outdooractuary

Agree with Hojo, with the caveat that if the plan is not frozen you should also include 2020 target normal cost to estimate the most current liabilities in the plan. We also adjust the liability from valuation date to the estimated date of payment using the effective interest rate.

Hi Bill, 2.6m is correct. Participant 415 max life annuity is the lesser of the dollar limit or comp limit. Maximum lump sum is based on the max life annuity. Participant would be limited to 2.6m in your second example. Also agree with Calavera about the suspension of benefits issue at age 68.5ish. The dollar limit exceeds the max comp limit (based on 401a17 limits) somewhere between 68-69, we try to hit that sweet spot with owners to get them the biggest LS possible before their max LS begins decreasing. Have a great weekend!

Effen makes a bunch of great points about the differences in complexity in plans as well as the potential differences in the quality of 5500 filings. There are additional things to consider as well, are you using Datair Pension Reporter? Is everything being entered by hand? Do you have an automated or semi-automated process in place? Are you including review time? What level of review does your firm require (clearly an actuary is reviewing the sch sb, but is the 5500 peer reviewed? actuary reviewed? The AFN?)? All of that being said at my former employer where we used datair as a val system, but ftwilliam for 5500 filings and had a mostly automated process in place for the sch sb I would guess that in pure prep time your estimate would be a little high. We did a ton of 3rd party actuarial work and with the processes that we had in place a junior admin could prep a sch sb and afn in 40 minutes or so (again this is a pure vanilla plan, no surprises). We had one whiz kid for a while that liked to time himself, he was under 20 minutes for a sch sb and under 30 for sch sb and afn. I would guess that 5500SF, sch sb and afn would have been 1.5-2 hours. This is assuming val is done, contributions confirmed, trust reconciliation complete, etc. before work is started. But to go with that we had a very robust review process that ensured that all the i's were crossed and t's dotted. I would guess that review would add anywhere from 10 minutes to 45 minutes depending on which actuary was reviewing.

I wholeheartedly agree with CuseFan. I worked to help set up a plan that did something similar, but the plan was installed with the buy in of the new owners. The new owners were on board with the plan and are going to keep it for the foreseeable future (or at least that's what they told us, and they were either sincere or really good actors) even though it was installed primarily as a way to defer taxes on the sale to the prior owners. If we had gotten even a sniff of an intent to terminate in 3 years we would have run screaming in the other direction.