Rates and Tables

[Guest Doogie61]

When I'm doing a DB val, I use a separate table for males and females. Say RP2000 Male combined funding for males and RP2000 Female combined for funding. Somebody in my office is arguing that I should use the Applicable Mortality Table for funding ...for both genders. We only do mostly small plans ...less than 10 lives.

I was under the impression that tables for funding were gender distinct?

[Andy the Actuary]

Depends upon your distribution assumptions. If lunp sum payment is assumed, then use the applicable mortality table. For persons receiving periodic payments, use sex distinct tables.

[david rigby]

Andy is correct.

See IRS Notice 2008-85.

http://www.irs.gov/retirement/article/0,,id=96699,00.html

[Guest Doogie61]

I don't see where you can use the AMT for males and females for FT and TNC. Why are there separate tables for males and females?

[david rigby]

There are sex-distinct tables because they are required for the NC and FT.

[Guest Doogie61]

That was my question...if I'm doing a valuation for 01/01/09 , do I use the Sex Distinct tables for FT and TNC.

[david rigby]

...do I use the Sex Distinct tables for FT and TNC.

Yes, as described in the Notice.

[Guest Doogie61]

Thank you...

[SoCalActuary]

I don't see where you can use the AMT for males and females for FT and TNC. Why are there separate tables for males and females?

You assume that participants will take the lump sum payment. This must be paid under the plan's assumptions, or under 417(e) rates, both of which are gender-neutral. For valuation purposes, you use the funding segment rates but the AMT to determine the lump sum expected payment. Read and study the regulation again with this perspective in mind.

[Guest Doogie61]

I'm aware of the 417 (e) rates for payouts. I was just questioning why we have to use Male and Female tables to develop the Funding Target and Target Normal cost (separate male and female tables) yet the Unisex AMT for payouts. Why don't they just have one table for ALL functions?

[david rigby]

I'm aware of the 417 (e) rates for payouts. I was just questioning why we have to use Male and Female tables to develop the Funding Target and Target Normal cost (separate male and female tables) yet the Unisex AMT for payouts.

See IRC 430(h)(3). The NC and FT of a plan should closely reflect the best estimate of the Plan's actual cost.

Why don't they just have one table for ALL functions?

Different purposes. Not all plans pay lump sums. The use of a 50/50 blend to define a unisex table is expedient and arbitrary, but not necessarily representative of a plan's population. Search for "Stop the Insanity" from a previous Enrolled Actuaries Meeting (2003?).