Andy the Actuary

Vote: [x] Yes -- It is a plan feature.

Has anyone checked the new box at the bottom of Schedule SB (see attached)? New_Schedule_SB_Box.pdf

Any input: (1) The inclination is not to address this problem without the written agreement of the IRS on specifically how this is to be handled. (2) If the client does want (1), then since the ERISA attorney is telliing you what to do, make sure he tells you precisely what to do. Have a piece of paper to demonstrate that you have followed someone else's instructions. Better yet, walk away.

The 430 regs were not exactly handed down to us by a supreme being. It is bewildering how many scenarios you can conjure up where the regs produce a ridiculous result.

Recommend you ask the PBGC for their written permission.

Personal, unofficial vote: Assumption change. IMHO, an actuarial method dictates the manner in which you calculate an asset or liability. Assumptions pertain to best estimates of future experience. And as Casey would have said, "And you can look it up!"* --------------------------------------------------------------------------------------------------------------------------------------------- *For the casual baseball fan, the reference is to the erstwhile baseball manager, Casey Stengel, who would more often than not speak pure gibberish and would complete his outlandish comments by adding "And you can look it up."

This is an interesting question that is not new, only compounded by 436 stuff. I once was actuary for a plan where the PBGC revoked the termination because the client had failed to file timely with the PBGC. In such case, minimum funding was reinstated and so was the good old fashioned credit balance. If I had to vote (without rereading regs), I would vote to ignore the credit balances when calculating the AFTAP. (Of course, what interest/mortality rates do you use to compute the FT and do you use MV of assets or AV, since 430 presumably doesn't apply?) However, if the Plan Termination does not go through, your client could then be in deep ca-ca because the Plan may have made impermissible distributions. Given that your client intends to fund the Plan to sufficiency and assuming there are no client cash-flow issues, the client might elect to burn all credit balances now which certainly would take your question off the table.

Business as usual. Plan termination does not give free pass on lump sum distribution issue either for the 80% threshold or 110% threshold for distributions to HCEs. Nor does it alter operations prior to final distribution. For example, if as of 7/1/2010, the AFTAP were 79%, all distributions could still be effected at termination but full lump sums could not be distributed (to NHCEs) say as of 9/1/2010 (unless contributions were made to increase AFTAP to 80%). Assuming a standard termination -- i.e., plan will be sufficent at distribution -- the applicable restrictions would not apply at the plan termination distribution date. My recollection is this very issue is covered in that morass of words more affectionately known as the final regs on 430/436 (though they are not labeled as such).

Would appreciate any thoughts and comments and if you find any flaws in conclusions. Facts: Frozen DB plan has 150 participants. Facts: No change from 2009 to 2010 MV Assets: 2,000,000 FT = $1.700.000 FSCOB = $600,000 Expenses To Be Paid Out of Trust = $10,000 = MRC Conclusions (1) Plan has funding shortfall in 2009 of (1,700,000 - (2,000,000 - 600,000)) = 300,000 so quarterly contributions of $2,500 apply in 2010 (and in 2011). (2) If Plan fails to make these quarterly contributions, then must meaninglessly notify PBGC for each missed contribution within 30 days. (3) Plan sponsor cannot issue standing election to apply FSCOB to get around quarterly contributions because ordering provisions of final regs would apply FSCOB after quarterly due dates. (4) Possible remedies (a) Plan sponsor can made $10,000 contribution before first quarterly is due (b) Plan sponsor can elect to burn $310,000 of FSCOB so that not only there is no shortfall on 1/1/2010 (i.e., no quarterly contributions due in 2011) but also there is no MRC in 2010. © Plan sponsor could elect before first quarterly contribution is due to apply $10,000 of FSCOB to MRC. (d) Plan sponsor could elect before first quarterly contribution is due 4 separate elections to apply FSCOB to reduce quarterly contribution.

Many don't.

Why wouldn't you simply continue the past practice that has been used to determine age (e.g., for benefit calculations)?

(1) Adopt different interest assumptions (2) Adopt asset smoothing (3) Apply credit balance if feasible (4) Change valuation date from EOY to BOY Some or combination of above may help

Feh, we're splitting hairs. Make the NHCE's benefits the greater of 2% of pay or $100/mo/yos and you should be fine without testing.

Are the facts that the NHCEs have no prior service (not that they have prior service but are not getting credited)? If the case, do you need any testing initially? Presumably, NHCEs (aka non-key employees) will get the 2% top-heavy minimum accrual. 4 years of past service is within the safe-harbor for grants of past service under the 401(a)(4) regs.

For all of you who want baseball to go back to two 8 team leagues and for them to insert 10 baseball cards in pack for 5 cents, ponder this, based upon long-standing frustration with how the national past-it-time has changed under the guidance of our very own Tony LoRussa: What would Cal Ripken's consecutive game streak had been had he played under Tony. I would guess he might have gotten to 28 or 29. For those of you who need to remember baseball the way it was, take a look at this: http://www.baseball-reference.com/boxes/SF...196307020.shtml Spahn was only 42 at the time. I wonder what his pitch count was?

