAILY PUBLIC UTILITY COMMON STOCK YIELD AVERAGES Price: 326.2 Yield: 3.47 New Dividend: 11.31

Ever heard of vesting?

I agree with Effen (I think). If the use of "irrevocable annuity contract" is meant to say that the plan purchased a single premium annuity contract for the participant's benefit, then the plan has relinquished assets in exchange for releasing liabilities. Thus, the plan no longer has any responsibility for that participant, and the contract is not a plan asset. In this case, a plan termination, it is difficult to imagine any other use of this terminology.