flosfur

Just want to make sure I am not missing anything. Since the new regs are effective 01/01/08 for calendar year plans, lump sum equivalent of deminimis can be paid out in 2007 even if the participant's Hi 3 is less than the deminimis benefit.

This doesn't explain why two national software vendors have different qs and why neither of them agree with Doug Goelz's projected qs attached to his message above. And one vendor's q41 & q42 are higher than the base qs. I thought that's exactly what I did!

I have been asked to provide FASB numbers for one person plan because the creditor(s) wanted to have them!

What do the plan design considerations have to with FASB calcs? Plan designing in small is most often (dare I say always) affected by the contribution goal of the sponsor.

Sure there is, exactly what the defintion states. Don't know if it was done correctly, but we should not assume a table is invalid just because it is not "standard". The purpose of (any) scale is to permit the modification of any table, thus creating a new table. "Sure there is"? Shouldn't 2+2 equal 4, no matter who computes it or what instrument is used to compute it. But here it seems not to be the case. As mentioned above, IAM 83 table projected to 2000 with Scale G from 3 sources don't have the same qs and hence 2+2 has 3 different values! If the projected qs had been put in the plan document then there will be no problem - right or wrong, they are in the plan document and they are what they are and the annuity factors based on them would be the same no matter who computed them, i.e. definitely determinable!

I know how to do it. But I am just trying to get a universally agreeable table. Now I have tables from 3 sources and they are all different. Some clown put "IAM 83 Female Proj to 2000 with scale G" as the mortality table for Actuarial Equivalent in the plan document I am looking at, so I want to make sure I am using the right table. But it looks like there is no such thing in this case.

I don't believe there is any official version of the projected 1983 IAM table that you mentioned. However, taking the regular 1983 IAM table and projecting the qx's 17 years with Scale G would be the approach I would take. I attached an Excel file of the projected rates. How do these compare with your national software tables? Thanks. The software vendors' projected qs are different than yours. Some are exactly the same, some differ on the 6th decimal and some on 5th & 6th decimal. For example, for females 1000 times your q15=167 vs 159 and 172; 1000 times your q16=181 vs 170 and 184 1000 times your q23=283 vs 286 and 285; 1000 times your q26=327 vs 338 and 340 1000 times your q30=369 vs 388 and 356; 1000 times your q40=504 vs 508 and 503 So they are all over the place.

Is there an official publication of the IAM 83 Proj to 2000 with scale G mortality table which is universally adopted? I ask because I am looking at the projected tables from 2 nationally marketed valuation softwares and they are different. What's more, in one vendor's version of the male table, the q at age 41 is almost twice the q at age 40 and q41 & q42 are higher than the qs in the base table IAM83M - which is clearly wrong! I also compared these tables to the similarly projected tables titled 1996 US Annuity 2000 ...., both the Basic and the 10% adjusted, from the SOA's website and neither vendor's tables match the SOA's version.

Where will it be published?

..... Given the 1.0 ERF's, the prior distributions do not create any offset under the correct mathematical solution (BERF=WERF). I guess you could say that you are considering the prior distributions, but that they don't affect the limit. However, if the prior annual distributions are large enough, say some exceeded the 415 comp limit, then it would create an offset. Pardon the ignorance but what is BERF & WERF? I guess ERF would be "early retirment factor"? I was astounded to hear & read that in converting the 100% Hi 3 limit to a lump sum one must adjust for prior distributions even if the prior distributions were an annuity payments = Hi3 limit. It made no actuarial sense. If one is entitled to $A per month for life from age x which is not adjusted if the payment is received before or after age x and starts recieving the payment from age x, then at age y (>x) the lump sum value has to be the PV of $A per month at age y and not PV of $A per month at age y minus the total of annuity payments received or accumulated value of such payments received. This goes against any mathematical logic but then again neither the IRS nor the legislature rarely do what is rational or mathematical logical.

Does a 401(k) deferral by a Sole Prop reduce his eligible comp for a pension plan benefit/contribution (DB or DC).

Because under the new regs, the S415 100% Hi3 = Hi 3 using the S401(a)(17) comp limit where as hitherto, S415 Hi 3 was permitted to be based on actual comps. In this case the (a)(17) restricted Hi 3 is $8k but Hi 3 of actual comps is $10.3k.

I guess you are suggesting buying a J&S annuity from Ned Insurance Co? If so isn't that tantamount to giving excess assets to the insurance co? Also, the participant may not want to receive an annuity payment and pay taxes.

I don't think this is a viable solution in a one person plan - sooner or later the plan will be terminated and excess problem will remain. I don't think many people are willing to keep the plan going and pay admin fees when they are not putting any money in the plan. And who invests with expectation of meagre return on assets?

