Andy the Actuary

I saw the movie Easy Rider and had a Red Ryder BB rifle as a child. I also know about Ryder who rents trucks. But what is an "income rider?"

Thoughts are plan factors apply for lump sums. Since no lump sum assumed, no lump sum valued.

Seems as if you changed assumed payment form to lump sum that you'd get desired result. Q: Is it reasonable to assume that a one-person DB Plan will keep going after retirement to make periodic payments?

Because I administer just a few plans, I use IFile with Sungard Relius and use the "actuary signs" option. I note that system will not generate xml file if attachments are a completion of SR templates. It will generate xml if attachments are pdf add-ons. Before I contact the vendor, Is anyone else experiencing this issue? If so, please indicate if you have a fix. If you don't use IFile, would appreciate anyone just attempting to generate an xml where you've use the SR template (e.g., for retirement age) rather than adding a pdf. Even if you could try with an existing filing where you don't use IFile, your efforts will be appreciated. Thank you. andy t.a.

Because I administer just a few plans, I use IFile with Sungard Relius and use the "actuary signs" option. I note that system will not generate xml file if attachments are a completion of SR templates. It will generate xml if attachments are pdf add-ons. Before I contact the vendor, Is anyone else experiencing this issue? If so, please indicate if you have a fix. If you don't use IFile, would appreciate anyone just attempting to generate an xml where you've use the SR template (e.g., for retirement age) rather than adding a pdf. Even if you could try with an existing filing where you don't use IFile, your efforts will be appreciated. Thank you. andy t.a.

Given IRS position that 415 applies to the accrued benefit, you would have to say "no" unless the Plan provides special language in its "freeze" amendment, in which case the freeze would not be considered a hard freeze.

The spreadsheet is being provided as a professional courtesy at no charge with the understanding that it is being provided solely for purpose of comparing values with any systems you might use to determine lump sums and present values and is not intended or warranted for you to copy in whole or part or use for determining lump sum values or present values in behalf of your clients or for any other purpose. Please post if you spot any questionable data. Since I work only in the under 500 market, you are getting only the combined tables and applicable mortality tables. These were stripped by computer from Notices 2013-49 and 2008-85 rather than keying. PPA Mortality.xls

So, now the employer must tell the union that sorry, no money to fund your guys plans, but we have money to fund our other plans. Sounds like it's time to pony up. At least, that's likely to be the PBGC's position. Perhaps, one of these other Plans is overfunded, provides for excess assets to revert to the employer, and could be merged with the union plan. Very tricky, replete with other issues, but doable.

Presumably, you mean single-employer and not multi-employer? How much is the anticipated short-fall? How many participants? Is the employer in bankruptcy?

Make sure you're the first to get your lump sum.

My senior memory has begun to wane. As such, I continually look for ways to protect myself from myself. In this regard, I recently changed my passwords to "incorrect." That way when I enter the wrong password, a system message appears, "Your password is incorrect."

The table is a matter of convenience and communication. Use the actuarial basis on which it is was determined to compute the age 49 factor.

(1) It certainly can be deducted in 2011 (or 2010 if made before the 2010 FIT return was due); you'd need to check the carryforward rules to determine if deductible in 2012. (2) It would be reported on 2011 SB. It could be added to the 2012 PFB and used to offset the 2012 MRC provided the 2011 (FTAP-PFB)/FT >= 80%. If less than 80%, client would have to make a contribution in 2012. (3) For FASB purposes, it would be a 2011 contribution (4) It would have been in the assets 2012 BoY to determine the AFTAP if the Plan requires an AFTAP certification

So long as client has a history of timely filing, generally talking to the IRS about abating penaties has been successful.

So, it appears the question is would it be discriminatory to use assets in excess of the value of accrued benefits to increase accrued benefits for HCEs? Since the employees hired in June 2012 did not enter the Plan, it would seem that they should not be a concern. Why would you deem them includable for 401(a)(4) but excludable for 410(a) and 410(b)? However, if there were NHCEs who formerly participated, it might be considered discriminatory in practice. Would suspect it would boil down to how long ago such NHCEs participated in the Plan. If believed discriminatory, would suspect the Plan could be amended to allocate a portion of the excess to these former participants if economically feasible.

