SoCalActuary

You should visit the Society of Actuaries web site for their XTBML reference tables. They have an easy method of getting the specific tables you need. The RP-2000 tables have a variety of mortality rates that depend on job class, active or retired status, etc. After you have looked thru the XTBML tables, if you have trouble finding it, let me know.

Judging from the original post, the reviewer wants you to change the original doc language to a new order of priority on distributions at termination. The oldest rules were the original PBGC categories, i.e., voluntary accts, mandatory contrib accts, retirees, covered vested benefits, other vested benefits, then all other benefits. This doc language would get dad paid first, and the kids nothing. Now the IRS is saying the doc should match the order set by the PBGC for standard terminations: Pay everyone else first, then the substantial owner last. If so, I like the new IRS document provisions. It eliminates the conflict between regs and the plan doc.

Yes, I dissent. Don't count the proposed reg's yet. They have serious flaws that need to be fixed before they are ready for real life. One key question is the determination of the annuity starting date. Did you have a lump sum payment at age 70 as a one-time payment, or did you start an annuity stream of payments? Under the new a9 regs for minimum distribution, you need to start an annuity stream based on the accrued benefits. So what election was made on the method of minimum distributions? Also, the interpretations on min distributions are not uniform in the industry. If you think the old actuary is wrong, are you prepared to defend your position with thoughtful research and citations for your authority? Will you get paid to do so?

However, if they are in the DB plan, you need to pick the method that works best. 5% DC 2% DB 2% DB with floor offset of PS account Comparable benefit to 2% DB. If they are getting good benefits from the DB in any event, then TH should be trivial in the DB plan. Also, the doctors need to tell you if they are employed through their professional corp even if they don't own a part of the medical group. If so, then they need to adopt into the plan, and they are key employees.

Participant wants to transfer a limited partnership interest to his personal account to satisfy the age 70 1/2 required minimum distribution. I fear this is a PT, and that the asset will be valued without a true market value. How do I advise this participant?

A small DB plan with all family members except one NHCE - he quits with 700 hours worked. Did not accrue a benefit because 1000 hours required. Do I fail 410b? I fear I do. My plan already has language to allow a benefit accrual for this person if needed, but I don't want to recommend it to the client, 'cause the person was not vested. Do I grant the accrual - then forfeit it?

The actuary is required to maintain a funding standard account, but is not required to file it with the IRS unless the 5500 is filed. So, no I don't think you have to file in the second year. In my experience, if you file a 5500-EZ under $100k, such a filing sometimes produces a letter from EBSA telling you you don't have to file.

mbozek - you may be right, but consider the issue of controlled groups. Does one exist? Are the other members (if any) responsible for the liabilities? Did they obtain income or buy assets of the closing corp? Did they raid the plan sponsor's assets to avoid liability? This situation does not sound like it, but the possibility is there. I had a distress termination about 12 years ago in which the PBGC tried to find the other assets of the business owner to recover their deficit.

Your facts describe a situation where a distress termination is required. Since you would not be able to satisfy the benefits of all participants who are not substantial owners, there is no way to do a standard termination. Start reading the instructions of PBGC form 600, and plan to take some time getting this resolved. Above all else, plan to get paid for a substantial amount of work. Also, you should have the substantial owner prepare an audited financial position of all his available assets, because the PBGC has the option to look beyond the corporate assets to any other controlled group assets, such as a wife's business or a sole proprietor practice of the owner. Alternatively, turn it over to a specialist who does these. If you are not comfortable doing a distress termination, you should excuse yourself from the assignment now.

Are you intending to have different assumptions for plan payouts as well? 3% rates for payout for the bad investors and 7% for the good investors? You really need two plans to have two different funding objectives and interest assumptions. However, I also ask why they cannot participate in a pooled investment trust that can be invested to meet their long term goals. That is the basis for a db plan covering both couples. Don't they trust each other? Do they need an independent fiduciary? What are the obstacles to operating one combined plan with one trust?

I will repeat some maybe obvious points here. If you have two separate trusts, with different investment objectives, and with no intent to pay one family's benefits from the other trust, then you effectively have two plans. That is the intent of the 401(a)(26) regulations. However, you are intending to file a single form 5500 for a single plan document. For the sake of the actuarial work, I think you are stuck with a single set of interest rate assumptions. These may be select rates based on the time duration before expected benefit payments, as in the proposed pension legislation and the PBGC valuation rules. The other demographic assumptions and salary assumptions can vary person by person, if you feel they are reasonable. Presumably, you have special knowledge of the intent of the plan sponsor, the likely dates of retirement, and other reasons to justify your decision.

