2004 Cl rules for DB absent new legislation

[mwyatt]

Just starting to get in data for 1/1/2004 valuations and wanted to make sure that I am up on the changes effective for 2004 in the current liability calculations (absent any corrective legislation).

To confirm:

EGTRRA repealed the "OBRA" Current Liability Full Funding Limitation effective for plan years beginning in 2004, right or wrong (so I assume that I still need to calculate RPA '94 Current Liability for the 90% threshold).

The RPA '94 CL range goes back to 90%-105% as the 120% change was only in place for 2002-2003 years, barring any future legislation.

PBGC variable rate premium goes back to 85%, rather than 100% of prior year's 30 year treasury rate.

I figure that some valuations may need to be redone (at lease as far as CL goes) if future legislation provides relief, but I would like to make sure that I'm not missing anything on the CL calc side.

[david rigby]

Might be prudent to expect some legislation, especially on the rate for PBGC variable premiums. Any other perspectives?

[mwyatt]

Actually praying for some relief (especially on PBGC variable premium). One question: since OBRA FFL is gone, QCbn liability is measured on RPA CL, what are the remaining reasons to calculate OBRA CL?

[AndyH]

Can't understand why. I got a plan that was fully funded a couple of years ago that has a $285,000 variable rate premium. And that is an off-calendar 2003 calculation, before the "relief" expires!

[david rigby]

AVA?

[AndyH]

Good point, but the $285,000 is with asset smoothing!

[Blinky the 3-eyed Fish]

I wanted to reprise this to again bring up the OBRA liabilities. I can't think of a reason to calculate them, but am worried if they still show up on the Schedule B, that if I don't do it now, I will have a lot of recalculations to do. Anyone have an inside track that knows if their reporting will not be required on the B?

[mwyatt]

Hey Blinky:

This point was actually addressed at several sessions at the recent EA meeting. If I recall, there were two instances (one of which pertained to 420 health transfers) that still refer to the OBRA '87 CL calculation; neither of them are very commonplace. At this point the IRS was not going to go on record as to whether the OBRA '87 CL numbers will be on the 2004 Schedule B or not. So, if it's not a big deal (I know our system does both calcs automatically) probably would be prudent to still calculate the OBRA numbers, even though they have no applicability to standard valuations. The request was made to see if these could be dropped from the 2004 Schedule B to the IRS.

[Blinky the 3-eyed Fish]

Thanks. I also emailed Paul Shultz and will let you know if I hear anything different.