Revenue Ruling 2003-83

[david rigby]

http://benefitslink.com/IRS/revrul2003-83.shtml

Huh? What am I missing? Where is the accrued liability "used to determined plan costs"? Where does it pass condition (2) of Rev. Rul. 81-13?

[Blinky the 3-eyed Fish]

Pax, isn't this RR just saying that these certain 2 entry age normal methodologies are not considered reasonable? I am not sure exactly what you are asking though.

Here is the holding from the promulgation:

"Because it can create experience gains or losses even if all actuarial assumptions are exactly realized, the aggregate entry age normal funding method that determines the normal cost per plan participant by dividing the sum of the present values (determined as of each participant's entry age) of each participant's projected benefits by the sum of the present values (determined as of each participant's entry age) of an annuity for each participant equal to 1 per year payable from the participant's entry age until the participant's retirement age does not constitute a reasonable funding method within the meaning of § 1.412©(3)-1 of the regulations.

Because it can create experience gains or losses even if all actuarial assumptions are exactly realized, the aggregate entry age normal funding method that determines the normal cost accrual rate by dividing the sum of the present values (determined as of each participant's entry age) of each participant's projected benefits by the sum of the present values (determined as of each participant's entry age) of future compensation from the participant's entry age until the participant's retirement age does not constitute a reasonable funding method within the meaning of § 1.412©(3)-1 of the regulations."