Andy the Actuary

As I said, "style." I've never worked with an auditor who had the least bit of interest in sparing the client fees! The auditor will charge for discussion of the appropriateness and the preparer may charge as well. The only benefit the client derives is some assurance that the forms have been prepared strictly according to Hoyle. If the client is not a publicly traded company, they may likely care less.

Just an issue of style, I've only pressed auditors when the matters are material -- especially when the client's fees to get it "right" exceed the value of getting it right.

1. No one goes to pension prison on this one. 2. As a propeller spinner, I always ask the auditor to send me a mark up up what they want to see changed. So long as nonmaterial, I accept their changes because frankly Scarlett, I don't . . . and this is not a pot worth throwing your chips into. Now if there's some problem later, the auditor can sort it out. In nearly 40 years, there's never been a problem.

Last time I scheduled a client meeting, I told them I'd be there between 7:00am and 5:00PM.

Mike et al, please see edited post for concern. So we're talking about taking a deduction in 2015 (not 2014) when plan terminated in 2014.

This has now become hypothetical because client's CPA wants to deduct in 2014 and I can deal with this without a plan amendment. The issue, which is now of only academic interest, is what governs deductibility of non-PBGC plans when contribution is made in year subsequent to the year of Plan termination and they want to deduct in the year subsequent to plan termination.

Mike, I considered (and may decide to) redoing the 2014 valuation using a higher comp assumption, which would not need to be the limit. I thank you because you answered my question, "There is no answer" about what is deductible in 2015. The other side of the coin is this is not a new issue and I have to believe that most plan sponsers would not make a nondeductible contribution.

Please see post in Plan Terminations http://benefitslink.com/boards/index.php/topic/57695-deduction-on-terminated-one-person-plan/

FACTS 1. Amenment timely adopted to terminate one-person DB Plan 12/31/2014. 2. IRS D-Letter received in July 3. Calendar year plan; BOY valuation. 4. Participant compensation always 100,000 except learned in 2015 that participant 2014 compensation 275,000. 5. 2014 5500EZ/SB NOT YET filed 6. No contributions yet made for 2014 7. 2014 Maximum Deductible determined as of 1/1/2014 = $300,000 8. Lump sum = $2,000,000 9. Plan assets = $1,000,000 Questions 1. Is $1,000,000 the deductible amount even though Plan not a PBGC plan? If not $1,000,000, then what? 2. Regardless of how much deductible, can it all be deducted in 2014 or is $300,000 maximum deductible in 2014 and the rest in 2015?

There are two selections. The formal selection is by the plan sponsor who must obtain the blessing of the auditor. The informal selection is by the plan actuary to whom the buck has been passed. I accept the buck but always caveat my transmission so that the buck ain't worth a dime.

Then, presumably the auditors would have no reluctance to point you toward the table (tables) that should be used?

Re: DOL. I believe the auditor was simply shoveling a pile of bovine excrement to support his position without understanding that I was born toilet trained and analyze one-car funerals!

Good morning. It's Sunday morning venting time: It's times like these that I'm pleased I've decided to hank up my spikes. A DB plan terminated 12/31/2014 and distributions will be made this month. The auditor DEMANDED that the FAS35 accrued benefit reporting values in their audit report reflect the RP-2014 mortality table, though they had no idea what that meant. They said the DOL mandated it (did the DOL tell this to anyone but the accounting firm?). I pointed out: ASC960 provides, "The primary objective of a plan's financial statements is to provide information that is useful in assessing the plan's present and future ability to pay benefits when they are due." The Plan was terminated as of 12/31/2014 and the termination was adopted long before the plan year end. This is a material event. The understanding was at that time that the benefits would be distributed in August 2015. Virtually all benefits are being distributed in a lump sum. Such lump sums are by law based upon the 2015 Applicable Mortality Table as published under IRS Notice 2013-49. Using these tables (which is what FASB calculations did) best represents the Plan's future liabilities and thus, using the RP2014 tables would overstate such liabilities. It would appear this is a valid reason not to use these tables. The auditor backed off but somewhat patted himself on the back and said they had to go to their national office to obtain an exception. The Plan had been using the Applicable Mortality Table to determine FAS35 stuff. I have plans that are audited by the same firm (different auditor) who use older standardized tables and nary a peep. Does anyone know if the FAS35 values are ever used by anyone for any purpose other than they are required?

