Deemed Waiver & Voluntary Waiver

[dmb]

Originally certified 2010 (calendar) AFTAP of 80% included a deemed waiver of credit balance. There was an additional voluntary waiver done after the AFTAP certification but before 2011 (for at-risk purposes). Now we are looking at changing the 2010 asset valuation method from average to market and that would result in a revised AFTAP. The new AFTAP of 80% would result in more of a deemed waived credit balance. The question is: Would the voluntary waiver count towards the revised AFTAP before an additional deemed waiver or would there be an additional deemed waiver come first and the voluntary waiver remain the same?? Any guidance is appreciated. Thanks.

[SoCalActuary]

I would ask if you are changing methods retroactively to invalidate a prior AFTAP certification.

My basic understanding is that you had a deemed waiver when the employer accepted the aftap cert. That made it permanent.

Then you had a voluntary waiver. Once signed by the employer, it was permanent.

So you administer the funding accounts using the known information.

Then you prepare a current work product, using your current methodology, including asset smoothing.

If that forces a new deemed waiver, it is a new action of its own.

What am I missing in your question?

[dmb]

I would ask if you are changing methods retroactively to invalidate a prior AFTAP certification.

My basic understanding is that you had a deemed waiver when the employer accepted the aftap cert. That made it permanent.

Then you had a voluntary waiver. Once signed by the employer, it was permanent.

So you administer the funding accounts using the known information.

Then you prepare a current work product, using your current methodology, including asset smoothing.

If that forces a new deemed waiver, it is a new action of its own.

What am I missing in your question?

We are not changing asset valuation methods to invalidate a prior AFTAP cert. We are changing to Market Value so the 2011 AFTAP will be over 80%. Since we can't change asset method for 2011 only, we need to revisit 2010 (the 2010 SB has not been filed or completed yet). In revisiting 2010 using market value, the new deemed waiver would be greater than the original. I know the original waivers can not be decreased. My question is whether or not the voluntary waiver is part of the deemed waiver for AFTAP or does the entire deemed wavier happen before any voluntary waiver is considered. I have included some numbers below:

Original 2010 AFTAP = 80% after deemed wavier, but due to NHCE annuity purchases, the FTAP for At-Risk purposes was less than 80% so employer voluntary wavied additional $29,000 so as not to be at-risk, so AFTAP was certified at, lets say 81% and FTAP for at-risk is 80%. All this based on average asset value.

Now, looking at market value, there is an additional wavier of $50,000 will keep AFTAP at 80%. The question is: is there an additional deemed wavier of $50,000 or is there an additional deemed waiver of only $21,000 plus the already voluntary waived $29,000 to keep AFTAP at 80%. Since its too late for additional voluntary wavier we are hoping the deemed waiver happens before the voluntary waiver is considered.

Hope that helps. Thanks.