Andy the Actuary

The IRS has pooh-poohed anything practical like the ye olde Schedule B 2*I/(A+B-I) approach. David Rigby had suggested a very reasonable method of accounting by months with a mid-month assumption for weighting contributions and beginning of month weighting for distributions. I've adopted David's suggestion. You might want to adjust benefit distributions to mid-month for a Plan that typically distributes benefits in a lump sum. My understanding is the IRS does not intend to publish guidelines and would likely accept any methodology that reasonably accounts for timing.

I believe he was the Orioles first announcer in '54.

Attached is your answer: So long as the entity is not shutting down, both annuity contracts and lump sums must provide that any active participant who would otherwise have become eligible does grow into the subsidy. This can significantly increase the cost of a termination, in particular if a plan provides for unreduced early retirement. IRS_Rev._Rul._85_6_Early_Retirement_Subsidy_Termination.PDF

It is disappointing that benefits professionals would even joke about taking the low ground. If a document was signed, you got a plan. The client should seek legal advice on this one.

Yes, but you I wouldn't think want to be one of those persons!

My vote: You got it right the first time. Amortization=$52,000.

Int he good old days before the timing of accrued contributions was material and elections/certifications were timing dependent, you could complete the 2010 valuation now (with appropriate caveat) even though the accrued contributions had not been made. I might add that I've never had a client who failed to make the accrued contributions by 9/15. Now, I find that client cases stay home, which means continued acquaintance efforts. Also, I can no longer invoice on a completed work basis without putting our Wheaten terrier out on the street with dark glasses and a box of pencils to generate some cash. How are practitioners handling this craziness? E.g., are you waiting until 9/15 to complete the actuarial report providing estimates in the interim?

My sympathies both for your personal loss and pension discombobulation. Rely upon this: You cannot rely upon advice from a message board to help you work through this nasty problem. You need competent help, in particular, for someone who can connect with the right government parties. I suggest you look to a benefits consulting firm as opposed to a CPA. They are likely to be more experienced in dealing with late filing pension form problems. You would want to retain their services prior to your responding to the DOL and IRS. It is certainly appropriate to ask them to qualify their experience in this area. The good news is you may be able to get this resolved without penalty or fine. The bad news is it may cost a bit for the consulting. Please keep in mind that someone is going to have to spend some time to determine the situation's history as well as possibly researching how the IRS/DOL has dealt in similar situations. Then, they will have to contact agencies and argue your position. Given this will be a one-time consulting job, they may request a retainer. You may be able to identify consulting possibilities in your area by contacting the American Academy of Actuaries. You may anticipate that the Academy members are likely to hold high professional standards. American Academy of Actuaries 1850 M Street NW, Suite 300 Washington, DC 20036 Phone: 202.223.8196 Fax: 202.872.1948 Website: www.actuary.org Web questions: Michael Roberts roberts@actuary.org Again, these are one persons thoughts and others may be able to offer alternative paths. Best of success, a.t.a.

Exclude Bob Petit? Boo, hiss. An insult to the great Southern State of St. Louis -- the western most state for professional baseball and basketball until 1955 (provided you exclude the Minneapolis Lakers). Okay, if you exclude Petit, then you must concede it would be unjust to include Woody Sauldsberry.

To anyone's knowledge, has the DOL formally or informally indicated that they will relax their no-sharing position on digital IDs so that a plan sponsor may give "power of attorney" to a third party to file the 2009 5500?

Do you mean 2008 and not 2009? In such case, except for EZ filers (and to my knowledge the 2009 EZ has not been released), doesn't 2009 have to be filed electronically?

Agreed again, especially for a plan that froze at 12/31/08 where there will be no normal cost (other than expenses) for 2009. In your example it seems reasonable to assume the 2009 expenses are less than the $1,000,000 excess assets! Reasonable, of course, unless legal fees are being paid out of the Trust.

Thank you. So, an employer (at least in 2009/2010) might in some cases be able to avoid the ramifications of blown quarterlies by virtue of an election to use different interest rates or asset averaging.

FT (2008) = $15,000,000 AVA (2008) = $14,000,000 MRC (2008) = $2,000,000 No COB So, projected quarterly contribution of $500,000 required in 2009 Plan frozen 12/31/2008 FT (2009)= $16,000,000 AVA (2009)=$17,000,000 PFB (2009)=$0 No quarterly contributions (of $500,000) made 4/15/2009 or 7/15/2009 In August 2009, determined FT and that MRC (2009) =0 Conclusion is no problem as far as late 2009 contributions since 90% of nada is nada. Any disagreement???

Thank you for recognizing Bob Petit plus a Hawk first round draft choice, Bill Russell, who was traded for Ed McCauley and Cliff Hagen.

Oh, good grief!!! Your logic seems right. In the particular example, you could make all of this go away by burning $5,000 of COB, which would then wipe out your prior base. The best part of doing this is you would eliminate quarterlies for 2010!!!

No one but no one had a sweeter touch than Mr. Baylor.

Those awaiting final regs might wish to consider that it required the IRS 13 pages in Rev Proc 2010-16 to define "last known address."

My vote: Win Wilfong Bevo Nordmann Chuck Share Rudy LaRusso Hot Rod Hundley Dave Piontek Gene Conley* Dick Ricketts* Chuck Connors* *for their contribution to the diminution of major league baseball with an assist to Nathanial Clifton because you just got to love the moniker, "Sweetwater" Finally, it was announced today that Buckwheat, of Our Gang fame, has converted to the Muslim faith and changed his name to Kareem of Wheat.

This falls into the category that clients don't always follow instructions that they normally follow and to quote Forrest Gump, "It Happens." A 300+ life DB plan for a not-for-profit organization does not provide for in-service distributions. Further, the plan provides for a late retirement date that is the first day of month coinciding with or next following the actual retirement date. An HCE turned 65 on October 4, 2009 and indicated he would actually retire on November 9, 2009. In August 2009, the HCE was given an election package that provided for a lump sum distribution effective December 1, 2009. Instructions were provided not to distribute payments until on or after December 1, 2009 and then only if HCE had terminated employment as planned on November 9, 2009 (which he did). The same personnel have been administrating the plan for years. On November 9, HCE terminated employment and was handed a lump sum check on November 9 for $1,020,000, which was the payment for December 1 distribution date. Had the distribution been calculated as of November 9, the amount would have been $1,016,000. Thoughts?

Presumably, you need to be mindful about grants of past service re: 401(a)(4) since it is a plan amendment?

Suggest you establish the plan in a non-overlapping plan year. Also, benefits in new plan must be aggregated with benefits from old plan for 415 purposes. E.g., assuming calendar year plan, establish as of 1/1/2011.

Potential (but unlikely) 401(a)(4) problem related to grants of past service.

That is what the attached had said although I could not find where this position was codified in the final regs. Are there any issues with professional standards with these hopping interest rates? IRS_9_25_2009_Interest_Rates.pdf

In 2008, a calendar year plan sponsor elected to use the transitional segment rates for the preceding September (2008). In 2009, the plan sponsor elected to use the non-transitional segment rates for January (2009). With final regs effective 1/1/2010, may the plan sponsor elect to use another basis for 2010 such reverting to a prior September determination month. Or, did the Plan sponsor use up his "freebee" change?