mwyatt

Note question on Schedule R on affirming change in actuarial cost method. The actuary should enclose as an attachment to the Schedule B a description of the change in actuarial cost method.

I brought up the modem issue since current electronic filing requires one (no Internet transmission). Certainly not using a modem for the Internet; more that I didn't want to have to go fishing for phone cords or have to deal with installing single phone lines in our office (or even better, have to deal with a dedicated computer for dialup transmission). If I'm reading these responses correctly, looks like there may be an issue with Internet transmission coming online in time for the filing deadline. Would venture that if they don't have that ready to go, delay a year. Who the heck uses dialup anymore?

One dumb question here. PBGC allows filing over the Internet; from what I see currently, looks like we have to scare up a bunch of modems to process IRS filings. Mechanically, are we going back to the Compuserve era w/ IRS e-filing, or will this be over the Internet?

This was touched on at the EA Meeting, but you project to NRD using your most recent actual crediting rate, not the segment rates, so that won't work. Think that for first year anyway, you can use the "at risk" approach for EOY vals. If you're doing it BOY, at risk is EOY payment, then discounted back at the segment rate so there will be a discrepancy.

Mike, not sure you picked up on the Relius Technical Update. This problem is a magnitude worse, in that the IRS is kicking out late filing letters because the Form 5558 (redesigned in '07 so that you no longer signed if extending a 5500) was not signed (huh?). Have gotten a couple of letters so far on filings I know were timely filed with a filed extension. Another level of mistake.

Well, it gets even better with 5558s according to Relius this morning: Relius Technical Update Bad enough they made an error with the language on the approval letters, they are now sending out late filing penalties because you attached a post-2005 unsigned 5558 (ignoring the fact that the 1/07 revised Form 5558 specifically excluded the signature requirement except for filing 5330 extensions). I'd keep this link handy as you'll need it to show to your clients that you know what you're doing...

I agree Mike, but this was asked twice with no commitment (in fact the response more seemed like, "isn't the new 404(o) enough for you"?). 404(o) isn't even on the agenda until 2010 at the earliest, so we're on our own...

Effen, we must have been at the same session. Did pose the interest adjust question at Larry Deutsch's "Small Plans Workshop" and generally the interest adjustment for 404(o) is no interest adjustments (of course, this does have the interesting result that the choice of an EOY val date would lead to a larger max deductible contribution which intuitively makes no sense). One other thing of interest from Rich Hochman (not really DB, but anyone in the midst of restating DC for EGTRRA should be aware). His firm, as well as Relius, ASC, et al, are going to be coming out with the strong recommendation that you file for a DL, regardless of prototype/VS status, as the liability with missed amendments is getting worse into the future (right now, you have to make sure that everything back to TRA is all in a row).

You're not going to see any AFTAPs until plans start filing 2008 Schedule SBs. Given what I've seen from the EA Meeting so far, doubt anyone will be filing those anytime soon until they can figure out exactly how to complete the Schedule SB.

Problem is that the newest version of the 5558 doesn't provide for a 3rd party address. Are you contemplating substituting your address for the plan sponsor? Someone in our office brought up the point that maybe they are targeting a random sample of extensions (I've only heard of one from 15 filed for 6/30/08 extensions, which I'm guessing is the first appearance of these letters). If so, that's even worse; do we have to contact everyone to see if by chance they received one of these approval letters? Wish that this was publicized a little better by IRS, to say the least.

We are e-filing as filing coordinator; we upload the XML file generated by the software. When I upload, that takes care of my electronic signature as enrolled actuary. For payment method, have chosen to print out the voucher for client to send paper check. I send that to the client for payment along with a paper copy of the Comprehensive Premium Filing for them to sign and return. We keep that in our files as proof in case of audit down the road. You can go the whole nine yards and pass the filing along to the plan sponsor for electronic signature and payment. Given our small plan size, seemed like more trouble and time to involve them in the website process. Sometimes you can't trump paper.

The upload method is the way to go for sure. We act as Filing Coordinator, print out the payment voucher, and send that to the client with instructions to mail the check along with a copy of the form to sign. Forget technologically challenged, who has time to chase everyone down to get this stuff done on the Web?