This is a draconian result but here's the 2009 Gray Book Effen referred to. Note, the attorney's I've worked with argue the Plan should give the greater of the NRB actuarially increased or the benefit accruals if the Plan fails to give the suspension notice. Not being an attorney, I was unaware of the implied requirement that the Plan must contain the suspension of benefit provisions. In the circumstances below, it is unclear whether the IRS answer would agrue their position applies even if the Plan provided the suspension notice in a timely way since the procedure was not stated in the Plan document. QUESTION 39 Other DB Plan Issues: Post NRD Actuarial Increase Not Stated in Plan Defined Benefit Plan A provides for additional accruals under the plan’s benefit formula for service after attaining normal retirement age. The plan does not contain a suspension of benefits rule. While normally a plan must be operated in accordance with its terms, the plan administrator needs to consider and abide by ERISA requirements in general. To comply with ERISA, the plan administrator administers the plan by providing retirees post normal retirement with the greatest of: • The benefit with additional accruals • The actuarial equivalent of the benefit at normal retirement • The actuarial equivalent of the formula accrued benefit at the beginning of each subsequent plan anniversary date (see 2000 Gray Book, item 34.) Is this acceptable? RESPONSE No. To take advantage of the offset inherent in providing the greater of the accruals or the year-by-year actuarial increases on previously accrued benefits the plan has to specifically provide for this. Where the plan does not so provide, ERISA would require that the plan provide both the actuarial increase and the additional accruals. In light of the Supreme Court’s Heinz decision, a suspension of benefits rule could be added to the plan for future accruals to avoid the need for the actuarial increases, but it would not apply to accruals earned before the adoption of the amendment

Since you are talking about a post-88 Multiple Employer Plan, you would treat each employer as maintaining a separate plan. This would mean as you implied that effective rates and ROR would be separately determined. This means, in particular in respect of effective rates, that there could be a lot of variance.

Assuming the contributions were not annotated in any way to designate that they were in behalf of the 2013 Plan Year, you may claim them for 2012 for minimum funding. The accrued contributions would be reported on the 2012 Schedule H. The interest adjusted value would be included in Plan assets for 2013 430, 436, and PBGC premium calculations. They would not be included in the 12/31/2012 assets for determining your 2013 404 maximum. The contributions would apply to fiscal year 2013 FASB. The employer would only need to amend the 2012 tax return if they wanted to claim a deduction in 2012 for the accrued contributions. Note the following subtlety for future reference: According to the IRS it is impermissible to deduct the accrued contribution for 2012 but to count it for 2013 minimum funding. I.e., you can't deduct contribution for a tax year prior to the plan year you claim the contribution for minimum funding.

Calculate the benefit limiting to 415 in accordance with your actuarial assumption regarding payment form. If that is lump sum, there is your answer. This is consistent with what David offered.

It's surprising that the IRS wouldn't impute income. Presumably, the nonrecipient is receiving dividends and not just working for le joi de vivre?

Perhaps, here's where the words in the DOL definition of hour of service come in: "each hour for which an employee is paid, or entitled to payment, for the performance of duties . . .

Your question is whether the exemption may be applied at pleasure from year to year. I'd take the position of continuing not to file but not being shocked if the IRS sent me a personalized form letter. If you file now but have a gap year, that might prompt the question of where the missing form is, and the question is whether a filing can be late when it is not required to be filed at all.

Your (P.S.): A toughie. The answer may be different if the Plan has 50 participants versus 50,000. If you have 50, you might just absorb the cost. If you have 50,000, the request process could get costly and it would be appropriate to provide one quote annually, and then charge for additional quotes within the year. You would need to define quote. Have seen requests run from what's my pension at age 60 versus what is my pension at age 55, 58, 61, 63, 64, and 65. Your suggestion might influence the participant's decision of when to retire and you may wish to shy away from that position.

Is there enough PFB so that if part of the COB was waived, the FTAP would still be below 100% so that you get your credit base? That way, it would not be necessary to apply more credit balance than the funding requirement. The issue is that the remaining bases are not allowed to go negative. It doesn't matter that the PFB applied is $1.

Got it! No demonstration required