Andy the Actuary

What/who has led you to the possibility that it could be removed and would be exempt from 411(d)(6) protection?

The roundest knight at King Arthur 's round table was Sir Cumference. He acquired his size from too much pi.

Mr. E's point is well-taken. I would opt for the Schedule R approach though this item appears to be more information-like than election-like. The real question is why would plan sponsor ever disagree? Plan is frozen to reduce costs. If plan sponsor wants to contribute more, then it is certainly likely he can do so with the ample 404 cushion. From 2009 5500 Schedule R instructions: See Temporary Regulations section 11.412©-7(b) for details on when and how to make the election and the information to include on the statement of election, which must be filed with the Form 5500 annual return/report. Here's the ancient reg, which by the way applies to amendments made after the close of the plan year. § 11.412©–7 Election to treat certain retroactive plan amendments as made on the first day of the plan year. (a) General rule. Under section 412©(8), a plan administrator may elect to have any amendment which is adopted after the close of the plan year to which it applies deemed to have been made on the first day of such plan year if the amendment— (1) Is adopted no later than 2 and onehalf months after the close of such plan year (or, in the case of a multiemployer plan, no later than 2 years after the close of such plan year), (2) Does not reduce the accrued benefit of any participant determined as of the beginning of such plan year, and (3) Does not reduce the accrued benefit of any participant determined as of the time of adoption of the amendment, or, if it does so reduce such accrued benefit, it is shown that the plan administrator filed a notice with the Secretary of Labor notifying him of the amendment, and— (i) The Secretary of Labor approved the amendment, or (ii) The Secretary of Labor failed to disapprove the amendment within 90 days after the date on which the notice was filed. (b) Time and manner of making election. (1) The election under section 412©(8) shall be made by the plan administrator by a statement of election described in subparagraph (3) of this paragraph, attached to the annual return relating to minimum funding standards required to be filed under section 6058 with respect to the plan year to which the election relates. (2) In the event that an amendment to which paragraph (a) of this section applies is adopted after the filing of the annual return required under section 6058, the plan administrator may make the election under section 412©(8) by attaching a statement of election, described in paragraph (b)(3) of this section, to a copy of such annual return, and filing such copy no later than the time allowed for the filing of such returns under section 6058. (In the case of multiemployer plans, such copy may be filed within a 24 month period beginning with the date prescribed for the filing of such returns.) (3) The statement of election filed by or on behalf of the plan administrator shall— (i) State the date of the close of the first plan year to which the amendment applies and the date on which the amendment was adopted; (ii) Contain a statement that the amendment does not reduce the accrued benefit of any participant determined as of the beginning of the plan year preceding the plan year in which the amendment is adopted; and (iii) Contain either— (A) A statement that the amendment does not reduce the accrued benefit of any participant determined as of the time of adoption of such amendment, or (B) A copy of the notice filed with the Secretary of Labor under section 412©(8) and a statement that either the Secretary of Labor has approved the amendment or he has failed to act within 90 days after notification of the amendment. [T.D. 7338, 39 FR 44751, Dec. 27, 1974]

Establishing FASB assumptions are the within the domain of the Plan Sponsor and the auditor. It is not incumbent upon the actuary to set these assumptions and there are some real dangers other than some basic commenting. Interestingly, search FASB87 and you will not find the word "actuary." It is recomended that you advise the Plan Sponsor to work with its investment advisor to establish the LTEROR assumption.

From final IRS regs under 430/436, "Under the final regulations, the target normal cost of a plan for the plan year is the present value (determined as of the valuation date) of all benefits under the plan that accrue during, are earned during, or are otherwise allocated to service for the plan year, . . . For an amendment that decreases benefits, the amendment takes effect under a plan on the first date on which the benefits of any individual who is or could be a participant or beneficiary under the plan would be decreased due to the amendment if the individual were on that date to satisfy the applicable conditions for the benefits. . . conditions for the benefits. The regulations provide that section 412(d)(2) applies for purposes of determining whether a plan amendment is treated as having been adopted on the first day of the plan year (including a plan amendment adopted no later than 21⁄2 months after the close of the plan year). the rule in section 2.02 of Revenue Ruling 77–2 (1977–1 CB 120) under which the charges for a plan year are based on a blend of the charges determined with and without regard to the plan amendment, and the alternative to that rule in section 3 of Revenue Ruling 77–2, no longer apply." It appears all of this says in your situation, there will be no TNC (pro-ration does not apply) except as the other Andy indicated possibly for expenses.

The caution is that actuarially increasing benefits is far from the same as making the missed payments -- in your case, 10 years of back payments that the participant should have received.

Notwithstanding SCA's comments, it would seem you cannot forfeit the payments from 65-75. Different attornies handle this in different ways. My preference is to amend the plan to provide for a retroactive annuity start date. This, however, can create another problem if benefit restrictions apply since the retroactive payments, including interest, would be considered to be a lump sum.

IRS Rev. Rule 2007-43; IRS Reg. 1.411(d)-2

1. Was a specific beneficiary designatioin made in respect of the lump sum distribution that is being distributed in installments, or is this designation an older one on file. If so, it is not clear that this prior beneficiary designation applies to your situtation. 2. Since the participant elected lump sum distribution, the Plan is still distributing the lump sum, so would seem if applicable, each beneficiary would split the distribution being paid prior to death until the restriction is lifted whereby the Plan would distribute the remaining balances. 3. However, since plan and election package are totally silent, the Plan needs to seek a legal opinion.

Just as a note to PC users, once you get computer clean, create a clean restore point. It would be horrid to clean up the computer and restore windows using a dirty restore point.