Thank you Frank. I guess I was just looking at the wrong part of that screen. It works great.

Can't find it. We have Version 10.0.4 and I don't see that item on the plan specification. Tried to look up the Help items for Maximum Deduction, 404(a)(1)(d), and RPA Current Liability to no luck. Any other ideas? How about a sample output report to attach to your response?

I would see no problem with the rollover of the SEP into the DB plan. Your accounting issue after it's done... that's more complex. If you run two separate trust accounts, with no commingled funds, then no problem. If not, how do you separately track the investment performance of each source of funds? When new purchases are made, how do you track which source's funds are applied to it? When investment returns come in, where is the fund reinvested? If you solve those, then certainly you should do what you intend.

The old cliche is that this conversation went to the dogs. OK, my fault, I started this line of reasoning. Your response was delightful, and I won't try to top it. We all had a good laugh.

Thanks for seeing the humor. What if I want a new dog? Breeder fees? I have to feed and care for them, don't I?

I have found it very helpful to call a broker and get a missing statement via pdf emailed to me. I would like the idea of getting the statements emailed either by a procedure set up for automatic processing or by request from the broker. It does require some vigilance, because you must look at each file received and make sure it is filed in the proper client directory. You also have storage management issues on your computer system, because your storage needs will expand. Plus you have some risk of vulnerability to viruses. But once backed up to proper permanent storage, it is very much more accessible in an office where multiple people need access to the information.

How about a pet therapist? I love to pet my dog. How about an aggression therapist? I feel much better after driving my car 100 mph or driving a golf club as far as I can. Just kidding. Does the art therapist have any medical credentials? Is there any university research or other supporting documentation of art therapy? If not, you should deny the claim.

Employees are covered under a collective bargaining agreement, and the employer provides benefits. Did the existing plan get mentioned in any of the collective bargaining agreements in the past? Do you have a conflict with NLSB rules by interfering with the collective bargaining? Do you have other non-union employees covered under the same plan? How's your funding levels? Are benefits adequately funded by trust assets? Who will pay for underfunding? If the plan stops being a union negotiated program, it becomes a multiple employer plan. Tread carefully here. Is this what you really want?

This sounds like a public entity, large corporation or non-profit that has concerns over their current vendors. Alternatively, you might be complying with requirements for open bidding on all outside contracts. My past experience has been that the existing vendor has huge cost advantages and almost always wins the contract again. The "almost" is tempered by the possibility the current vendor has gotten too arrogant, pricey, or has lost key people. Which goal do you seek? Lower costs, upgrade in quality, moving the account to specific people you want to employ? All these can affect your RFP, and your selection process as well. Having said this, I encourage you to seek a retired senior actuary or lawyer who has done RFPs in the past and who has no incentive to push business to one vendor. Their judgement and experience is very useful. Depending on your location, these people can be found throughout the US.

You can probably get close by using ancillary benefit valuation of early retirement. To do so, you create a table of early retirement probabilities used in your actuarial assumptions for funding and an early retirement reduction table used in your benefits section, and you change your valuation to value the benefits using the probability table you entered. For example, if you want to show expected retirement at 62, when the plan says 65, you would establish the early probabilities at age 62 as 100%. The reduction table for early retirement would produce the benefit you would pay if retirement is early.

I thought Relius had the new deduction rules built into the DB system, but I can't find the report. Where does it show that the unfunded current liability is deductible? Does it require 100 lives? Is there a plan spec parameter that must be coded?

The only concern I would add is on the tax-exempt issue. Can the taxpayer show that the cost of insurance - PS58 - was declared as taxable income during the duration of the policy? If not, the tax exemption may be in doubt.

The fiduciaries have a duty to evaluate the cost of recovery against the excessive benefit. If collection costs are a significant percentage of the expected recovery, is it worth it? But you still ought to try, at least in a perfunctory manner, to get the overpayments back, including a threat to file in small claims court.

I don't say "always", but I can see the argument for it, since there was no accrued benefit before the plan existed, and the current accrual is limited by the 1/10 415 limit.