PPA 06 Funding Method

[JAY21]

I don't have a lot of plans with insurance, just a handful, but I've had a few insurance guys tell me other actuaries are still doing split-funded plans w/insurance. I would have thought with PPA 06 unit credit type funding we're only left with envelope type funding (insurance policy "value" just part of overall plan assets, pure term cost (only) added to normal cost).

Any thoughts on this issue ? I realize you could still use say Ind. Agg for budgeting purposes but I'm talking about funding that impacts PPA 06 min and max numbers.

If you can still do it, what are the mechanics since you don't really have a projected benefit per se under your valuation.

[Lou S.]

Split funding is currently dead under PPA (for min /max).

There is a bit of a grey area though now with WRERA (I think this can in with WRERA) where you "add expenses to the TNC", the question becomes "what are expenses?"

This came up at the LA Benefits conference in January and there wasn't really a clear answer from the IRS. It is anticipated that in technical corrections or regulations that expenses will be clarified to read "administrative expenses" but how that will relate to insurance is still a bit of a mystery to me.

Like you we have very few DBs with insurance but this does have a big impact on the max deductible contribution for those plans.