Andy the Actuary

P.S. Unfortunately, regardless of other professionals' opinions and personal beliefs and as I perceive their uncharitable attitude toward you, Title IV of ERISA provides that you are excluded from being covered under the PBGC insurance program.

Apologize in advance but don't understand the question. It would appear that there may be a deemed burn either on 1/1/2011 (depending upon the 2010 AFTAP) or 4/1/2011. Are you certifying now? Because if so, then as of 10/1/2011 the AFTAP was deemed to be less than 60%.

There is no question the PBGC would welcome the additional dues but your client is uninsurable in accordance with ERISA.

----- Original Message ----- From: whoknows@whodo.com To: andytheactuary@whoknowswhere.net Sent: Wednesday, May 02, 2012 5:37 PM Subject: question hi andy the employee that i terminated in jan wants her pension check now. her name is bonnie x. can you figure out what i owe her til the end of 2011 and i will have my investment guy cut her a check. ============================================================================== -----Original Message----- From: <andytheactuary@whoknowswhere.net> To: whoknows@whodo.com> Sent: Fri, May 4, 2012 10:00 am Subject: Re: question What was Ms. X's compensation paid for 2011? Thanks and regards, andy ============================================================================== ----- Original Message ----- From: whoknows@whodo.com To: andytheactuary@whoknowswhere.net Sent: Friday, May 04, 2012 10:05 AM Subject: Re: question 28k =============================================================================== -----Original Message----- From: <andytheactuary@whoknowswhere.net> To: whoknows@whodo.com> Sent: Fri, May 4, 2012 10:09 am Subject: Re: question Please confirm: $28,000.00 (exact dollar amount reported on W2) Thanks and regards, andy ============================================================================== ----- Original Message ----- From: whoknows@whodo.com To: andytheactuary@whoknowswhere.net Sent: Friday, May 04, 2012 10:10 AM Subject: Re: question i'll check her w2 when i get home. but it was right around 28k.

What does the plan provide? Likely, it does not provide for the underfunded plan situation. Was this plan covered by the PBGC? They have some thoughts about how many owner employees can take a hit if the Plan terminates underfunded. I would offer that IME generally parties must agree to waive benefits and spousal consent must be obtained if the participant is married. Without this written agreement, it would not seem you could force the prior owner to accept a reduction.

It sounds as if I'm not sure but I agree with your approaches and would be how I would treat the situations. However, I'm not up on the particular legalese cannot give you the "correct" answer you're seeking.

Including this actuary's spouse, no one has ever voiced concern over an actuary's satisfaction. If it fits the prototype, you could have NRA = 65 (or even 62) as a safe-harbor and then have unreduced e.r. at 58/10. This stuff was covered in IRS Notices 2007-8 and 2007-69.

58/10 is still allowable so long as you can support it reasonably representing the norm for the plan sponsor's industry. How to demonstrate this? Generally, good luck.

Before or after the amendment? Hey, you don't need to answer. My answer will be the same: I dunno.

I see this a lot with takeover plans - no actuarial increase for vested terms., and no RASD. How does one suspend a vested term? I don't doubt that there is a requirement to provide an actuarial increase, it is just not in these documents and I don't know why. And I see it often with lawyer-written documents. Comments? Generally, plans are drafted by folk who have never even performed a benefit calculation. The post-65 vested term case is not addressed because after all, administration is always right on top. On several take overs, I've worked with attorney's to add RASD or at least to include language that supports giving an actuarial increase. In the end, you've got to act in favor of the participant where the plan is silent.

For an active employee, Plan may stipulate no actuarial increase if Plan Administrator provides appropriate notification to affected employee. In short, the employee trades lost pension for salary. "Appropriate" goes well beyond just telling employee -- there are specifics that the "notice of suspension" must contain. If Plan fails to give "appropriate" notice, then remedy appears to be to give the actuarial increase. For a former employee, there can be no suspension and unless Plan provides for retroactive annuity start date, actuarial increase would apply. In this case, there is no salary trade-off. Suspect you will find agreement with the stated treatment for actives and disagreement with the stated treatment for former employees.

When we first submit a 5500 in behalf of a client, we follow the process of asking them to request us to file electronically, and then countersign their request and return it to them. When we amend the form, do we need to go through the request process again with the amendment or does the initial request cover the amendment?

