AFTAP never certified

Hi

This is a new one for me and it is for AFTAP gurus out there.

Looking at a possible takeover, one lifer DB plan.

Effective date 1/1/2010. I just found out that AFTAP was never certified for this plan. So, each year a benefit accrual was done and funding was based on this (my understanding is that the target normal cost (TNC) needs to be funded separately each year and not the funding target (FT)). Just by looking at the various valuations provided, looks like the funding may not be an issue, both covering minimum required and maximum permissible deduction so let's leave this part alone for the time being.

It is a BOY valuation.

The plan document states automatic restoration.

After my research, I think the freeze date is 12/31/2014 - end of 5th plan year. Am I correct on this date?

Q1: What I do not seem to find is, how to restore the AB after AFTAP is certified as of 9/30/2022. For simplicity, say the AB is $1,000 per year of participation. So, if frozen as of 12/31/2014, the frozen benefit as of 1/1/2015 and on would be $5,000. This benefit would follow thru 12/31/2021. After AFTAP certification, how would 2022 AB would look like at 1/1/2022 and 12/31/2022.

Q2: Another thing I read (not sure if it will fly), I can hard freeze the plan now i.e. before certifying the AFTAP and have the AB frozen at $5,000 until I amend the formula.

I would appreciate any comments.

Thank you

First - I am not here, and I never said this:

Is the sponsor going to pay you for all your hard work?  Are they going to appreciate what you are trying to do for them?  Are you going to report prior actuary to ABCD for not providing the AFTAPs?  Who is actually impacted by all of this crap?

Don't make their problems your problems.  Resign before you get involved.  

Easy answer is to resign, but someone still needs to do the work, so consider this:  Ask the sponsor to waive all PFB and COBs. Ask them to specifically tell you not to review any work prior to the current valuation.  You should confirm to them in writing that you are not responsible for anything prior to current valuation date.  Certify current AFTAP.  Prepare the current valuation, Go and sin no more.

I am fully aware of everything you did not say since you are not here.

There are no PFBs and COBs to eliminate.

I still would like to know about the AB's, the freeze date etc, for my information.

Any takers on this?

7 hours ago, Jakyasar said:

Any takers on this?

I don't think you'll find any as the consensus would appear to be why does it even matter in a one life plan?

I do not think I agree with your statement, one lifer or not, AFTAP is applicable to all DB plans (at least the ones I deal with).

Given that the accrual has to jump, it can matter big time especially with the possibly increased level of minimum required contribution.

I have not seen anywhere that says "one lifer, who cares".

No one?

On 9/23/2022 at 4:20 PM, Jakyasar said:

I do not think I agree with your statement, one lifer or not, AFTAP is applicable to all DB plans (at least the ones I deal with).

Given that the accrual has to jump, it can matter big time especially with the possibly increased level of minimum required contribution.

I have not seen anywhere that says "one lifer, who cares".

Oh, certainly you're supposed to have one and certainly it's required.  I think the reason you're not getting a response is that this isn't something most people would bother to determine for a one-life plan unless there is a reason under audit.  Just my opinion of course....which is not worth much.

You may be right but still not the right approach. After all, how is the accrual restored? It is the same for one lifer or not.

 Looks like will freeze now before certifying AFTAP and do an A+B amendment.

Call the ABCD and see if they can provide guidance.  This is a serious suggestion.  They might be able to provide guidance and/or comfort.  

In the end, you need to do whatever you think is right. 

Yeah, only if I knew what to think is right. Thank you for the suggestion though.

Never thought this would be a subject where I could not find a solution to or get any guidance.

If you are an ASPPA member, try the ACOPPA Board.  You might find someone over there that is willing to engage in the discussion.

No access to ACOPA board, thank you though.

If I find anything, will share with the board.

Such a touchy subject.

Here is another thought:  Contact one or more of the dozen or so Enrolled Actuaries who also have a JD after their name.  

Thank you for the suggestion.