Form 5310-A actuarial attachment

[david rigby]

I'm assisting in a plan merger of 2 DB plans (same sponsor), and preparing the IRS Form 5310-A.  Line 5a requests an actuarial statement showing compliance with IRC 401(a)(12) and 414(L).  Anyone willing to share information about the form and substance of such attachment?

[Luke Bailey]

david rigby, take a look at Treas. Reg. sec. 1.414(l)-1(e). Basically, if both plans are adequately funded to pay all benefit liabilities on a termination basis before the merger, you're home free because obviously the merged plan will also be able to do that. However, if either or both plans are not fully funded, then, absent some special measure as required by 401(a)(12) and 414(l) the participants of the pre-merger better-funded plan would receive a smaller benefit on termination after the merger than they otherwise would have received had the plans not been merged, and correspondingly the participants in the pre-merger worse-funded plan would be better off on termination than they otherwise would have been. To correct for this, the merged plan must contain a provision that modifies the ERISA Section 4044 schedule to compensate for that and you have to provide a statement that shows how that would actually work out on a termination immediately after the merger for each individual participant, showing what their funded benefit was before and after the merger (must be at least the same). That's basically it, but there are of course details.