Cross Tested (New Comp) - Mortality Tables

[Alex Daisy]

Can someone tell me where I can find copies of all the different Mortality Tables that can be used when doing a Cross Tested (New Comp) Profit Sharing Calculation.

[david rigby]

Society of Actuaries Table Manager might help:

http://xtbml.soa.org:8080/xtbml/jsp/index.jsp

[Alex Daisy]

Society of Actuaries Table Manager might help:

http://xtbml.soa.org:8080/xtbml/jsp/index.jsp

Thank you for the link, but do you know which Tables are acceptable to use for Cross Testing?

[david rigby]

See definition of "standard mortality table" in reg. 1.401(a)(4)-12.

Sorry, I don't have a list of any possible updates since the reg was issued.

Note the phrase at the end of the paragraph, referring to the 417(e)(3) table. You may need to refer to IRS Notice 2008-85 for the current table.

A more generic answer to the question is, "hire an actuary with experience in cross-testing."

[Tom Poje]

if when cross testing you do not impute permitted disparity, then it really doesn't matter which table you use. theAPR will be a constant on everyone. the exceptions would be individuals who are past NRA or if the plan is 65/5 and they are past 65.

If you impute disparity then it can make a difference as seen in this example (straight from my book)

note, before imputing, the NHCE is not in the rate group.

using UP 1984 8.5 % vs

1983 IAF 8.5%

(sorry, I'll never get the headers to line up, but hopefully you can figure it out)

age compensation contrib Total (E-BAR plus disparity up84) Total (E-BAR plus disparity 1983 IAM)

HCE 60 235,000 49,000 4.158% (3.944 + 0.214) 3.474% (3.260 + 0.214)

NHCE 44 20,000 1,000 4.139% (3.489 + 0.650) 3.534% (2.884 + 0.650)

The APR for 1983 AIF 8.5% is 115.39 for age 65

for UP 1984 it is 95.38

in this example the NHCE would still not be in the rate group, while with 1983 IAF the NHCE would be.

Hint: guess which mortality table I always use, and why I don't worry about what the orther mortality are!

[austin3515]

If you use relius, there is a way to export the tables. Don;t know it off the top of my head, but if you ask them, they will be able to help.

[Tom Poje]

despite what Dave may unintendedly imply, not all people who do cross testing are actuaries.

I do cross testing, and I'm far from being an actuary.

proof: I still have a sense of humor (it may be extremely dry, but I still have one)

[david rigby]

No disrespect intended, Tom. For me, the advice, "hire an actuary", just makes sense.

[austin3515]

You only need to be an actuary to understand the logic of why formulas were written the way they were written. But once someone else writes the formulas (or, as did Relius) writes a report that runs all the acutarial calcuations, you don't need to be an actuary.

Now to zero in on the best set of assumptions, etc. ok, I'll give you that,. But, IAF 8.5pre, 7.5 post works out pretty darn well

[Tom Poje]

my only precaution to Austin's statement is to be careful about relying on software without having an idea of how to check numbers or even verify if things are run correctly.

certainly bad data in = bad data out and

"I think you do it this way..." is a dangerous road to travel.

for example, one of the options available on the mentioned software is testing age = SSRA.

well, the regs also specify testing age is normal retirement age, so whille SBJPA does permit SSRA as a testing age, you had better have it written into the document as to the testing age. In addition, my understanding is if you use SSRA then you have to do BRF testing which probably ruins using SSRA as a testing age.

and don't get me started on 'grouping accrual rates'.

so when David says use an 'actuary', I'll take it to mean 'be very careful when it comes to punching the keys that run the software.'

[austin3515]

I am fortunately one of those dorks who is able to check the accuracy of the caluclations (I created a very cool little spreadsheet, that I'm quite prod of!). And I totally agree "garbage in garbage out". So be careful about what comp is, who is in the test, are catch-ups caluclated correctly, etc.

But as to whether or not Relius is correctly imputing disparity on an EBAR, I for one would be comfortable presuming that what relius says is correct.

Do you need to know the rules, sure! But that doesn't mean you have to be an actuary (IMO).

(Oh, and I never use SSRA (you would need an actuary to know when to do that , and I also only very very rarely get into banding).