Sue! Who is she and how can she help?

I watched one nauseating Cardinal game this year where there was roughly a 10-minute delay to review a home run. These games seem to be running about 3 hrs 15 minutes as it is. Perhaps what would be better is if there were honest conferment among the umpires. The second base umpire had to be in pretty good position to note that the runner was out in last nigh't fiasco. He could have jumped in but there is the unwritten rule not to undermine your colleagues. Perhaps, the request could be for an umpire conference rather than an instant replay. My own suggestion is that if you ask for a conference and you're wrong, your team has to buy the post-game beer.

How do you overturn a call that is not protestable under the rules of baseball? Would you argue as such if the perfect game had not been at stake? How about if the call was a game-altering decision (e.g., runner on 3rd scores the winning run)? Compound this by making this play in the last sentence the end of a one-game playoff to decide the pennant winner? No doubt, a horrible injustice was committed that will cost this pitcher personally and possibly financially. I must say the umpiring this year has reached bottom in terms of accuracy, consistency, and judgment. Unfortunately, with unions so strong, there is no peaceful solution to dealing with incompetent umpires. Lippy, I'm with you: They ought to reverse the call, but they can't and won't. There're simply too many other worms in the can.

Haddix was a 27 year old rookie in '53 when he went 20-9. This little (about 5'9"", 165) carve-ya-up lefthander posted a fine season in '54 and then was approaching toast, when he was shipped to the Phillies in '56. He never regained his earlier form and had it not been for his 12 perfect innings against the Braves, would be long forgotten. Heck, does anyone remember Alex Kellner, let alone, that he too was a 20 game winner in his rookie season (Philadelphia A's in '49)?

Mea culpa, mea culpa. May I be condemned to 100 years of sitting in the corner in the "sorry chair" for filing extensions. Had we filed 5500s (some done) in April, the clients would have had to be involved. That would have been fine for some, a disaster for others. Generally, the choice of many attorneys in preparing compliance amendments is to wait until the deadlines to see if modifications or other changes apply. Different strokes. You go your way, I'll go my way, and no one will care 100 years from today who went which way.

Unfortunately, Jim Joyce and his blown may be more remembered than had the perfect game been completed. Those old enough may recall the Don Larsen PG in the '56 WS ended on a controversial third strike call (on Dodger Dale Mitchell) by home plate umpire Babe Pinelli. Don Denkenger's blown call in the '85 WS is more well known than the identity of the game's winning pitcher (Quisenberry). And for what is Bill Buckner best remembered? His near HOF career? Perhaps a more perplexing question is why wasn't "The Sieve" watching the Red Wings in the Stanley Cup finals last night?

Does this provide your answer? http://www.mhco.com/Library/Articles/2010/...0EZ_052710.html

The SB instructions provide, "On an attachment to Schedule SB, list the rate of retirement at each age and describe the methodology used to compute the weighted average retirement age, including a description of the weight applied at each potential retirement age, . . . " A plan provides for unreduced early retirement at age 62 and 20 years of service. The retirement assumption is that participants retire at normal retirement age (65) or otherwise when first eligible for an early retirement age. This statement describes the methodology. However, the weights are dynamic and not an assumption but rather a function of the participant demographics. Are those with analogous provisions providing the "weights" (i.e., w% at 62, x% at 63, y% at 64, and z% at 65) and if so, are the percents weighted by benefits or liabilities.

So long as you go through the standard termination process, I would expect you should be fine. Even though essentially sanctioned by the PBGC on their website in a Bluebook Q&A, the PBGC will be very unhappy if you do not go through the Plan Termination process. A few years ago, a client shut down their operations suddenly. In accordance with the Plan, lump sums were distributed. Because there were no Plan participants, the Plan sent the PBGC a letter in accordance with the aforementioned Bluebook and did not file for a PT. Now mind you we are talking about maybe 25 participants with total liabilities of $700K and the Plan made 100% of the distributions. The PBGC was totally miffed and audited the Plan. The bottom line is there was no problem but the client had to pay outside professionals to deal with the PBGC. In the end, we filed a standard termination filing with values reported as of the benefits distribution date. You may want to talk it over with legal counsel but the suggestion would be to buy the annuities, file the forms as of your proposed termination date, and show values as of the distribution (i.e., annuity purchase) date. One question would be do you need to provide for 60-day delay if all obligations have been irrevocably settled? In short, who would you give notice to if there are no participants?

It comes as a great shock that the US of A which prints thousands of words on preventing ID theft would prescribe an option that circulates people's signatures in cyberspace. This is one of those options that will end bad for someone.