The plan termination cannot eliminate the defined benefit feature though the plan could be amended to allow for a voluntary lump sum election. Once the pension has started, the retiree retains the right to continue the option unless he/she voluntarily elects otherwise. If the case, the Plan must purchase an annuity.

The nuance regarding SCA's comment is that TNC relates to the benefit expected to accrue during the year. If you had a plan to which 404(o)(3)(A)(ii)(I) -- the funding cushion compensation calculation -- applied, this would be a long-term assumption. Prior to PPA, the assumption SCA described might not have been appropriate since actuarial assumptions reflected (or at least were supposed to reflect) long-term expectations.

Better than Puxico, Missouri's finest, Win Wilfong, who while born Win Wilfong, played under the name, "Win Wilfong?"

Please clarify. Is there only one employee or are there multiple employees (i.e., owners) but all but one were distributed their benefits? If you have more than one eligible employee, it would seem you would need more than just one participant to satisfy 401(a)(26).

See ERISA 4021. In particular, plans covering only substantial owners are excluded under 4021(b)(9).

Well now, in the east they are called Peking Ravioli... I, too, used the suffix "king" when referring to Ravioli when I responded to my m-i-l.

My mother-in-law once asked a waiter in an Italian restaurant if they served pot stickers. Now, that is in the dumb arena. Would assume the answer to your question is the combined limits do not apply but would suggest you check if there are any issues if the organization pays UBIT.

If you can pay the retroactive payments in a lump sum representing 10 years of payment, the issue becomes more complicated for 415 determination purposes because you will be paying part lump sum, part deferred annuity at age 70. Thus, you would have to somehow convert the lump sum to an annuity at age 70 (using regulations that were not even around 10 years ago?) and add to this the deferred annuity of $60,000 (valued at age 70) starting at age 80. I do not believe that the issue is simply limit the ab to $60,000 and pay the lump sum. Other opinions?

Not an attorney but suspect SCA's suggestions would require appropriate plan wording. E.g., if the plan provides for a deferred begining date (except for HCEs), then the plan would need to be amended to to allow for an in-service distribution. Ditto, retroactive annuity start date.

IRS was emphatic some 10 years ago that despite the statute, 415 applies to accrued benefit and not benefit payable. The 2007 final regs codify this position. In such case, benefit would be limited to $5,000. However, there is no reduction to pay benefit in the form of a QJ&S.

Federal Register: http://webapps.dol.gov/federalregister/Pdf...spx?DocId=24417

If this helps, SungardRelius appears to have incorporated the revised model notice into their system that prepares the 2011 AFN. So, this implies that SR believes it is acceptable to include the revisions in 2011. Since the proposed regs are not yet final and since it has never been mandatory to use the model notice, it would seem you could either adopt or not adopt for 2011.

I think I understand what you show. Let me take the $50K a month employee and apply what you show. Time period 60 Mos Avg Period Comp 401(a)(17) Amount used 10-01-2007 - 12-31-2007 $150,000 $225,000 $150,000 01-01-2008 - 12-31-2008 $600,000 $230,000 $230,000 01-01-2009 - 12-31-2009 $600,000 $245,000 $245,000 01-01-2010 - 12-31-2010 $600,000 $245,000 $245,000 01-01-2011 - 12-31-2011 $600,000 $245,000 $245,000 01-01-2012 - 09-30-2012 $450,000 $250,000 $250,000 Total $1,365,000 with a 60 month average of $22,750. If the employee worked to 12-31-2012, then the amounts used would be Time period 60 Months Per. Comp 401(a)(17) Amount used 1-1-2008 - 12-31-2008 $600,000 $230,000 $230,000 1-1-2009 - 12-31-2009 $600,000 $245,000 $245,000 1-1-2010 - 12-31-2010 $600,000 $245,000 $245,000 1-1-2011 - 12-31-2011 $600,000 $245,000 $245,000 1-1-2012 - 12-31-2012 $450,000 $250,000 $250,000 Total $1,215,000 with a 60 month average of $20,250. Thus my prior conclusion that the suggested scenario seems improper. Any reactions to my suggested scenarios? Nah, the plan document reads as follows: "Highest Average Monthly Compensation: The highest average monthly compensation paid to you during a 60-consecutive-month period during your entire employment history. Thus, at 12/31/2012, the appropriate average compensation would be $22,750. You will need to discuss the result you believe to be improper with others.