Andy the Actuary

The DB benefits election packages I prepare typically require the participant to check one of three boxes: [ ] I am married [ ] I am not married [ ] I am married but cannot locate my spouse Are practitioners modifying the election packages they prepare to request additional information? This seems like a damned-if-you-do and damned-if-you-don't proposition. On one hand, the Plan would endeavor to respect a participant's privacy. On the other hand, you'd hate for a legally married beneficiary to show up some day and demand a survivor benefit when benefits weren't reduced to cover the cost. In absence of any convincing direction, I will not change the package understanding that married is married and you could have the same issue with a heterosexual estranged spouse if the participant checks the "I am not married" box. Adding modifiers such as "legally" married can be problematic. For example, Texas recognizes common-law marriage in respect to the J&S stuff. Thoughts?

Hadn't thought of that. Better place the paper print side down so that the birds may use it for the intended purpose.

The AFN is far more useful than the SAR. With it, you can cover the bottom of the bird cage for 7 days rather than just one.

Get some help. Funding this plan to 110% could cause trouble later on if the Plan evolves into having assets in excess of those that statute allows to be distributed.

For the past 18 years I received a monthly pension from Towers Watson, which used to be Towers Perrin, which used to be TPF&C, which gobbled up my roots at Tillinghast, Nelson & Warren. Now, I get this "thing" called an "Annual Funding Notice." It tells me the company should have contributed $125 million in 2013. They didn't tell me what they contributed, but gee, $125 million is a lot of billable hours. Oh, I turn to page 2 and it shows assets of $2.2 billion and liabilities of $1.8 billion. So, I feel somewhat comforted. Then, I see some credit balances of about $450 million. I wonder what they are. Obviously, something bad because they're subtracting them from the assets. Is $450 million a debt the Plan owes? Does the Plan not really have enough assets? Is my robust monthly pension of $115.05 secure or do I need to make other provisions for my retirement. In any event, I'm certainly pleased that Congress forces TW to set the record straight for me so that my former employer does not hide the precarious shape the Plan is in.

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Have seen the IRS not comment on waivers to HCE key employees. I believe the PBGC will not object if the waivers are by no more than two substantial owners. These exceptions, however, have been witnessed only when final distribution was made subsequent to a plan termination. I.e., not when the plan is ongoing. Some practitioners take the position that if you are okay if you have an IRS determination letter. However, what is done and included in document for an IRS D-Letter doesn't mean that it wouldn't later have to be rectified upon audit. It would mean only that the IRS wouldn't retroactively disqualify the plan. The pension world is well aware of an infamous disenrolled EA who would make up numbers to satisfy clients' contribution objectives, reduce future accruals without giving 204(h) notices, and waive benefits without even having a supporting piece of paper. Anything is doable if you choose to flout the law. The generally accepted understanding is that as you stated, a plan participant can't voluntarily forfeit benefits. Whatever action is taken should be preceded by a legal review. While you didn't state it, presumably plan benefits and future participation are frozen?

New situation. Calendar year DB plan. Insurance company under state receivership, who may or may not make contributions. They may not make authorize futher contributions. Plan has previously been reported to PBGC but PBGC has not yet stepped in. 4/15/2014 quarterly has not been made. Large contribution for 2013 still due by 9/15/2014. I (and legal counsel) need to outline all the bad things that can happen. Not looking for detail just cateorgies because frankly my clients over the past 25 years have been well-behaved. 1. Notify Plan Participants 2. Notify PBGC 3. Penalty interest on late contributions 4. Excise tax if 9/15 contribution not made up to 100% if not cured. Presume this may be ongoing? 5. Presume must continue valuations until Plan is terminate or taken over by PBGC? 6. Any IRS disqualification issues? 7. Any DOL issues? I will speak with counsel about getting the PBGC to get pro-active to take over this plan.

Yes. I believe 401(l) applies. This will simplify the QDRO later on. ?

Given you seem amenable to accepting advice anonymously if it makes sense to you, here's the advice: You will be better served retaining a pension actuary to assist you. If you are unsure how to locate one, contact the American Academy of Actuaries.

What does the Plan provide?

Thank you. That is helpful. I use "Ifile" under Relius.

Sorry to be so dense. I find nothing in the instructions to 5500 to suggest you don't have to include a Schedule C. It seems obvious since you wouldn't include Schedule A if no insurance or Schedule SB after the plan termination year. I was simply concerned that EFAST2 might reject a filing without a Schedule C. I guess I can try filing without a Schedule C and see what happens though this would mean checking back on EFAST2 at a later date to ensure all is copacetic.