In one-person plan, the owner is up against the 100% Hi 3 limit and the plan has excess assets of $100k based on the pre new final 415 regs Hi3 limit. After 12/31/07, the excess will increase to over $300k. The owner is past NRA and his Hi 3 is unlikely to increase in the future. To reduce further increase in excess assets, a proposed solution is for the owner to take in-service distribution and rollover his money. Owner’s wife will start taking wages and will enter the plan to use up the assets remaining in the plan. Anyone see any problem with this solution?

COLA can be applied to Hi 3 only if the employee has terminated employment which I don't think is the case in one-person plan. He can terminate employment only by closing the business down and then the plan must also terminate as it will have no sponsor.

Yes, the effective date is 04/05/07 and per 1.415(a)-1(g) and the reqs apply to the limitation years beginning on or after 07/01/07 which for calendar year will be, as you say, 01/01/08. But per 1.415(a)-1(g)(4) the grandfathered benefit is "..... the benefit accrued as of end of the limitation year that is immediately prior to the effective date of final regs under this section ..... The effective date of final regs is 014/05/07, so for the calendar year limitation year, isn't 2006 the limitation year ending immediately prior to 04/05/07?

S1.415(a)-1(g)(4) grandfathers the benefits accrued as of the end of limitation year that is immediately prior to the effective date of the regs. So for a calendar year limitation year the benefit accrued @ 12/31/06 would be preserved. An employee's monthly accrued benefit under the plan @ 12/31/06 is $8k (100% of 401(a)(17) Hi 3) and his S415 Hi 3 is $10k (which is less than the $Max). PV of $8k using the plan assumptions is 1.3 million and PV of $10k (S415 Hi 3) using the S415 assumptions is 1.5 million. So he could have been paid 1.5 mil. Absent the grandfather rule, under the new regs, the S415 Hi 3 benefit will now be $8k with a PV of $1.2 mil. Assuming the employee's average comp remains unchanged in the future, under the grandfather rule, is the S415 maximum payout equal to: PV of $8k using the plan assumptions or the PV of old Hi 3 of $10k using the plan assumptions?

Typo. It sould have been "white". I noticed the typo after posting the msg. I can understand the j since that is next to h but I don't know how w went missing.

Ed - I don't think anyone implied that your post was a "scam" or you were scamming for infomation. Everyone has been trying to get to the bottom of this issue with the limited information you have provided. Most people were surprised at the tax bill of $10,000 on excess benefits for someone earning less than $100k. But it now turns out that the tax bill is only $800 - big difference. Also, how could a fortune 500 company (or their consultants) not be aware of the IRS' limit on the compensation and accrue "excess benefits" to the participants and do it annually? How about scanning the letter (with the company's and other names deleted) and posting it on the message board?

Update on the "suspended" EA who used to work on the DB cases of the TPA under discussion. It turns out that, per JBEA, the EA's enrollment was permanently revoked in Dec '03 (he must have done something very egregous - JBEA would not divulge the reason for revoking the enrollment). However, he continued to sign Sch Bs after that date and only stopped doing so after April/May 2006. Which law enforcement agency would be interested in knowing this?

I want to exhaust the criminal prosecution route before going the civil route. There must be someone out there prosecuting cases like these!? Anyone knows if anyone in the TEGE branch of the IRS would be interested in this?

I believe that's called "unlawful enrichment". Sure the sponsor is the beneficiary but he would have paid the TPA for actuarial fees as part of the total admin fees. So it's the TPA who was unlwfully enriched (and not the sponsor) as well as commiting the fraud. As to where the forged signature came from: Unless he is brain-dead, the TPA knew very well that I neither performed the val nor did I sign the Sch B. And I did not receive any fee for this case. Even if he had someone else forge the signatue, the fraud was instigated by the TPA, for I don't think there are people out there marketing signature forgeries!?

Next to try is the FBI but I don't think they will get excited about such a jite collar crime especailly when there is . Just called the local FBI office amd I was told that the govt. has put a limit on the number of cases they will investigate and that they do not investigate any case involving less $10 million! So FBI is off the table.

Emailed Chairperson of ABCD and, as expected, they can't do anything since the offender is not a member of an actuarial organization. Called the DOL's local & national offices - they said Sch B is IRS's jurisdiction so they can't do anything about it. Called IRS's enforcement dept and left a message but no response yet. Called and left a message with the state's Board of Accountancy but have not heard from them yet. Called twice and left messages with the director of JBEA but no response yet. Next to try is the FBI but I don't think they will get excited about such a jite collar crime especailly when there is .