Andy the Actuary

You have my vote for King!

This is a personal preference that all 2009 calendar year 5500s, save the EZs, are being put on extension to 10/15/2010. This is to allow time for additional changes by the DOL as well as software. When I put my front tooth under my pillow last night, I wished that the DOL would eliminate the privacy-threatening requirement to include a scan of the signer's actual signature.

If I will now submit forms in behalf of my clients (i.e., no one else will need to get to the forms online), then I presume that I don't need to use Webclient and there would be no advantage to using it? Also, I would obtain EFAST2 credentials as what "Filing Signer" and "Transmitter?"

I have no money. So, if you come after me you won't get enough to buy a big salad. Mr. Preston once said in a moment of lucidity, "Sometimes the "correct" course of action isn't the one that is legally defensible at a cost. Instead, it is the action that ensures one needn't defend anything - legally defensible or not."

Routing filings function is not working. This issue is not with your computer. PBGC is aware of problem and should have resolved in next day or two.

The movie of this dialogue was made in 1950. It was called Rashômon.

A plan has a zillion dollars of FSCOB and no PFB. FT/Assets 2010 > 80%. Any problem with the getting a signed election now (in 2010) to apply the FSCOB to reduce 2011 quarterlies?

The 2009 MRC for a calendar year plan was $20,000. On January 1, 2010 election was made to apply $20,000 of the FSCOB to cover 2010 quarterly contributions of $5,000 each. In July 2010, the valuation is performed and it is determined the 2010 MRC is $0. So, what happens to election? Is approximately $20,000 of FSCOB effectively burned, or is $0 burned since there were no quarterly contributions due for 2010? It would seem that in establishing such an election the appropriate wording would be to state "to the extent required." I presume this is doable since I took the quote directly from the reg.?

You can download an Excel add-in from the SOA's website. It will list all of the tables as well as projection scales. It was common to use the 51 table with projection (of mortality improvements) to 1960, 65, etc. The file also contains the projection tables. This sounds like such a table. http://www.soa.org/professional-interests/...le-manager.aspx

Your use of terms is ambiguous here. What is your funding target, actuarial value of assets, COB and PFB? If Asset / FT (the "raw" funding percent) is above 94%, that is not your AFTAP unless it is also above 100%. Wouldn't it be possible that the transition rule applied through 2010 so that the 2009 AFTAP would be 94%?

Thank you, I dug this out from the final 430/436 regs (not easily found): "With respect to a participant who was barred from receiving an optional form of benefit that would have been payable but for the application of a restriction on prohibited payments pursuant to section 436(d), once the restriction ceases to apply, the participant’s benefits will continue to be paid in the form previously elected unless the plan offers the participant a new election that modifies the prior election. The final regulations permit a plan to provide that the participant will be offered the opportunity to have a new election under which the form of benefit previously elected may be modified, subject to applicable qualification requirements, and clarify that any such new election will result in a new annuity starting date for purposes of section 417."

The 50% lump sum restriction had been in effect for a calendar year plan effective 4/1/2009. There were six participants who elected to take the 50% lump sum and start an immediate pension. The plan sponsor contributed additional amounts in 2010 for 2009 so that at least for the time being distribution restrictions no longer apply. The sponsor would like to offer those six the opportunity to take the remainder of their pension in a lump sum. I know we have the "annuity start date" issue. I have also been party to plan terminations where annuitants were offered lump sums. Any thoughts on whether or not offer to allow participants to revoke their election and elect lump sum payment is doable?

It would seem that an equally great concern is the possibility of functions being outsourced (to India). We can only thank Congress for reverting our work back to the noncommodity bucket.

Because of funding restrictions, all lump sums distributed under a particular DB Plan in 2009 represented only 50% of the total benefit. The instructions to line 3 Schedule R indicate, "Line 3. Enter the number of living or deceased participants whose benefits under the plan were distributed during the plan year in the form of a single sum distribution." Thus, a fundamentalist reading of the Schedule R instructions would suggest "0" is the appropriate entry. How have practitioners approached this question?

Not the mantra of the IRS or DOL. It's the Christian ethic I learned in shul !

