Plan sez actuarial equivalency uses mortality based on the 71GAM table

[Gary]

A plan states that act equiv uses mortality based on the 71GAM table (unisex blend). It does not say what percent the unisex blend is based on the male table or the female table. What blend is reasonable to assume in this case? That is since it is not specified can one take the approach that it be a 50% male and 50% female? The Plan violates 401(a)(25)(definitely determinable benefits). So any suggestions as to the extent that the Plan's percentage blend could be challenged on that basis?

Gary

[david rigby]

I would assume a 50/50 blend, based on the wording you have given, but it's hard to believe this has not come up before, thus creating a precedent.

[Guest]

ditto....

If there is no precident, call the attorney who wrote the document and ask him for the interpretation.

I would not recommend that you just pick 50/50 out of the air because you think it seems reasonable without reviewing prior calcs and/or consulting with the attorney.

[Gary]

I agree with your comments. I am looking at it from participant's perspective and playing devil's advocate. So my question really is, could it be MUCH of a case to argue that a 95/5 table is unreasonable (regardless of what plan has done) since it is not specified. Plan says the actuary determined it to be 95/5 based on employee population.

[david rigby]

If there is no precedent, and no other indication of the original intent, then using the actual population as of a particular time is not an unreasonable definition, but that should mean a one-time decision, not likely to change.

BTW, if the actual population is really 95/5, then it seems silly to me to define a blend. Another perpective is that you don't really care about the population mix; a better comparison would be the PV of benefits (probably using a turnover assumption) as of some "snapshot" date.

At any rate, you would probably want to round your blending percentages, especially if you expect that data as of your snapshot might be changing. For example, if you have 84/16, then round to 80/20, or even 75/25. If the group is expected to change significantly over the next 10 years, then 60/40 might be reasonable.