Andy the Actuary

Pardon my inexperience with your terminology. It is unclear what are the facts, circumstances, and issues. Has your client been denied benefits? If so, under what circumstances? Please elaborate.

Are you asking does the determination differ post FASB 158? If that's the question, I don't believe it does. FASB158 simply accounts for stuff on the financial statement. OCI is disasterously misleading terminology. OCI is an equity item so a debit is bad and a credit is good.

The Spendid Icicle?

The initial thought is that even if what is proposed is allowable, you cannot assure you accomplish the objective. That is, you can't prevent the IRA from being cashed out prematurely.

You may want to withhold this thought from your eHarmony.Com questionairre.

I can top anybody: Option was a J&50% with 10 years certain, with 100% pop-up if beneficiary died before participant reached age 70, and with automatic cola that capped at 150% of initial payment. Now, I know that wasn't in Jordan.

Sure it was. 1/2 of the total benefit is valued at his life annuity rate. 1/2 of the total benefit is valued at her life annuity rate. When one dies, their life annuity ends. When the other dies, their life annuity ends. Sorry Andy, but it is that simple. Don't understand your post. I certainly knew how to value it. I just don't recall having ever seen it discussed.

I'm older than David and have never seen the likes of this one. Surprisingly, it appears to satisfy the definition of QJ&S (see IRS Reg. 401(a)-11(b)(2)). I hope someone will jump in if they disagree with this conclusion. Participant should ask for copy of the Plan document in effect when participant retired to assure this is was the Plan called for. If not, then she may be able to get this resolved without lawyering up. If so, then it will be a matter of determining whether or not communication was adequate and that might be lawyering up. Again, it would be worthwhile to learn if any professionals have ever seen this "true" J&S. It wasn't even discussed in Jordan's life contingencies. By the way, I was unable to conclude from the SPD passage that the Plan was offfering a tradition J&S. It seems that the SPD language could be contrued as describing the strange J&S option.

Treat him as if he were a terminated employee and follow the plan document, 415, and 401(a)(4) [high 25]

I have kleptomania, and when it gets bad, I take something for it. Suicidal twin kills sister by mistake. My short-term memory is not as sharp as it used to be. Also, my short-term memory's not as sharp as it used to be. I may be schizophrenic, but at least I have each other. Kentucky: Five million people, fifteen last names. Nobody is perfect. I am a Nobody. Therefore I am perfect Money isn't everything, but it sure keeps the kids in touch. Corduroy pillows are making headlines! I want to die while asleep like my grandfather, not screaming in terror like the passengers in his car.

Of most concern, what is your interest in providing advice regarding a subject area and plan (and possibly a client) you know nothing about?

No, you're good. You, like me, probably simply couldn't envision why anyone would bother to legislate a two year transition!!! Speaking of transitions, would anyone care to conjecture how many wealthy old men were legally dead as of 12/31/2009 but were maintained on life support until 1/1/2010? We keen observers of Mortimer Spiegelman's toll booth probably should take a close look at the death rate in December 2010!

We're the transition rates only appllicable for two years? Or, am I in a dream again?

Sounds correct. The TH benefit is simply a minimum and you will have provided greater than that minimum elsewhere. Note, the 1.2% will be actuarially increased as well at least regarding the accrued benefit. If you don't increase it prospectively as well, I believe you would need to give a 204(h) notice.

In spirit of the NRA reg, would actuarially increase to age 62 the benefit accrued at age 55, which would be greater of formula benefit or top-heavy benefit. Thereafter, whatever benefit is determined which would be no less than the AB55 actuarially increased to 62, would be compared to 2% x YOP @62.

Yes, I noted you ignored the 105% but including in item 7 the 417(e) confused me as I didn't see it in the example (I only saw 105%). Did I misread the final reg?

In days of old before the wheel and when the IRS was the IRB, your position was a sensible approach. And you could certainly argue it. Now, however, we're in "gotcha" mode and whether or not it would be acceptable (errors do occur) would be an actuarial answer: "It depends."

We all have experienced different employer reactions in this regard. In 2008, many employers contributed extra to get to 80% owing to the perception of asset mismanagement. In 2009, these same employers backed down and let the chips fall where they may having taken advantage of 2008 where most got schmeized on their investments.

This is strictly hypothetical. Actuary B takes over the Widget Company Penison Plan in 2010 on this very morning 1/2/2010. The prior actuary, Actuary A, had timely certified the AFTAP to be 81% in 2008 and again 81% in 2009, and all the numbers look in order. The Pension Plan had distruted full lump sums in both 2008 and 2009 to several employees. Actuary B compares the 1/1/2010 census to census provided by Actuary A. The Plan has an age 65 NRA with full actuarial increase granted for working beyond age 65. No credit balances. Oy! Actuary A had reported Mr. Widget has having been born on 1/1/1944 but low an behold, Widget Company HR has now reported Mr. Widget as having been born 1/1/1940. Had we valued Mr. Widget's benefit using the actuarially increased beneft -- at age 68 in 2008 and at age 69 in 2009 -- the AFTAP would have been 79% as of 1/1/2008 and 78% as of 1/1/2009. Benefits would have been restricted. Any suggestions? My initial thoughts (other than contacting an attorney) would be to contribute enough now interest adjusted according to the credit balance actual return interest crediting rates to make the Plan have an AFTAP of 80% on 1/1/2008 and 1/1/2009. These contributons would not be counted as excess contributions for 2009. We can't go back and amend the 2008 schedule SB owing to the 8 1/2 month rule. Then, I would face Mecca and pray.

Mike, I'm confused (for a change). Example #1 to which you referred appears to incorporate the 105% crud, which for small plans, was removed by WRERA. Is there some other provision (or example) that specifies in TYPESUP's #7 that you would use the 417(e)(e) rates? The confusion, perhaps, is that the 415 regs were not revised (at least I don't think they were revised) to recognize WRERA.

If you are amending to a higher NRA, but keeping the protected subsidized early retirement, how have you amended to increase benefits? The Plan has always provided for an NRA of 62. It has never provided for an early retirement benefit. Now, the plan is eing amended to allow unreduced, immediate early retirement at age 52.

Archimedes, so it is said, contended "Give me a fulcrum and a long enough lever and I will lift the world." This begs the question of where Mr. A had in mind to place the fulcrum?

Can anyone present a cogent argument that amending the plan to provide unreduced early retirement for an HCE does not fall under the 404(o)(A)(4) cushion restriction? After all, it does increase benefits, albeit not chaning the basic formula. Presumably, however, if the Plan is terminating, you could change the assumption to retires on the valuation date and pick up most of any shortfall by virtue of the the maximum deduction being at least as great as the minimum contribution which would reflect the Plan amendment.

The 415 regs are entitled "final rule" and not "final with unnoted exceptions." I'd vote for the ignore, which means via the first law* of Andy T. A., I am wrong! *If the probably that I make the correct decision is 50%, there is a 100% chance I will make the wrong decision. E.g., taking Yogi Berra's fork in the road.

You certainly have my vote to replace Jim Holland.