ndj2377

We are assisting a client with terminating their plan. The plan is small (just over 100 participants). They are trying to decide whether or not to seek a determination letter with the termination. They are confident their plan document and administration of the plan is in order -- the last determination letter received was 2012. Does anyone have experience with clients that do not seek a determination letter and if so, does this increase the likelihood of a PBGC or IRS audit? Most clients we work with go through the process of obtaining a Determination Letter. They are under 300 participants, so the PBGC audit would not be automatically triggered. Any details of similar terminations would be appreciated. Thanks.

Estimated the $350k using a 2.50% rate. It is a small plan, older population with average monthly benefits of $75 per month. Just looking for some some other options for annuity providers. I have one that looks like they may bid, but would like to have a few more possibilities.

Plan sponsor will be finalizing the termination process during the 1st quarter of 2018. They have 40 annuitants. Expected liability for these annuitants is approximately $350,000. We are having a hard time finding firms to bid on the annuities due to the overall size. Does anyone have firms that they have had success with smaller plans? Thanks.

Could the argument be made that those participants are not eligible to retire because eligibility depends on termination of employment - which has not occurred

Thanks for the reply. A quick follow-up - For actives that do meet the age/service requirements -- they will have the immediate annuity options (QJSA, QOSA). Question -- Should they receive those immediate annuity options based on the early retirement subsidies or alternatively, should they have their immediate annuity options be an actuarial equivalent based on their lump sum?

DB plan is terminating and it seems there may be some differing opinions on how to treat active participants. - Actives cannot receive benefits until they terminate employment - Early retirement subsidies starting at age 55 and 5 years of vesting (all have 5 years of vesting) - As part of the Plan Termination, lump sums will be offered - The plan was not amended to offer in-service distributions Question #1 Do active participants that have met the age and service requirements for retirement (55 & 5) receive only the QJSA and QOSA Immediate Annuity options or do they get treated the same as Vested Terminated Participants and have the full allotment of annuity options as if they terminated employment and are retiring? Question #2 If the answer to the first question is "NO", do the Actives that meet the age and service eligibility requirements get the subsidized QJSA and QOSA options or are the subsidies only available for those that "retire"?

Thanks Mike - Based on their instructions, it would appear that the timing I laid out is ok. Counting backwards, count the day before the event occurs (October 31st) and the first day of the period (September 2nd).

For the 60 days requirement, is the day the notice provide included in the 60 days? For example - if the NOIT was provided September 2nd and the Plan Termination Date was November 1st - does that satisfy the 60-day requirement? Looking for definitive answers and they are hard to come by.

They did file for a corporate extension. Got a little extra time to get it filed.

I will be checking with them on that today.

Have a DB client PYE 6/30/16 where form 5558 was not filed (was due 1/31/17) and they now have a late filing. The issues we have are: They still need to contribute to the 2015 plan year; The audit report will not be ready to file until April - possibly later; They have a bad history already with the DOL/IRS for missed filings, etc - the audit reports have not been on time for the last 4 years and the 5500 was filed without them. They have paid penalties to correct those filings. I would like them to avoid having to pay excessive penalties for the missed filing. Would it be best to just wait until they can make the contribution and file without the audit report or wait until they have the audit report as well? When the filing is completed - we intend to use the DFVCP. In everyone's experience, how quickly will the IRS/DOL notice the late filing? Would it be risky to not file for another month until the contribution and audit report are complete?

Was digging some more and saw that the discussion here may apply: http://benefitslink.com/boards/index.php/topic/57513-frozen-db-wants-to-add-lump-sum-feature-63-aftap/

I work on a plan that has been frozen for 20+ years. - The plan does not have an unlimited lump sum provision - They would like to offer a lump sum window (unlimited) to its vested terminated participants - They are less than 80% funded - No restrictions on lump sums since they were frozen prior to PPA Can they still offer a window since the AFTAP percentage does not impact their ability to offer lump sums -OR- Since it would is a new provision/amendment, does the 80% come into play?

Our firm recently took over as actuary for two plans that were just merged into one. We are coming across a few questions that we are having difficulty finding guidance on. Background 1. Plan A: Plan Year is 9/1 – 8/31. Last 5500 filing was for the 9/1/12 to 8/31/13 plan year 2. Plan B: Plan Year was 7/1 – 6/30. Plan had a short plan year from 7/1/13 to 8/31/13 and last 5500 filing was for that plan year. The box indicating “final return/report” was not checked. 3. Plan A and Plan B Merged effective 9/1/13. Assets and liabilities from Plan B were merged into Plan A Questions 1. Going forward, should the new plan use the plan number held by Plan A since Plan B was merged into Plan A? 2. Should Plan B file an additional 5500 filing (9/1/13 – 8/31/14) that shows the participant count and assets going to 0 on 9/1/13 or can the last return suffice as the final filing? 3. Prior to the merger, both plans: a. Smoothed assets; b. Had credit balances; and c. Had shortfall amortization charges Does the newly merged plan only retain the asset gain/loss, credit balances, and shortfall amortization charges for Plan A effective 9/1/13, or are the asset gain/loss, credit balances, and shortfall amortization charges from Plan B merged in as well? If plan B items are merged in, is there specific guidance on how to merge those items? Thanks for any assistance.

I have a small NQ plan (10 actives) that assumes 100% lump sums. The rate used for lump sums varies month-to-month. In prior years, the discount rate for fiscal year-end has been modeled using the assumed lump sum payouts. However, the plan has a new auditor this year and we are getting push-back on the development of our rate. Since the lump sum rates is not a constant, they believe the discount rate should be developed assuming annuity payments - this would be for the discount rate only. Plan liability would be valued using the assumed LS payments and this discount rate. The auditor made it seem as though this is the method that most pension actuaries use. The number of plans that our office has exposure to that assume lump sums is pretty limited and the few plans we do have do not use the method suggested by this auditor. Has anyone developed the discount rate using this method and what was the reasoning behind it? I would be interested to hear some other opinions on this. Thanks.