Andy the Actuary

So, you're a Republican and I'm a Democrat. What's that got to do with it?

Did not mean to imply that Jim Holland has reversed his position on this matter. Didn't say or mean this. But positions have been reversed (certainly, you don't question this assertion?). A document provider's interpretation is not the same as an IRS statement. Rhetorical question: "While the concept is simple and is perfectly logical, why has it not been stated?"

Where does it say that? I see an exemption to accelerated benefits restriction for plan frozen on or before before 09/01/05 but don't see anything for plan termination or plan freeze after 09/01/05! You pain is felt. Similar questions/repsonses have been posted with someone always (rightfully) chiming in that they have heard Jim Holland say Avagadro's number of times that PPA does NOT apply to plans that terminated prior to the 2008 plan year. After wishing for world peace, cheap gas, and the outlawing of TV reality shows, next comes that the IRS should affirm this position in writing. Unfortunately, Jim Holland has reversed himself on occasion and so am reminded of what movie mogul Louis B. Mayer was reputed to have said, "An oral contract isn't worth the paper it's written on."

I am my own secretary/assistant and as such have developed secretarial spread (sheets). My wife avoids all gerunds so her assisting, writing, and typing are out of the question. BRANIAC used Hollerith cards to read in information. Each 80-column card had to be keypunched. So, a box of 2,000 cards contained so to speak 160,000 bytes. My 1 terabyte harddisk then is equivalent to 6.25 million boxes of cards. What this all means is that my basic clerical skills have atrophied. However, I am still well under 40 (dog years).

I left my Woodstock at college after an all-nighter and 2 six packs of Pabst. Since I had the opertation to become surgically attached to my desktop, I can no longer hand-write. To your point, however, I've experienced great success with my desktop tete-a-tete-ing with the IRS BRAINIAC mainframe. The main issue is that IRS tracking systems do not necessarily conform with 5500 instructions. Ergo, it's preferable to file on time rather than expend the effort to demonstrate that you are operating under a papal dispensation.

Mr. SCA, agree. However, I feel strongly both ways. Besides, not since my Towers Perrin days nearly 20 years ago have I had a plan that had a history of 25 HCEs!

Indeed, if your high 25 group is from years ago, it speaks nothing of the spirit of the law and regulations -- namely, to prevent HCEs from depleting the pension fund and leaving nhces to bear the brunt. Concurring with Mr. Merlin, It would appear to make any sense, you'd need to exclude from your high 25 those HCEs who no longer have an undistributed benefit and start considering those who still have an interest in the plan.

The more interesting example would be if any of your former HCEs had received a total distribution (at a time lump sums weren't restricted). In such case, suppose you had 25 former HCEs each of who had received a total distribution and each of who had compensation of $200,000. Now, you have an HCE with compensation of $125,000. Can this employee receive a lump sum distribution, assuming the AFTAP is 80%. That is, is a $200,000 floor established and someone is bumped only from the high 25 when there is an HCE of greater pay?

Thank you. But presumably the the 90 days is measured from the date the IRS releases the forms and not 90 days from the date Relius, Corbel, etc., modifies their forms preparation system?

A calendar year defined benefit Plan which terminated February 1, 2008 is closed out on April 30, 2008. Final 5500 is due November 30, 2008 and presumably the date could be extended to February 15, 2009. In the past, we simply would have used 2007 forms to file the final 2008 5500. However, since the Plan was terminated after the January 1 actuarial valuation date, a 2008 Schedule B will need to be completed and it will look nothing remotely like a 2007 Schedule B. It is quite likely the 2009 Schedule B will not be available even by the extended final 5500 extended due date. Has anyone heard of any guidance in how the final 5500 may be completed in this particular situation?

