Any EA Conference News?

[AndyH]

Anything on quarterlies, Notices, interest discounting, anything of note? Anything confirmed as unclear?

[Effen]

If you have specific questions I might be able to tell you what I heard.

The gray book was very good and answered a lot of AFTAP/Notice type issues, definitely worth getting a copy.

[david rigby]

Also, note the Employee Plans News, issued 03/31/09.

w/r/t the definition of MV rate of return to be used in rollforward of credit balances, JH said "I think you don't want more than you already have." Unlikely that the IRS will devote any time to defining this in regulation. IMHO, a reasonable interpretation of the statute is to determine a rate of return on a cash basis (no accrued anything at BOY or EOY) using whatever time-weighting factors are available and reasonable. (For example, I can see reasonableness in using 1/2 year for monthly benefit payments, but not for ER contributions. You decide.)

Be carfeul about NC. Note the change in definition in WRERA. Not trivial.

[Andy the Actuary]

Slight elaboration re: TNC. Now, TNC must include provision for expenses assumed to be paid from the trust which is interesting in itself. In many instances we may have no idea what expenses will be paid by plan sponsor. Now here's the killer (and it wasn't discussed): We know that if we change an assumption that reduces the funding shortfall that IRS approval may be required. Consequently, care should be taken in postulating expense assumptions because TNC could be construed to affect shortfall in subsequent year. What might seem reasonable is "last year's expenses plus PBGC premium."

Annual Funding Notice for non-multi-employer plans should be sent to PBGC, ATTN: Single-Employer AFN Coordinator, 1200K Street, NW, Suite 270, Washington, DC 20005-4026 or it can be emailed to "single-employerafn@pbgc.gov." Address for multiemployer plans is same except, ATTN: Multiemployer Data Coordinator, Suite 930, and email address is "multiemployerprogram@pbgc.gov"

General concensus is EA should advise Plan Administrator to instruct EA to issue AFTAP certification since this absolves EA of fiduciary responsibility. I.e., if PA never instructs EA, then EA does not certify.

Note, additional schedules for Schedule SB include discounted contributions. However, this appears only to be required if missed a late quarterly contribution. Consensus is always provide.

Apparently, cannot deduct a contribution for an earlier year than claiming on SB. Example, contribution made in 2009 and claimed on 2009 SB cannot be deducted in 2008. This could arise, for example, if made a 2008 quarterly on 1/15/2009. Then, after revising 2008 valuation for WRERA it is found contribution isn't needed for 2008 so claim towards first quarterly in 2009 (the one due 4/15/2009). You can't deduct for 2008 even though made before 3/15/2009. Contribution made in 2009 and claimed on 2008 SB can be deducted in 2008 or 2009.

The IRS will not (at least is not contemplated to) address how plan distributes restricted portion of a lump sum benefit. It is up to Plan design and of course must satisfy J&S, 415, etc.

Jim Holland was adamant that amounts burned must be stated in a dollar amount rather than as a percentage or a conditional amount (e.g., enough so that AFTAP is 80%).

[AndyH]

No sample 436 Notices? No imminent guidance?

Anything on 404 limit for cash balance plans?

[Effen]

Nope, nope

Not really, although most I talked to seemed to think it is ok to use an "at-risk" that is equal to the sum of the hypothetical accounts - but there was nothing official.

PBGC is still saying they want to notification of any missed quarterlies including small plans.

[Guest DBPension]

If you have specific questions I might be able to tell you what I heard.

The gray book was very good and answered a lot of AFTAP/Notice type issues, definitely worth getting a copy.

Still learning ........ What is the full title of this "grey book" and where can it be obtained (Is it online ... link?) ? Thanks

[Guest DBPension]

If you have specific questions I might be able to tell you what I heard.

The gray book was very good and answered a lot of AFTAP/Notice type issues, definitely worth getting a copy.

Still learning ........ What is the full title of this "grey book" and where can it be obtained (Is it online ... link?) ? Thanks

Found it ....... I'll answer my own question (for those who may also wish to know) .... link is https://www.enrolledactuaries.org/cgi-bin/S...9-GB+1238770806

[AndyH]

"Not really, although most I talked to seemed to think it is ok to use an "at-risk" that is equal to the sum of the hypothetical accounts - but there was nothing official."

To Effen or anyone,

Maybe this is the wrong thread for this, but how is this being interpreted for a beginning of year val? Wouldn't the maximum be (at least) the unfunded account balances at the val date? Or is this being extended to the end of year or the payment date with interest? If so, where is the authority for that?

[Effen]

Andy,

I'm not sure I understand your question?

[AndyH]

I think what you and others are saying is that the consensus is building that the hypothetical balances less the assets is one of the maximum deductible amounts. If the val date is 1/1 and the contribuiton is made the following 9/15 does the maximum get increased with interest? If so, what is the justification for that?

[Effen]

At this point I would say the consensus is "no". There is apparently nothing in the Code or proposed Regs that implies the maximum should be adjusted for interest to a point other than the valuation date. Therefore, a beginning of year valuation would have a beginning of year maximum with no adjustment for later payments.

At the session I was at where the question was asked, the IRS gave a "no comment".

[AndyH]

Thank you.

[mwyatt]

Effen, we must have been at the same session. Did pose the interest adjust question at Larry Deutsch's "Small Plans Workshop" and generally the interest adjustment for 404(o) is no interest adjustments (of course, this does have the interesting result that the choice of an EOY val date would lead to a larger max deductible contribution which intuitively makes no sense).

One other thing of interest from Rich Hochman (not really DB, but anyone in the midst of restating DC for EGTRRA should be aware). His firm, as well as Relius, ASC, et al, are going to be coming out with the strong recommendation that you file for a DL, regardless of prototype/VS status, as the liability with missed amendments is getting worse into the future (right now, you have to make sure that everything back to TRA is all in a row).

[Mike Preston]

Well, I may be the only one who feels this way, but I think the language lends itself more to the conclusion that the MRC includes its interest adjusted amount as the basis for the 404(o) language. Hmmmm, that doesn't read mellifluously, does it?

Let's try again.

I think that you can deduct the amount specified in 404.

404 says you can deduct the MRCs (not MRC, the "s" is critical).

A contribution made 8 and 1/2 month after the end of the plan year in an amount that is necessary to satisfy the MRC for the year constitutes a piece of the required "MRCs".

Don't you love the English language?

[mwyatt]

I agree Mike, but this was asked twice with no commitment (in fact the response more seemed like, "isn't the new 404(o) enough for you"?).

404(o) isn't even on the agenda until 2010 at the earliest, so we're on our own...

[Mike Preston]

Which, as far as I'm concerned, is just fine.