Beginning of Year Valuation - Ineligibles

[John Feldt ERPA CPC QPA]

Beginning of year valuation method. Calendar year plan. New plan 1-1-2009 (small: 60 employees).

Accruals are based on plan years with 1000 hours of service, but excludes any years of service earned before the plan year that includes the participant's date of entry.

As of the 1-1-2009 actuarial valuation date, a half-dozen ineligible employees (all with 1000 hours in 2008) have not yet reached their plan entry dates. Since they were hired early in 2008, the entry dates would be in 2009, such as 2-1-09, 3-1-09, etc.

The enrolled actuary would like to include that half-dozen group of employees in the 1-1-2009 valulation for plan contribution purposes, making this an ongoing actuarial assumption. Another enrolled actuary has stated that this is not allowable.

Comments?

[Andy the Actuary]

From the December 28, 2007 proposed regs.:

"However, the proposed regulations would continue to apply the rules of . . . §1.412©(3)-1(d)(2) (under which the future participation in the plan of current employees who are not yet participants is permitted to be anticipated)."

[david rigby]

Caution: this is an actuarial assumption. Do not assume the valuation count equals the PBGC participant count.

[Mike Preston]

While I don't disagree with your conclusion, isn't it part of the method, rather than an assumption?

[Calavera]

1.430(d)-1(e)(3)

Anticipated future participants. —In making any determination of the funding target or target normal cost under paragraph (b) of this section, the actuarial assumptions and funding method used for the plan must not anticipate the affiliation with the plan of future participants not employed in the service of the employer on the plan valuation date. However, any such determination may anticipate the affiliation with the plan of current employees who have not yet satisfied the participation (age and service) requirements of the plan as of the valuation date.

So, you may include those hired before 1/1/2009 if they become participants during 2009.

[John Feldt ERPA CPC QPA]

Caution: this is an actuarial assumption. Do not assume the valuation count equals the PBGC participant count.

Clearly. Thanks.