Perhaps, government actuariess need to read this and learn the error of their ways -- there was never any need to replace the Wigglesworth table so long as you can control retirement age ! This balderdash is all over the net and sounds like rediculous propaganda to encourage aging (and high-priced employees) to retire. I found no professional replies to it. Clearly, the way to beat this game is don't retire. Anyone ever read Darrell Huff's How to Lie with Statistics? Life_Span.pdf

i wAs HavinG a bOd Dae (or at least my bady was)

Following this literally, a one-person plan sponsor for which the sponsor is the only participant could be subjected to the draconian penalties if he doesn't give himself a notice that lump sum benefits are restricted !

"Their's not to make reply, Their's not to reason why, Their's but to do and die" Though I would change Mr. Tennyson's words to "do or die"

Oops, lost sight of the proverbial forest. Thanks for reeling us back in.

I belive "ain't" is too strong, because the PBGC allows for the possible delay of obtaining an IRS determination letter. See the following words from PBGC.GOV. (Apparently, the PBGC once have must requested a D-Letter !!!). * Is there a deadline for distributing assets from a terminating plan? Yes, there is a deadline for distributing assets to provide for all benefits under the plan, either by paying lump sums (as permitted) or buying an annuity contract. The deadline is normally the later of (a) 180 days after the end of the PBGC's 60-day (or extended) review period or (b) if the plan administrator has timely submitted a valid IRS determination letter request, 120 days after receipt of a favorable determination letter. The deadline may be extended. (See the instructions for the plan termination forms booklet for more details .) (This deadline does not apply to distributions of excess assets to participants or to the plan sponsor.)

But, even if fund to 80%, still have to keep certifying, which means continuing to have to perform costly valuations. You're now issuing valuation reports for the sole purpose of providing documentation to support the AFTAP certification.

Let's extrapolate. Calendar year plan. Plan Terminates 12/31/2008. Plan files for D-Letter in April 2009. IRS doesn't issue D- Letter until 3/15/2011. Election packages target distribution for June 1, 2011. Further, lets suppose AFTAP 1/1/2008 = 89%. If as of 4/1/2009, certification has not been made, deemed AFTAP is 79% so restrictions apply. If by 10/1/2009, no certification has been made, AFTAP is <60% so lump sums cannot be paid at all. Ergo, you must certify for 2009, 20010, and even 2011, because if you don't certify within 30 days of a restriction, your in violation. Now, only way you can certify is to perform a valuation. So, employer has terminated the plan but still must pay for three more valuations, principally because of IRS delay. This is interesting since for the EA to certify that Plan will be fully funded, he should obtain commitment letter from Plan Sponsor to make sufficient contributions.

Since you can't do both, you choose the lesser of two evils -- missed quarterly contributions. If the change is deemed material (and it's hard to understand how it could be deemed immaterial), the penalties for failing to give notice of benefits restrictions can amount to $1,000 per day per participant, so by Oct 1, your client could be bankrupt if the maximum penalty is assessed. In short, DO NOT LET THIS HAPPEN

Spousal consent is not required if J&75% actuarially equivalent to QJSA. OSJA rules effective for Plan Years beginning after 12/31/2007, so in calendar year case, beginning rather than end of 2008. To answer your P.S., problem resolved is that your client will now be complying with the law.

There should be no need to certify 2007 so long as 2008 is certified before 10/1 or such earlier date if distribution restrictions would be lifted.

First, I will take a krytonite bullet for the cause and allow myself to be named contingent beneficiary. You would need to confer with a benefits attorney.

Yes. Since say for a calendar year plan, the amendment is not required to be effective until 1/1/2009, it may be ignored.

Just to add some fuel to the fishfry, ERISA Reg Sec. 901.20(b) provides that "An enrolled actuary shall not perform actuarial services for any preson or ogranization which he/she believes or has reasonable grounds for believing may utilize his/her services in a fraudulent manner or in a manner inconsisent with law." Since "fraudulent" is synonymous with "deceitful," not to make a certification would be abetting the employer to willfully flout the Plan. Or, would it?

Mazel Tov!