Moose

Thank you for the insight, it's much appreciated. Those numbers are very close to actual - it is a small plan. All of the participants that are not yet in pay status have relatively small benefits, so the sponsor is expecting all of them to take the lump sum, which is good. They are expecting a couple of the retirees to continue to want the monthly benefit, so we will likely have that issue of finding an insurance company for 1 or 2 contracts... The plan doesn't have a broker and in my role (as the TPA), I'm limited on the advice I can give, and we don't do the annuity shopping. I will suggest that the sponsor consult a broker. They were thinking that they would pay the lump sums out and then shop for the annuities after they knew for sure who was taking one, but it sounds like it'd be prudent to get the ball rolling on that earlier to get an idea of the cost.

We have a plan that has been frozen since 2010 and currently only pays monthly benefits. The plan is covered by the PBGC. They're debating terminating and are exploring the options of adding a lump sum option/window to "unload" some of the liabilities. To use round numbers, let's say this plan has: 1 participant who is active on deferred retirement, 10 participants who are terminated but not yet at NRA, 10 participants retired and in pay status (5 of these are at RMD age). My questions here primarily circulate around possible discrimination issues.. -If they amend the plan to add the lump sum option (without the use of a window), this would only open the lump sum option up to participants that have terminated and are not yet in pay status, correct? Would this potentially cause discrimination issues since it would not allow participants currently in payout status to elect a lump sum? -If we add a lump sum window for the participants already in pay status, would it be ok to only offer it to any employees who are not part of the "Top 25 paid HCEs"? We have 3 HCEs: 2 are in pay status and the other is the active deferred retirement. The plan is fairly well funded an probably won't have any issues with the 110% asset rule for the top 25 paid HCE's, but we're hesitant to jump right to terminating and offering lump sums and/or annuity purchases for everyone since that could potentially be a high cost. Ideally, we'd like to stagger the payouts so we can analyze after each step.

Theoretical follow-up questions for my own mental notes. (I did find those slides, C.B., thank you.) If an amendment and 412(d)(2) election were made within 2 1/2 months after the end of the plan year to freeze benefits as of the beginning of the plan year, that would reduce the TNC to $0, correct? As less than 1,000 hours were worked and no accrual was earned, the amendment would not be reducing any benefits, so I think it would be ok. Then I believe would re-run the review to take the freeze into account as of the valuation date. Thoughts?

Thank you both for the insight. I'll take a look into Kevin Donovan's ASEA webcast.

We have a plan in which the only participant is the owner. The 1/1/20 BOY valuation was originally run assuming 1,000 hours (and therefore a benefit accrual) for the participant for 2020, which resulted in a TNC and a MRC > $0 (the plan has no shortfall). We now get to the end of the year, and due to a down-turn in business, the participant/owner ended up not working 1,000 hours. Would it be reasonable/allowable to re-run the 1/1/20 valuation showing no expected benefit accrual, which in-turn means no TNC and $0 MRC? If allowable, would that be considered a change in Actuarial Assumptions for the year as reported on Schedule SB? Thanks for any insight!