Andy the Actuary

An NHCE is anyone who does not sleep with Pappa Bear.

So long as all the Big Bad Wolf does is huff, and puff, and blow your house down [ooops, wrong fairy tale] and does not amend the plan to reduce benefits, it doesn't seem 204(h) would apply. However, good practice would be to advise Goldilocks lest she thow her hot porridge in your face when she discovers that baby bear, who does very little work, is getting the greater benefit because of his birthrights.

DOL Reg. 2580.412-(16)© provides, "The Act does not prohibit more than one plan from being named as insured under the same bond. However, any such bond must allow for recovery by each plan in an amount at least equal to that which would be required if bonded separately. This requirement has application where a person or persons sought to be bonded pursuant to the requirements of section 13 have handling functions in more than one plan covered under the bond. Where such is the case, the amount of the bond must be sufficient to cover any such persons having functions in more than one plan for at least 10 percent of the total amount handled by them in all the plans covered under the bond. For example, X is the administrator of two welfare plans run by the same employer and he handled $100,000 in the preceding reporting year for Plan A and $500,000 in the preceding reporting year for Plan B. If both plans are covered under the same bond, the amount of the bond with respect to X shall be at least $60,000 or ten percent of the total handled by X for both plans covered under the bond in which X has powers and duties of handling since Plan B is required to carry bond in at least the amount of $50,000 and Plan A, $10,000."

When the IRS discussed 415 (I believe at the 1998 EA meeting) just before issuing 415 guidance, they indicated that 415 applied to the accrued benefit, which is consistent with how the final regs. apply 415. In short, the plan should specify if accrued benefits are to be increased as a result of COL increases to the 415 limit. I say, "If you agree," only because there are some legal beagles who are still willing to argue the statute trumps the regs. and that 415 applies to the benefit distributed. I, myself, would rather take my chances with Mike Tyson.

IRS has taken position that 415 applies to the determination of the accrued benefit. If you agree, then look to the Plan language to see if offers direction, and if not, you may want to make it so if/when the plan is restated for termination.

Welcome to the plan !!!

You are publicly asking professionals whether they would follow the law or follow a practical line and do nothing unless a question were raised. There is only one way for professionals to respond to your question.

"Theirs not to make reply, Theirs not to reason why, Theirs but to do and die."

You can build any sort of untrue identity by starting with a false premise: 4=0 4+ 12x = 12x 4(1+3x) = 12x

How much was the check? It's possible that the Plan was using a minimizes cash-out rule, which IMHO is a misapplication. I have seen the IRS approve terminations where the participant was given an opportunity to elect lump sum payout, but then I believe you would have to jump through all the annuity start date hoops of offering all options and requiring spousal consent.

Kudos to the EA Meeting Committee for (a) sending the attendance certificate via email and (b) linking meeting handouts online at http://www.enrolledactuaries.org/ea2011/me..._materials.html

Is there a large unrecognized loss? If so, wouldn't a shorter amortization period for losses accomplish the objective, or removal of the 10% corridor if used? We've had those changes approved by one of the large audit firms. Nope, its about 800K AOCI and 3,200K Liability for pension benefits. But, you've given me an idea. Thank you.

A well-funded frozen DB plan sponsored by a not-for-profit organization has a $4 million pre-paid pension asset (say it's all in "Liability For Pension Benefits"). The sponsor wants to terminate the Plan but does not want to run $4 million through expense in a single year. Has anyone been involved with similar situations were the auditor has sanctioned (i.e., not written an unfavorable opinion) that the sponsor could expense this pre-paid over a number of years and then terminate the Plan when it has been written off?

Andrew Biggs. The presentation mirrored his paper in the Financial Analyst Journal. See attached. Andrew_Biggs_Financial_Analyst_Journal.pdf

Estimated attendance was 750-850, a far cry from the peak of 2,600. Average age looked over 50, which may be generously low. Owing to economic factors, aging attendee population, and the shrinking DB plan arena, it's questionable how long the EA meeting format can garner sufficient interest without significant reshaping (or significant legislation). Of note is number of former private sector actuaries/consultants who now work for IRS. American Benefits Council Exec. Kenneth Porter commented that Congress believed defined benefit plan funding was fixed and expressed no interest in discussing the subject. Massive brain power continues to be focused on minutia, actuarial standards, and saving DB plans rather than focusing on retirement and retirement income policy. Perhaps, it's a matter of what you can get your hands around? Perhaps it's a matter of what constitutes continuing education in Joint Board's eyes. The above are my observations, perceptions, and thoughts and are not intended to represent nor should it be inferred that they represent the general thinking.

And when you say "all employees past" do you mean all employees since the freeze or the past service of all active employees? Well, I truly mean all employees forever since the inception of the business. That said, do not ask me how I would conduct such a test because I have no idea. if somehow you could tie the 20% to past-service limited to 5 years of service prior to the Plan Amendment, then I believe you would then only have to look at the current active employees (including those not covered by the Plan). This is covered in 1.401(a)(4)-5(a)(3). This safe-harbor on past-service is for 401(a)(4) and does not give you as pass on 410(b). I also failed to mention it would appear that 401(a)(26) applies if the Plan is reopened.

Yes, but in looking at your 401(a)(4) test, you would somehow have to consider all employees past.

Would have to satisfy 410(b), 401(a)(4) (in particular, grants of past service), and the AFTAP would have to be at least 80% after increase. Benefits could remain frozen but would not longer get the free pass (if the Plan ever had it) of not being subject to the 436 stuff.

Since there is no "x" operator, multiplication is assumed in "2(9+3) In such case, 48/2(9+3) = 48/2x(9+3)=48/2x12=24x12=288

Operationally, it would be appropriate to maintain a running balance whereby the balance is increased using the segment rates that were determined at the annuity start date. The remaining balance would be the balance held as a liability for purposes of IRC Sections 401(a)(4), 430, and 436, PBGC variable premium determination, and FASB. In short, on paper, we are escrowing within the Plan. So, assuming an annual distribution, and first segment rate of 5%, you'd have: Duration Balance Distribution Net After Dist Interest 0 1,000,000 75,000 925,000 46,250 1 971,250 75,000 896,250 44,813 2 941,063 75,000 866,063 43,303 3 909,366 If you don't credit interest, then participant is suffering a forfeiture of benefit by virtue of the restriction. (sorry, don't know how to get the columns to allign)

Not to split hairs, but "can use" or "must use" or "should use?" "can use" ==> either use 08 or 11 and either is acceptable "must use" ==> must use 11; 08 will not be accepted "should use" ==> preferred is 11 but 08 will be accepted until renewal notice sent

The Joint Board cashed my $250 check some time ago. I have received no notification of renewal status. My understanding is effective 4/1/2011, the 11-XXXXX rather than 08-XXXXX number should be used to certify SB, etc. Can anyone confirm or offer differently?

Thank you. That was my answer but I was hoping for a "no."

A DB Plan has over 1M in unfunded vested benefits (funded %=77%) as of 1/1/2011 and the variable premium applies. Active Plan Participation is as follows: 1/1/2009 50 1/1/2010 30 1/1/2011 30 PBGC Form 10 was filed in 2010 for the active participation in 2009. Since active participation 1/1/2011 is less 75% of active participation as of 1/1/2009, must Form 10 be filed for 2010?