2008 Sch B question

[Guest Doogie61]

Here is my question...

I have several clients that are "one man" DB plans. Some are over 250K in assets and need to file an EZ form. Some are way under 250K and do not need to file an EZ for 2008.

Well, if I'm not preparing a 2008 EZ form, do I still need to prepare and "send" the client the Sch B for their records?

Thanks !

[Effen]

Note. The Schedule SB does not have to be filed with the Form 5500-EZ, but it must be retained (in accordance with the Instructions for Form 5500-EZ under the What To File section). The enrolled actuary must complete and sign the Schedule SB and forward it to the person responsible for filing the Form 5500-EZ, even if the Schedule SB is not filed.

Instructions seem pretty clear to me.

[Andy the Actuary]

The instructions are clear that if you are filing form 5500EZ, you do not have to attach SB. However, you are required to prepare SB and provide it to sponsor. I believe this is what Effen's quote refers to.

It is not clear (at least to moi) from the instruction that you would need to prepare/provide the SB if no Form 5500EZ is required. However, the SB this is the standard certification to demonstrate that minimum funding has been met. If you don't provide the SB, how would the client demonstrate upon audit that minimum funding has been satisfied?

[Guest Doogie61]

Note. The Schedule SB does not have to be filed with the Form 5500-EZ, but it must be retained (in accordance with the Instructions for Form 5500-EZ under the What To File section). The enrolled actuary must complete and sign the Schedule SB and forward it to the person responsible for filing the Form 5500-EZ, even if the Schedule SB is not filed.

Instructions seem pretty clear to me.

Not so fast...it's says even if the SB is not filed...well, the SB is not EVER required to be filed with an EZ form....lol

My question really is....what if the EZ doesn't have to be filed period...(i.e. cause assets are less than 250K)....the instructions are nebulus in that regard whether a B needs to be sent to the filer.

Who's responsible for filing that EZ that doesn't need to be filed???

It this just semantics or am I looking into this too deep?

Thanks!

[david rigby]

... how would the client demonstrate upon audit that minimum funding has been satisfied?

Perhaps an implicit statement from the IRS that plans with less than $250K are not likely to face audit?

[Andy the Actuary]

... how would the client demonstrate upon audit that minimum funding has been satisfied?

Perhaps an implicit statement from the IRS that plans with less than $250K are not likely to face audit?

Is "are not likely" the same as "are not subject to?"

The calculations will need to be made anyway. If they're not communicated, what happens if the EA later disappears (my personal ambition is to emulate Judge Crater)?

[Effen]

I guess maybe you could stretch this to say if we don't actually file the EZ then you don't need to prepare the SB, but I think you are just creating problems for yourself. As AtA said, how do you intend to demonstrate if contributions were sufficient? Also, thinking ahead, what if the assets eventually cross over the $250K, how will you know justify your starting positions if you never prepared an SB?

I guess you could argue that if they elect to forfeit any COB and they never elect to create PFB then the history doesn't really matter anymore, but what about possible funding deficiencies?

We are currently looking at take over situation of a plan like yours where no schedule B's were done because they weren't required. Without schedule B's, how do we even know if an actuary worked on it, let alone agreed with it. We have good reason to suspect that on this particular case the TPA felt that since no B's were required, they didn't need to pay no high priced stink'n actuary so they just did the vals on Datair, which as we know "if it came out of the computer, it must be right". So now what? Our only choice is to redo all prior vals and pass the bill on to the TPA so they don't get sewed by the sponsor.

Although you might not be explicitly required by the instructions, I think basic professionalism would require it.

[david rigby]

Well stated!

[mwyatt]

Effen, always thot it was akshuarials that billed so much to those TPAs. If the computer spit it out, it must be true, right?

[Blinky the 3-eyed Fish]

Well, if I'm not preparing a 2008 EZ form, do I still need to prepare and "send" the client the Sch B for their records?

Thanks !

I would definitely not send the 2008 Schedule B under any circumstances, EZ filer or not.