truphao

thank you, guys, great points. Fortunately, neither 415 nor non-discrim are getting in a way. Truly appreciate all the comments.

Hello DB Plans Community, Here is the situation. I just took over the defined benefit plan. It has less than 100 participants (but more than 25). All the participants are either receiving payments or terminated vested (however I am not sure it is relevant to my question). AFN for 2019 has not been issued yet. Some of the quarterly payments for 2019 Plan Year have been made late (more than 60 days late it is). Plan sponsor made the required payments by October 15, 2020 to avoid the funding deficiency for 2019 plan year. From 5500 has been filed timely without funding deficiency. I would like to issue the AFN as soon as possible since it was due October 15. Am I correct? Do I need to issue a notification to participants regarding the “late quarterlies”? I believe I do. If so, I would like to include the language notifying the participants regarding “missed quarterly payments” and “the corrective action” as part of the AFN. Where can I find a sample of the “notification and correction” language? Thank you in advance.

yes, the seller is one of the employees. The benefits going to other employees are not larger than a potential tax saving. From purchaser perspective it makes sense since the purchaser DB is really well funded on ongoing basis (almost 100% funded on termination basis). From the seller perspective it is desirable as well as a way to shift the taxation to a personal level on deferred basis (via receiving DB payments in future). Am I getting the concept correctly? How one would report it on 8594?

Totally agree however I am trying to develop a conceptual understanding rather than receive a technical advise. Basically, I am trying to get myself to a level of understanding of what to ask a tax advisor.

My client that is sponsoring a defined benefit plan is considering an acquisition of another business. In scenario 1 the purchaser makes 100% cash deal and pays $3,000,000. In scenario II the purchaser pays $500,000 and covers all employees of the acquired company in the DB plan granting past service back to original date of hire with the seller. Lets assume that the value of the accrued benefits one day after the deal is $2,500,000. How does the Scenario II impact the taxation from both the buyer and the seller perspective? How is the Form 8594 prepared to report the transaction? Are there any other considerations? All the coverage, non-discrim, participations, etc. issues before and after the transaction are non-issue. Thank you in advance.

Zeller, I am totally with you but I thought I would ask around to make sure I am not overlooking any professional issues.

Hello all knowledgeable and thinking people. I was a signing actuary for a client and last Schedule SB I signed was for 2017. Before signing 2018 SB I have departed from my employer and another actuary of the same firm has signed Schedule SB for 2018. The Schedule C for 2018 has never reported that there was a change in Actuary and my perspective is that an Actuary is an individual and not the firm. I have never received a notification from the client that my services as Enrolled Actuary have been terminated. Here are my questions: 1) What does it mean from the client perspective? Do they need to fix it at least by formally informing me that my services have been terminated? Do they have any exposure from not doing it correctly on 2018 Schedule C? What are the potential ramifications? I had (and still have) a very good relationship with the client and would like to minimize any potential negative consequences for them if there are any. 2) What does it mean from my perspective as an individual Enrolled Actuary who has never been formally terminated? Am I still formally their enrolled actuary? Do I have any professional exposure here? All thoughts are appreciated. 3) If I were to take over the actuarial work for this client and become their Enrolled Actuary "again" would I need to report the "interim" actuary being terminated? Or would I just let it slide since I have never been "terminated" myself? Any other thoughts and questions about this situation are appreciated as well.

In my opinion you can modify the actuarial assumption to explicitly recognize the future plan termination date. Then the shortening of the expected future service will accelerate the annual loss amortization.