Each June, I file extensions for any calendar year plans whose 5500s have not yet been filed. I want to give IRS time to record to their system. If 5500 is submitted by July 31, extension box is not checked. I do this preventatively for to quote the former St. Louis Cardinals's pitcher, Joaquin Andujar, "I have only one word, 'You never know.' "

Does this link contain what you're looking for? http://www.irs.gov/Retirement-Plans/Funding-Yield-Curve-Segment-Rates

In June I sent 5558 to the Ogden address -- no street -- and received the return receipt. I.e., it worked. I personally would be reluctant to try the street address given I received the acknowledgement without it.

Cetainly a possibility. But wouldn't you want to cover what happens if there are no cracks?

Isn't the issue the 2015 5500 will have compliance questions not on the 2014 5500?. You can submit the 5500 as you suggested but then would need to complete the 5500-sup on paper if that is permissible. Recall that you must file fewer than 250 tax returns to use the 5500-sup. the 5500-sup was issued in draft form last October. I believe many practitioners are operating as if the "sup" and 5500 compliance questions will be effective for 2015 and so temper their responses accordingly. In the end, it's the client's decision how to file and the practitioner should ensure they have communicated any attendant exposure, risks, and consequences.

It appears that if the plan sponsor files 250 or more "tax returns of any type" that the SUP cannot be filed. In such case, would have to wait for 2015 5500 or 5500-SF to be issued. "Tax returns of any type" are inferred to mean everything, including W2s, etc. Any agreement or disagreement?

Since America's bicentenniel year, actuaries have witnessed and been forced to participate in spoiled fruits of wrapping a social code (ERISA) around the Internal Revenue Code. As pension forfeitures accrue owing to pension recipient mortality, the Plan possibly enjoys actuarial gains. Ultimately, this can lead down the line to reduced contributions and to taxable entities lower tax deductions. If the money is lump summed, the IRS will actually accelerate its revenue though the tax rate will be personal rather than corporate. From a policy perspective, the IRS would get paid sooner, which on the surface seems desirable. But then the old social code competes. The government must protect retirees from themselves. Before they retire, protection comes in the form of reams of incomprehensible notices and disclosures. Forget ,hat whether you are a paralegal or work on an assembly line preparing burgers at McDonalds, you get the same words. Most distressing is the other Andy's (AndyH) comment that the IRS has added lawmaking to its agenda while the checks and balances of our government stand idley by.

All valid 2-cents worth points. Presumably, then, the feds should step in and crack down on unscrupulous lenders charging usurious interest rates to uneducated people? A lot more egregious and wide-spread than annuity buyouts. See attached which is unconscionable. Frankly, I don't believe the feds have gone far enough -- lump sums should be forbidden -- period, as they frustrate the purpose of a defined benefit pension plan to provide a guaranteed lifetime income. Unless there was an exception, this would likely eliminate the non-retirement vehicles that are no more than tax-shelters for wealthy professionals. SLPD 3-12-2015 She borrowed $100, and paid back $3,592.pdf

Thank you all.

So, Mike, does this in your mind mean that if a participant started to receive monthly payments at age 55 that he could not elect a lump sum settlement at age 65? If this is the case, then Notice 2015-49 would eliminate retiree buyouts altogether.

2015-49 appears to apply only to pensioners who have passed their RBD and not to younger recipients . Do you read it to apply to all pensioners irrespective of their age?

Thank you. I'm almost elderly and look forward to the government protecting me!