Actuarial Certification

[Andy the Actuary]

Has anyone heard of any informal guidance pertaining to the actuarial certification? In particular, how will the EA certify the funded percentage if it is to reflect prior year accrued contributions made after the certification date? Presently, the EA would not sign Schedule B until after receiving evidence that all contributions have been made.

[SoCalActuary]

Sufficient prior experience teaches me that I certify only the funded ratio that reflects contributions already deposited.

When future payments are actually made, I might consider a new certification if it is materially different.

[Andy the Actuary]

We are on the same page in respect of signing the current Schedule B. However, given that lump sum distributions and even accruals could be affected by the PPA2006 certification requirement, I simply wondered if anyone had heard this topic mentioned at any informal gatherings with the IRS.

[SoCalActuary]

But the certification of funding ratio is just as legally binding as the schedule b.

And, it is just as subject to potential abuse when someone makes a contribution promise that they don't keep.

[Andy the Actuary]

No argument, but have you heard the IRS offer any discussion on this topic?

[ak2ary]

The IRS is aware of all the issues related to the certification including the issue of receivable contributions, the need for large plans to be able to roll-forward data, the problems created for EOY vals and many, many more...

They are very closed-mouthed about these issues in public meetings and in less public meeting, while they indicate some sympathy, give no clue as to where they are going..

Obviously, there are arguments on both sides of the receivable contributin and data issues...

[Andy the Actuary]

Yes, the IRS, indeed, is aware. If history repeats itself, the IRS representatives will attend the EA meeting in 2008 and sit passively. Then, at the last session after March 31 has long disappeared, they will announce that the IRS has published guidance that applies retroactively. Meanwhile, between now and then, they will issue a proposed regulation that stipulates disabled life mortality tables to be used for the determination of liability only for puposes of calculating minimum quarterly contributions.

[SoCalActuary]

AndyTA- that was subtle sarcasm. I salute!