Andy the Actuary

Thank you. Good recipe. I like the way it tastes! andy t.a.

Mike, thank you for your help and especially your time. Greatly appreciated. Best Regards, andy

Sometime in 2010 with distributions whenever the IRS gets around to approving.

Very simply, hubby and spousette. Hubby at 245,000; spousette at 50,000. Hubby is age 69, spousette is age 52. 100% plan so H3=50,000 (roughly) for spousette.

I would vote for using whatever the Plan prescribes.

H3=average of high 3. Sorry

Of course in my 2,000 years of practicing, I've never had to determine the maximum distributable lump sum on a deferred pension. Alas, my day has come, in particular, because of the NRA=62 requirement. So, facts are participant age 52 with NRA=62 has over 10 years of whatever and has accrued the full benefit of the high three (H3) average compensation under 415(b)(1)(B). Since lump sum is available, then presumably "annuity starting date" is at age 52 and not age 62. So, we do as follows: (1) Determine the lump sum for a deferred annuity to age 62 valued at age 52 using the plan factors. (2) Convert this lump sum to an immediate life annuity at age 52 using the lesser of the Plan actuarial equivalence or the applicable mortality table and 5.5% interest. I.e., produce the greater annuity. (3) Reduce H3 to an immediate annuity using whichever produces a lower factor -- the Plan actuarial equivalence or the applicable mortality table and 5.5% interest. I.e., use the lower amount. (4) Assuming (3) < (2), the distributable lump sum is (1) / (2) x (3) Any disagreement?

I wanted to share my holiday greeting with my board (not bored) friends. These were sent to my clients, other professionals, and personal friends. ================================================================================ "Invictus," featuring Morgan Freeman, Jr. as Nelson Mandela, debuted in US theaters on December 11. A very peculiar title for certain, especially to those who are not a student of classical literature. Invictus, as you may have remembered or conjectured, is Latin for "unconquerable," which aptly describes Mandela. The term invictus lay dormant for quite some time. In fact, the only other notable reference may have been a poem entitled "Invictus" that the English poet, William Ernest Henley (1849-1903), had penned in 1875 from his hospital bed. At age 12 he had contracted TB of the bone and had to have his left leg amputated below the knee. He was in poor health and hospitalized much of the rest of his life. The poem is clearly a demonstration of his resilience to his physically crippling disability. While the subject sounds like a "downer," the poem is truly optimistic of life, which is why it becomes part of this holiday greeting. Out of the night that covers me, Black as the pit from pole to pole, I thank whatever gods may be For my unconquerable soul. In the fell clutch of circumstance I have not winced nor cried aloud. Under the bludgeonings of chance My head is bloody, but unbowed. Beyond this place of wrath and tears Looms but the Horror of the shade, And yet the menace of the years Finds and shall find me unafraid. It matters not how strait the gate, How charged with punishments the scroll, I am the master of my fate: I am the captain of my soul. There is little doubt Mr. Henley would have looked only to himself to deal with today's adversities. There is a lesson to be learned. The warmest of holiday wishes to you, your family, and friends, Andy t.a.

Would agree. In general, what are NRD and vesting provisions? E.g., participant may not be vested if 3 year vesting and NRD is 5 years from DOP. In such case, whether or not there is an AB is moot.

Cheiron, Inc. is pleased to announce that longtime IRS veteran James E. Holland, Jr., ASA, EA, FCA, MAAA will be joining Cheiron, Inc. on January 4, 2010 as the firm's Chief Research Actuary. Holland, who has been Assistant Director, Employee Plans Rulings and Agreements since February 2008, is leaving the Service after a distinguished 36-year career. One of the nation's leading experts on the pension provisions of the Internal Revenue Code and ERISA, Holland is a frequent speaker at professional conferences. He has provided technical guidance, interpretations, and rulings on the myriad of complex issues throughout his tenure with the IRS, both directly and through supervising the Employee Plans technical staff. He holds a bachelor degree from the University of Virginia with a major in mathematics.