Thanks. You are fortunate. I work with a number of organizations (subject to audit) with high turnover of their financial officers (they don't even have HR) where the pension plan is the red-headed step-son. Often, multiple follow ups are required or repetitive emails to explain a process. There are a number who could manage the process but my boy scout preference is to make life as simple for the clients as I can and to ensure it gets done. I will report back if any (many) of my clients elect to submit the filings on their own.

And how many employees do these clients typically have? Do they own a computer? If so, do they know how to turn it on? The point is some will find the simplest task cumbersome. We are there to serve, not to be served. I'm glad for you that your clients had no problems.

The third party submitter option is most welcome. The only concern is that the electronic submission would need to contain a pdf formatted attachment of the first two pages of the 5500, which would include any signers' signatures. This attachment would be posted to the DOL's website along with the 5500 and would be available for public inspection. I would hope eventually owing to privacy and identity theft reasons that this requirement will go away. We'll be filing to extend the 5500 filing deadline to allow more time for the DOL to reconsider this requirement.

Recently, my email address changed and in the interim, I missed some Benefit News Letters. I wanted to retrieve them in the same format. Here is a way to do so if you use a PC, provided you are using Internet Explorer (IE). (1) In IE, ensure that you have appropriately designated your email program. {Tools}{Internet Options}{Program}. Use drop-down menu to designate an implemented email program such as Outlook or Outlook Express. (2) In BenefitsLink {News}{Newsletter}{By Date} and select {lef mouse click} the newsletter (3) In IE, {File}{Send}{Page by E-Mail}. The email template appears and designate yourself as recipient and send Voila!

The distinction is perceptual. Just like it's perceptually okay to terminate a DB plan but not to convert it to a cash balance plan which still credit benefits.

The value of money is relative. $100,000 means very little to A-Rod (about .3% of his compensation or the equivalent of $600 for someone making $200,000) but means a lot to me. $1,500 has modest meaning for me but to someone making $30,000/year, it's rather significant. Even with flat salary of $30,000, a 5% contribution means $7,500 over 5 years and it is unlikely the person (unless a complete Spartan) would have been able to accumulate such a sum on his/her own.

The general reality of life is that professional and small business owners do not start their businesses solely so that others can have jobs. Whether or not the owner values his employees as an asset, they are there to help him make money. If they don't, they are not carried. As such, if an action doesn't benefit the owner, he's virtually unlikely to take it. In short, if you don't appeal to his own savings needs, he won't spend money on his employees. While there may be age-weighted plans or cross-tested plans that use the 3 times gateway, the wager is that most of the cross-tested plans employ the 5% gateway. This is not so the administrator can be better compensated for dealing with a more difficult technical problem but so that the owner can contribute the maximum for himself while minimizing the cost for his employees. This philosophy is neither illegal nor immoral. It's simply business and like it or not, that is the truth. If you kill cross-testing (which I suspect would ultimately mean age-weighted plans as well), many employees will lose benefits. No employer will make a 25% profit sharing contribution for his employees just so he can max himself out.

Oh mon dieu! I'm being threatened by the Masked Avenger from Woody Allen's Radio Days

I remember one of the Bush Administration actuaries speaking before a general session at I believe the 2005 EA meeting: "Our proposal eliminates credit balances and we're damn proud of it." In my limited experience (heck, everybody has limited experience), the trouble that credit balances cause are generally worth it as they do provide some degree of funding flexibility.

FYI. I sent the following to my Congressman. ============================= I am an Enrolled Actuary who does not practice in the defined contribution arena. Nonetheless, I urge you to oppose Congressman Lloyd Doggett’s (D-TX) proposal that would eliminate retirement benefits for many workers. Under present law, individual account retirement plans are permitted to provide older workers with higher benefits to facilitate their catching up on their retirement savings. Such plans are generally required to provide all workers with a minimum contribution of five percent of pay. Certainly, the concern is that owner-employees tend to be older and often when they retire, the business ends. Nonetheless, a contribution of five percent of pay is a significant benefit even if accrued over a period shorter than the employee's remaining working career. Five percent is certainly more significant than 0% which is where the employee will be at if law destroys the incentive for the employer to sponsor such a plan. Please contact Acting Chairman Sander M. Levin (D-MI) or Ranking Member Dave Camp (R-MI) and ask them to oppose the Doggett proposal. Simply put, this proposal is a retirement plan killer that would result in millions of Americans losing their valuable retirement benefits