Schedule SB questions

[dmb]

Question 1: Is a change in PPA interest rate basis (e.g. changing from Jan 2008 seg rates for 2008 to November 2008 seg rates or November fyc for 2009) considered a change in funding method per line item 25 on 2009 Sched SB??

Question 2: Besides the pdf files of the Sched SB and each individual attachment, in what format does the Sched SB need to be completed for actual efiling? We only prepare the SB for our clients, we do not prepare the Form 5500 so we can't prepare an xml file for uploading. We had been sending the pdf files and it turns out our clients are manually entering the Sched SB data when filing the 5500 and that's never a good thing. Can anyone in this situation provide any help?

Responses are greatly appreciated.

[Andy the Actuary]

I'm now an IFILE sufferer.

You should sign a copy of the SB and send your client a PDF. The client can then add this attachment through the IFILE editor. The client would need to select "MB/SB Actuary Signature" in the drop down menu after specifying he wanted to add an attachment. The Client can then create a temporary PDF of the entire filing and can attempt to verify that the SB he created matches your SB. UGH!

[david rigby]

Q1: IMHO, this is a change anticipated by the both the statute and the reg, except that you have a temporary pass. Read both 1.430(h)(2)-1, subsections (e)(1) and (h)(2) and (3).

[Effen]

Q1: http://benefitslink.com/boards/index.php?s...od+change\

I'm calling a change in the month of determination an assumption change and I'm calling a change from segment rates to yield curve a method change.

[dmb]

Q1: IMHO, this is a change anticipated by the both the statute and the reg, except that you have a temporary pass. Read both 1.430(h)(2)-1, subsections (e)(1) and (h)(2) and (3).

Thanks David, but i understand that thre is a free pass to change the interest rate basis for 2009, but my question is whether or not that change would be consisdered a funding method change. If you changed your interest basis for 2009 are you checking Yes to line item 25 on the 2009 Sched SB??

[Guest Richard Feynman]

The proposed regs had it as a method change that generally required IRS approval for any change, but the final regs backed off on that to allow changes at will from default to alternative or to the yield curve (changing back you need IRS approval - but not in 2009 or 2010).

It is an election by the plan sponsor, so IMO it does not make sense for it to be an assumption change since an assumption change generally requires a justification.

Some may feel it does not make sense for it to be a method change either since the funding method traditionally is something set by the actuary. Also, some may feel that when you have a free pass it is not appropriate to check box 25 when no IRS approval is needed.

But IMO box 25 should be checked (method change). I've heard that is what Carol Zimmerman thinks too. Apparently it does not matter to the IRS that a huge percentage of Sch SB's will have box 25 checked, masking the number of "true" method changes that require approval.

[david rigby]

... since the funding method traditionally is something set by the actuary.

While it might be "traditional", it is the prerogative of the plan sponsor. To be precise, the sponsor has always been responsible for choosing the funding method, while the actuary has (until recently) been responsible for choosing the assumptions.