If so, this is actually a worse outcome than what we had before when we had to sign and get the approved extensions back. At least then, the approved 5558s would come back to the TPA; we're now talking about having to chase down each client to get a copy of the letter returned to ensure correct filing. Anyone at the IRS/DOL think about the logistics here?

Even more entertaining is contemplating min/max contributions with sole props/K-1 Income. You do realize that given the spreads between min and max funding, you are going to have different Net Earned Income figures for all dependent on what is actually contributed. I've made the decision for second year or later plans with Sch C/K-1 that you pretty much have to go to a beginning of year valuation date (so you don't pull your hair out contemplating ramifications).

no.

Have you actually seen what happens to 2009 lump sums under 417 if you're using the December rate? Fire up the calculations and see what the lump sum comes out to based on November 2008, then December 2008 rates. Modest 30-35% increase in lump sums generated. Amazing what happens when the 30-year rate gets pegged below 3%... Restrictions in 2009 on lump sum payments may not exactly be the worst thing in the world for a plan's health, coupled with asset losses.

Thanks Tammy (how are things in Concord BTW).

Not that I plan on filing any of these any time soon (at least until after the EA Meeting to make sure that all issues are addressed), but has anyone noticed on Relius Government Forms that the Schedule SB prints with no bar codes at the bottom?

What is the death benefit and what was the status of the participant (active, retired receiving benefits)?

Was frozen a couple of years ago (thank God). Of course, the plan sponsor has now brought up the fact that he had his housekeeper on the corporate payroll for the last 20 years, which he never informed us of. The gifts just keep on giving. Hello VCP/PBGC.

One thing is what your interest month setback period for 417? Has anyone else noticed that there is a "modest" 30-35% jump in the lump sums between the November 2008 and December 2008 rates on resulting lump sums? If you're trying to look to the common good, maybe having LS restrictions in place for 2009 isn't exactly the worst thing in the world (of course if you're a retiring participant, that 2.5% 30 year rate in the mix for December is an amazing windfall).

So far have two plans impacted. One in particular was valued using an end of year val date and also had plan year that ended 11/30/2008. As of that date, everything was fine in the world (and the statement from the shaky investment manager had it as such). As we all know the curtain was pulled back 10 days later. Working on the PBGC and DOL notifications, but just wondering what the heck to do with the valuation for ye 11/30/2008. Know we're not supposed to reflect anything after the val date, but that seems a little too slick to me (especially since this client had probably 97% invested). Other plan at least had losses through Lincoln Financial (Rye Investment) with amount under the $500k cap. Other one is trashed. Any advice?

Just can't wait for the EA Meeting at the end of the month to discover how little I know. Of course, of the two 2009 valuations I've done to date, these may be moot concerns since I've seen -30 and -70 point swings from 2008 to 2009 in AFTAPs. Anyone have any model AFTAP notices out there for under 60%?

Even more "entertaining" is contemplating benefits shown for said individual (if, you contribute the minimum, here is one benefit based on a level of NEI, if you contribute the maximum, here's a lower benefit based on a lower NEI). So will be explaining to perplexed client that if he puts less money into the plan, he has a higher benefit - I can't think of a better reason to move to BOY valuations than this logical (but illogical) result.

Been thinking about this one and not sure of the correct answer. Say I have an existing 1-man DB plan which we have been valuing as of the end of the year using Individual Aggregate Actuarial Cost Method. Owner is a sole proprietor so that we have had to do some iterative calculations to determine Net Earned Income (Sch C less SET deduction less contribution) for the year. We now turn to PPA 430 and 404(o) calculation methodology for minimum and maximum funding. As we've seen in examples, there can be a pretty wide range of calculated contribution between minimum and maximum. Seems to me, thinking about it, that to determine 430 minimum we would again do our iterative methodology to determine NEI for 2008 based on assumed minimum contribution (in order not to drive myself mad, probably would use minimum payable @ 9/15/2009 plus any possible quarterly interest charges). However, when determining maximum funding, would think that I would need to do another set of iterative calculations solving for max funding, with a different (lower) NEI for 2008 than the resultant NEI for 430. How is everyone interpreting this? If you just plugged in the NEI you developed for minimum funding into your 404 calcs, think you would end up with an "out of balance" NEI calculation.