Internal Actuarial Data - Relius

[Lexus1]

I'm working DB Plan but with very limited knowledge in Defined Benefit Retirement Plan administration.

My employer uses Sunguard Relius software and I'm struggling to fully understand the Internal Actuarial Data (IAD) Report for a single owner DB plan.

The Benefit formula is 14% of Average compensation X Year of Participation Up 5

The owner attained age was 68 with 1 Year of Participation and 4 years of future participation, and his NRA is 72

The Highest three consecutive years Average compensation is over $260,000

Reviewing the IAD

-Accrued Plan Benefit = $2,807, which appears to be calculated using 5% & 1994 GAR

Is there any specific reasons why the 5% &1994 assumption used?

-The 415 limit = $2,818.71, which appear to be calculated using 5% & 2011 Applicable

Is there any specific reason why the 5% & 2011 Applicable assumption used?

-Accrued Plan PV = $252,573, which appears to be calculated using 5.5% & 1994 GAR

Is there any specific reason why the 5.5% & 1994 GAR assumption used?

-415 PV = 256,550F, which appears to be calculated using 5.5% & 1994 GAR

Is there any specific reason why the 5.5% & 1994 GAR assumption used?

-How should the Minimum Required Contribution (MRC), the Target Normal Cost (TNC), the Funding Target (FT) calculated for this particular case.

Finally, I was told we need three PVAB calculated, including PVAB for Funding, PVAB for Testing, and PVAB for GATT. The PVAV for Funding is the one that needs to be used in determining he MRC, TNC & FT. Why?

Please explain me the step by step process in getting me understand this DB valuation concept.

Thanks!

Lexus!

[david rigby]

Step 1. Hire an actuary.

[Lexus1]

Thanks for the suggestion David.

FYI: my employer has more than one actuaries and my role is to help the actuaries entering data and preparing the reports for their review.

I'm interested to teach myself how to perform DB plan actuarial valuation if possible outside of my work reading materials and joining forums.

I'm sure I'll achieve my plan of acquiring the DB Plan valuation one way or the other because I'm determined to do so.

[Effen]

I think what David meant was that your questions are not the type that you can be adequately address on a message board. Although you may not want to, you should ask your questions to the actuaries in your firm who are best qualified to understand the context of your question.

[Mike Preston]

Lexus, your determination is laudable. And I wish you luck, but you are asking a lot of people here to respond to so many questions at once. What if you tried to do it in bite size pieces? Anything that folks can answer within a few minutes.

I'll bite off the first piece:

"-Accrued Plan Benefit = $2,807, which appears to be calculated using 5% & 1994 GAR

Is there any specific reasons why the 5% &1994 assumption used?"

Unless things are very strange in your document, there is absolutely no tie between the calculation of the accrued benefit and a set (any set) of actuarial assumptions. None. So, it is difficult to answer the actual question you posed because it is based on a false premise.

The assumptions you mention might be the assumptions required in the case where a participant reaches one year beyond NRA (73 in your example) to determine the actuarially equivalent benefit commencing at age 73 equal to what was accrued at age 72. If it is, then the answer to your question is one that you will get over and over again: RTFD [Read the fantastic document].

[Lexus1]

Thank you Mike for the suggestion and I'll make good use of it in the future.

Also, Thank you for answering my questions.

I think the word actuarial assumption in my questions need to be re-phrased.

I was trying to mention the mortality/interest used in the calculation.

[Mike Preston]

You were, huh? Pretty amazing.

Just before 9/15 and 10/15 is probably not the best time to be looking for lengthy tutorials on new endeavors.

Especially since, and I apologize in advance for what will seem like an unkind thing to say, you have trouble with such elementary concepts.

So, before you respond, review what you originally said, how I responded and then your most recent response. Does something strike you as kind of odd?