Appreciate the thoughts but it looks like no one else has dealt with this issue?

I will be submitting a 5500 without a Schedule C because there is no information to report. Will EFAST2 reject the filing?

It's important to note that accruals cease under 436 if AFTAP < 60% so should check applicability of this point to your situation. Check this out: Assuming calendar year and 2012 AFTAP>100%, lump sums could be paid without restriction until 9/30/2013 which would have been point where deemed <60% because of no certification.

Agree. Don't want to mess with NRD. However, that does not preclude the plan from being amended to provide unreduced early retirement at some earlier age. Then, provided the Plan so provides, you value his accrued pension payable immediately to get your 417(e) lump sum.

As long as my cronies are weighing in, here's my 3 cents worth. (1) Can't get out of a multi-employer plan without potentially paying a withdrawal liability, which may be heavy. (2) The understanding is that liabilities for benefits accrued stay with the ME plan whether or not the Employer withdraws. In short, if you froze benefits, the employer would still be on the hook for contributions or worse if he withdrew.. (3) Suppose I'm wrong, that you can get out and liabilities and money moves. The defined benefit feature would still have to be preserved. So, this would mean starting a mirror individual DB plan and then terminating such plan with the option of rolling the lump sum to the new DC plan. In short, a conversion of a DB plan subject to Title IV to a DC plan is a plan termination.

(1) You did not state the accountant needed this information for income tax purposes. Hence, my comment to ask. (2) I'm telling you what I've seen done for Schedule C purposes. If the Plan were terminated underfunded, employees get their benefits, Doc takes the hit. Maximizing Schedule C deductions minimizes self-employment taxes. (3) As far as other allocation methods, whatever makes sense to your client, accountant, and you. (4) You could have had a situation where two docs but only one in the Plan. Perhaps, the allocation was requested for allocation of bonus purposes.

This is only an opinion and you may receive others, some of which may sentence me to actuarial death. I would show the employees' contributions as the sum of their TNC. If the sum of their TNC is greater than the contribution, I'd prorate their cost based upon their own TNC. Whatever is left, if anything, is allocated to the doctor. However, before you do anything, it's important to understand the purpose for which the accountant is asking the question. For example, Schedule C, line 19 is where employee pension costs are reported. However, the instructions do not appear specific as to what you report if no contribution is made. I.e., can the employer take a deduction for on Schedule C if no contribution is made? The answer would seem like "no" but the accountant should make this determination.

EA (1976) suggests grandfathered EA as a possibility. A number of life insurance actuaries in our office who had never seen a pension plan became EAs at the onset. IRS administered pension proficiency exams became required circa 1978.

Question is will this out-of-touch actuary care? There is a famous case of an EA who simply made up numbers to get the client whatever contribution the client wanted. The schedule B's were a mess and finally the Joint Board dis-enrolled this EA. Not to worry, the EA kept practicing and signing Schedule B's. Obviously, a "B" signed by a non-EA seemed tantamount to filing an incomplete 5500. The real question is how far back should the "take over actuary" have to go to purify past sins? A number of years ago I was presented an opportunity to take over a DB Plan. I knew it was trouble as the Plan Sponsor didn't want to take a hit in his benefit but didn't want to contribute any more money. I looked at the 5500 the accountant sent over and the "B" was signed by the (I don't know what to call him) in the first paragraph. I knew I would not be comfortable unless I went back to day one or file under a corrections program and was unwilling to present this story to the prospective client (whom I didn't want anyway) besides putting myself in the position of being sued. That is you need to pay me to redo everything you've already paid for. It would have been acceptable if the Plan were under audit and the IRS was requiring redo's. So, I declined to bid. So, the party has lived a clean life for the past 25 years but had committed criminal acts previously for which the statue remained open. Are the party's sins forgiven? Under all of this, it is assumed your friend is a MAAA. If not the case, must your friend comply with the ABCD guidelines. What about JBEA? Not sure what they say. Suggestion is tread cautiously and under guidance of legal counsel.

You will be providing more information, including SB, than is required. You will also answer "No" to questions such as fidelity bond which may look peculiar and trigger audit questions. Finally, the SF is available for public screening.

If the market value of the property in an escrow account falls below one hundred ten percent (110%) of the remaining restricted amount, the Employee must deposit additional property to bring the value of the property held by the depository up to one hundred twenty-five percent (125%) of the restricted amount. Let's say the HCE does not have the wherewithal to fulfill the additional property obligation, what happens? So, if the remaining balance is returned to the Plan, must the participant select a new distribution option? Suppose the escrow value has severely depreciated? Has anyone seen an HCE select the escrow arrangement and then default?