No AFTAP Certification

[Andy the Actuary]

A Plan Administrator and actuary take the position that the actuary will not certify the AFTAP unless requested by the PA. Thus, the AFTAP is deemed to be less than 60% and other than de minimis lump sums cannot be distributed even though if the AFTAP were certified it would exceed 80%.

MAP-21 rates apply for funding and AFTAP in 2012 unless the plan sponsor (not the PA) elects otherwise. So, the plan sponsor does not elect to defer MAP-21 for funding and AFTAP determination. The PA still does not request the EA to certify the AFTAP.

Position would be that AFTAP remains under 60%.

Any comments?

P.s. As of 4/9/2013, IRS is still uncomfortable with this consequence but has not publicized that it will be addressed.

[Mike Preston]

You are starting to make me regret teaching you about fonts. :-)

I think you left out a couple of "not"s, so you may want to edit for clarification.

At issue is whether the AAA's position paper regarding the requirement that the actuary wait for specific authority to issue an AFTAP makes sense in all cases. Certainly, if the law requires the actuary to wait then waiting is not a violation of actuarial standards.

And if waiting has the consequences you describe, they naturally follow. So, yes, still under 60%.

[Mike Preston]

"lump sums can NOT be distributed"

"The PA still does NOT request"

"MAP-21 rates apply for funding and AFTAP in 2012 unless the plan sponsor (not the PA) elects otherwise." Maybe, the IRS hasn't issued its "transitional" guidance yet so it may very well be that the plan sponsor must elect to apply MAP-21 rates for 2012 in order to use them. Time will tell. I thought we were going to have said guidance issued before this weekend. I was wrong. Shouldn't be long, though.

The substance of my original response remains unchanged.