Just to clarify: Is the IRS position that at the end of each year, the Plan provide the greater of the formula accrual or the actuarial increase of the (greater) benefit at the end of the prior year so that in effect each years accrual flows into the actuarial increase formula? The Plans I've seen specifically provide this mechanism or the great of the ab at termination or the actuarial increase of the NRB.

Thank you. IMHO, I would place my faith in Sol and not a,t.a. On the other hand, the cite AndyH provided appears you could accomplish Sir Riggiford's #2 in two steps.

What, please, is the title of TEOB section. I do not have the 2009 edition. Thank you.

Contention the normal form of benefit no longer applies -- the forced cashout has eliminated the defined benefit feature. Further, you can eliminate the forced cashout provision and you can add the forced cashout provison where none existed. Conclusion: In two steps at the very least you could get to Sir Riggiford's #2.

411(d)(6) protects distribution options. A forced cashout is not a distribution option.

I know you can eliminate deminimis cashouts at a whim, so why can't you make a #2, even if it is in two steps (eliminate, then reinstate as modified)?

Oh yeah? Chapter and verse please.

Depends upon your distribution assumptions. If lunp sum payment is assumed, then use the applicable mortality table. For persons receiving periodic payments, use sex distinct tables.

Don't! Are your fees (and possibly current and future legal fees) plus potential IRS audit exposure justified by such a small tax deduction? Then, you will be dealing with next year when they want to cut their contribution to $3,000 and the following year when they want to freeze their plan. IMHO, you're looking for trouble. No doubt others will say ignore my comments. DB plans are best suited for high, stable wage earners who want to maximize contributions. They won't even notice the expense when they're deducting 200+K.

Yes, if married, could provide as J&100%. However, this means keeping the Plan alive indefinitely (unless annuity premium eats up excess). This becomes annoying (fees, finding replacement actuaries, etc.) as well as the plan could later require funding. And the $64 dollar question, what do you do with remaining assets once last survivor has died?

Unfortunately, it appears the answer is PV65. This is simply one of those "ain't fair, ain't right" rules. Had one of these a long time ago had taken over years ago where particpant was 70 and should have walked 5 years prior owing to 415(b)(1)(B) restrictions. One suggestion was since 90-95% of excess assets would go to our favorite uncle, why not take on significant, high reward investment risk with excess? If it failed, you'd lost 5%. If it hit, then you would end up with 5% of some very large number. Seemed very perverse to me.

Believe it was either vice-versa or verse-vicea

Gracie Allen was telling George Burns about talking with her Uncle Alfred when George interrupted her, "Gracie, I thought a year ago the doctor only gave your Uncle Alfred six months to live?" "Oh, that's right George," Gracie replied, "but my Uncle Alfred didn't pay the doctor so the doctor gave him another six months."

RE: 2010 Relius Government Forms Limited Time Offer Dear Relius Government Forms 5500 customer, You may have accidentally received an email earlier today regarding our 2010 software that indicated that you had not renewed, and we wanted to earn back your business. Please accept our sincere apologies for the confusion. Our intention was to reach out to clients who had canceled their software before 1/1/2008 to win back their business. Glad they clarified that my business does not have to be earned!!!

I received a renewal notice for 5500 software a week or so ago. I had not yet renewed but had planned to by year-end. Today, I received the following email: Dear SunGard Customer: According to our records, your firm has not renewed your Relius Government Forms software. Our 2010 version of the software will soon be available, and we want to earn back your business! Order the 2010 version and receive 2011 for free! This is a limited time offer, so you must purchase by 5 PM ET, December 23, 2009. The telephone number in the email is the Relius number. This offer seems desperate as the incentive seems far loftier than what would be needed to obtain my renewal by 12/23. Did anyone else receive a similer offer? Does anyone know if S/R is in financial trouble? Is this for real or am I the victim of clever spam?