Thank you. It seems that each tool removes some unique stuff. There is not 100% overlap.

My PC XP uses various spyware tools -- Norton, Lavasoft (Ad-Aware), IOLO (Spyhunter). I've read about Spybot and even though it is freeware with undetermined support, I am considering it. Are there any users of Spybot? Any other recommendations?

One card for personal, one card for personal on-line, one card for business. These are my reasons as a person who (except for BOA) embraces unbundling. I also have separate carriers for internet, cable, cell phone, etc. A bit more complicated but then it is unlikely you would ever loose all services at one time. In the case one credit card is lost (and I'm out of town at the time), I can always use another.

A calendar year DB Plan was frozen to new participants 1/1/2008. The 2008 AFTAP was 80%. The 2009 AF TAP was 73% and a Notice of Benefits Restriction was delivered to all participants by 4/30/2009. The Notice did not state the 2009 AF TAP. April 1, 2010 is creeping up and I've yet to receive census or asset information. Thus, as of 4/1/2010, AFTAP will be presumed to be 63%. Thus, there is no immediate change in the extent of the restriction. My reading of the final 436 regs. leads to the conclusion that the Plan Administrator does not have to distribute a Notice of Benefits Restriction for 2010 unless the AF TAP would later be determined or presumed to be less than 60%. Any comments?

No doubt the grass is brown next door. BOA does a lot right. There is a scary but humorous peripheral story: The BOA people told me that they would be sending out three new credit cards. I asked them for security purposes to overnight to the BOA facility in Naples near where we were staying. They said they couldn't (i.e., wouldn't do that). I said OK and for them to send to the security guard at the gate of the highrise condo where we were staying. The next morning I alerted the security guard to expect a Fed Ex delivery. That afternoon I went downstairs to go to the gate whereupon I found in the lobby sitting on a table by the front door 3 Fed Ex envelopes addressed to me. (Why not one?) The three replacement cards did not require activation!!!! The aggregate limit on the 3 cards is significant. And I might add that it was the fraud department who orchestrated sending out the replacement cards. So, as best as I can see, BOA does a great job of inviting disaster. As we go through life we continually balance risk v reward. So long as the liability is BOA's, I'll continue to opt for convenience.

While on vacation last week, I attempted to use my Bank of America VISA and it was rejected. Since I hadn't made many purchases, I decided to call BOA. A few days before, some hacker (or some hacker's system) has opened a new checking account in my name but with a Connecticut address. (I've lived in St. Louis forever and this anommoly in itself did not stop the train. A couple days later, an attempt was made to transfer my lines of credit (nontrivial sums) to this checking account and that transfer was thwarted. Bottom line is all our banking is with BOA, I use billpay to pay bills, I have direct debits of certain insurances and mortgage, and certain direct deposits, and of course, multiple BOA credit cards. I spent 5 hours at BOA (in Naples, FL) closing accounts and opening new ones. I will likely spend appreciable time over the next couple months totally unravelling the mess. Worst part is that it is unlikely I will ever know how the gates were compromised. While I lost no money, I suffered loss of time and aggravation. All this sad story told, this is not quite the same as living (or dying) with ALS, it's not the Tsunami or Katrina, the Hindenburg, or Chicago Fire. I tell this story for those who do on-line banking with BOA, though it likely applies to other major banks as well. I presume for marketing reasons, BOA allows users to open on-line checking accounts. You cannot elect out of this option. Therefore, besides practicing safety (don't store passwords on your hard drive even though this is convenient), check your banking positions regularly. This is particularly an issue for someone who is an infrequent on-line user to whom my advice would be, don't take the risk at all and close down your on-line banking. BOA has been wonderful in assisting with the recovery from the identity compromise but I nonetheless blame them 100% for affording the opportunity for this to have happened.

You could always relax participation requirements retroactively.

It sounds as if you need a vacation. Early retirement is not an issue. The lump sum would be the present value at age 60 of the accrued benefit payable at age 65. What is meant by your words "The plan sponsor has decided to pay an involuntary cashout to a terminated participant aged 60 years with 5 years of service who is 100% vested." Where is the decision? The Plan either does or does not provide for involuntary cashouts.

Would you please boil this down. It sounds as if you're asking, "can you simply not take an RMD, leave it in the Plan, and recharacterize it as a (timely) contribution?" Is this your question? Also, by late charges, do you mean late quarterly contribution penalty interest (i.e., 5%) that is charged on the SB?

Well, the RMD would have to be distributed to the participant as a taxable event. That is clear. Who makes then makes the contribution is another question. If the participant was a sole proprietor, then the participant would turn around and make a contribution. If the company is a corporation, then it would seem than the corporation would need to make the contribution, which would mean that the participant might have to loan money to the corporation. It doesn't seem reasonable that anyone can make a contribution to any plan. This question needs a response from an accountant and not from an actuary (me) who operates out of two shoe boxes. The curious question is what is the reason the plan has not been terminated?

I'm thrilled no one castigated me for my egg-galitarianism.

Eggplantation - A farm where eggs are planted

.There has to be a pretty darned good explantation why this happened. If it was just to get the money out of the plan, then starting a new plan could be perceived as a subterfuge of the normal retirement age regs.

Thank you

I've gotten a couple of email messages from worldnet that services are being discontinued and that email addresses need to end in @att.net henceforth. Has anyone else gotten these messages? Are they legitimate? I cannot tell from worldnet.att.net -- You'd think they'd have this information plastered on their website. In any event, I use outlook express. If these announcements are legitimate and anyone else out there uses outlook express and has made the conversion, is there anything more to do in outlook than to make sure the "worldnet." prefix is removed?