EA-2B Again Spring 2003!

[FSA Wannabe]

VBadj ? VBpay ? .94 - what the #$#^(@@%&@$

I can't believe some of the problems I saw on that exam!!! It's been a long time since I felt like I've just wasted months and months. So much for the annuity factors on the back of the sheet which I didn't know about until problem 15 or 16. I printed off the information a few months ago and these were not on there. How about the "?" in the PBGC Adjusted vested benefits formula? I think I actually knew the formula. I really didn't think the spinoff problems involving 412 would be on there since they were on the EA-2A exam. Even Farber's material said to ignore some of his problems because he contacted the JB and they said that the material would not be on there. WRONG!

[yeppers-wsmn]

I was surprised by the question marks in the variable premium formula as well. Can't someone look at these exams before they are sealed and shipped fairly easily?

Also, because I am new to the EA exams I'm not sure if it's the first time they've done it, but since when did they not provide the relevant annuity factors at certain ages with each problem? All the old exams I've looked at had them.

One other thing :rant: , I didn't realize their goal was to add a new wrinkle to EVERY SINGLE TYPE OF PROBLEM.

[PosterNutBag]

I have to agree with everything said thus far.

The question marks throughout the ACM VRP formula in the given information is just wrong when you go into the exam assuming that the entire formula (operational signs included) are given information. If they wanted you to memorize the operational signs, they should have given you the question marks in the original information they published months ago.

That being said, I don't think I slipped up on the ACM VRP problem. I just am disgusted with the exam committee for doing that based on principal alone.

The 412 spinoff problem was uncalled for. I realize that EA-2B "presupposes" EA-2A knowledge and that 414 is on the syllabus for both exams, but if 412 is only on one syllabus then why are those questions on this exam? I too bought the ASM problems and saw Farber's comments about that stuff not being covered on EA-2B.

Yeppers is right that they seem to need to invent a new wrinkle for every type of problem. I found some of them extra creative, but man they make this thing harder than they need to in my opinion.

It is going to be a tough call on whether or not I passed. I tend to dwell on the problems I had trouble with, but I think I did pretty well as long as the general consensus is that thus was a very tough sitting. Everyone always tells me that if you are truely ready for the exam, you want it to be a difficult sitting. We'll see. I feel like I would have dominated an easy sitting, but I have at least some doubt in my mind after yesterday.

Good luck to everyone. It will be a long 2+ months of waiting.

[Traci]

"""I found some of them extra creative, but man they make this thing harder than they need to in my opinion. """

Totally agreed.

I thought the ?'s in the formula were just silly. Either give me the formula or TELL me that it needs to be memorized. But don't tell me you're going to give it to me - and then only give me half of it! I don't think I missed that one - but thought it was just a silly thing to do. (I got D on that one - what did y'all get?)

And yes - I saw the spin-off problem and thought - HEY! That's 2a!

The multi-employer w/d question was very straight-forward. As was the permitted disparity calculation question. But most of the others seemed to have some new little twist. Not out of line on any particular one - but why twist SO MANY of the questions?

At least I didn't run out of time on this one. I had 30 minutes left - went to the restroom to clear my head for a minute - came back and tinkered with a few of them. I didn't think it was too bad (I was expecting the worst) but it's quite possible that I was not prepared enough to catch everything!

A VERY long wait til July 19th!

PS - what did y'all get for the one about how much needed to be contributed to avoid the variable rate premium? (I think that was how they asked it - I have blanked out on the specifics of most of the questions!) I should have known it right off - but just wasn't sure in the end - I think I got $300k.

[yeppers-wsmn]

Traci,

do you remember what number question it was, the variable premium one, or what the actual final value was?

[StoneGroove]

I was thinking that I got $125,000 for that one, but it is hard to remember. I seem to be blanking the whole experience out.

What did people get for the top-heavy question with the guy with the in-service distributions who is now terminated? Do you count 5 years worth of distributions because they were in-service or do you only count one year's payment because the guy is now inactive?

[slam]

I counted all 5 years of in-service distributions. The "trick" was that that "5" didn't change this year. It would have been a nasty double-trick for them not to count. It would have rewarded the people who obliviously thought that under the new rules, you only went back one year. My answer, for what it's worth, was $185,000 = 5*$20,000 + $85,000.

[StoneGroove]

The "trick" was that that "5" didn't change this year.

What do you mean by this?

[slam]

Under the new rules, you only go back 1 year to look at distributions. This "1" used to be "5". When the rules changed, however, they did not change for in-service distributions, maintaining the 5 year lookback. I would assume that most test-takers were aware of the change from a 5 year lookback to a 1 year lookback, but might have been unaware of the exception for in-service distributions. It would have been strange to have the 1 year lookback apply, because the participant was retired by the determination date, because then people unaware of the non-change for in-service distributions would get the problem right. Sorry for not being clearer.

[StoneGroove]

Okay, I think I agree with you.

Let's try another. How many HCE's did people count out of that list?

[yeppers-wsmn]

I think I had 5 in that one. But, I wasn't too confident because I originally thought it should be 4 (which wasn't a choice).

Here's another one - what did you all get for the long one near the end that asked how Plan A passed the 410(b) test? I put D for that one - aggregated with B and passed the AB%T.

[PosterNutBag]

I think I had 6. I seem to remember including everyone over $90,000 for PRIOR YEAR pay and also including the one person who was a 5% owner in the CURRENT YEAR, but not in the prior year. I remember more of what I did than the final number. Hopefully my memory serves my correct and 6 is what I got.

[StoneGroove]

i got 7:
i counted the number of employees in 2001 who made more than $85000 and limited it to 20% of total employees and added in an 5% owner who wasn't in this group.

[PosterNutBag]

Did they apply that top 20% clause? I don't remember that part of the problem. I may have done that, but maybe not.

[StoneGroove]

For the other question, i think i got C - aggregated with B and passed ratio test. I don't remember the specifics of that question. It's bad enough when the questions are wordy, but when the answers are wordy too, then i get really frustrated.

[Traci]

I agree with slam about the top-heavy question. I used 5 years worth of distributions - but 185K doesn't sound familiar to me - I don't remember my final answer - but I think it was less than that.

And I think I kicked out all but HCE #2 - but I don't remember the specifics. I seem to be blanking out most of this experience as well! :-)

This is why it would be SO nice to have a copy of the exam to discuss right now!

On the VR premium question - I kept ending up too high above the E range. So I guessed D. The end of year valuation date threw me - I wasn't sure if you were to increase by 1.0475 and/or leave out the 1.07 accrual factor. Also - having 2 asset values given - I wasn't sure whether to use the one from the Schedule B or the one given above - I use the one given above and assumed it was as of 12/31/01 - which would mean that it included the first contribution ...

The other one (I don't remember the number of the question) was about contributing up to the FFL to avoid the VR premium (I think) - Something about that one kind of threw me off too - so I wasn't sure.

[Buru Buru]

The ? in the pbgc formula was definitely a typo. The ? also appeared before each adjustment factor (in place of =) for the C&C and J&S adjustments to the pbgc limits. I think that they should trow out the pbgc problem as defective and am going to write to the SOA. So ? basically appeared in place of any -,+, or = in the formula sheet.

[PosterNutBag]

There is no way the ? was a typo. In thinking about how the ? would conveniently replace every operational sign, you would have to deliberately type in a ? everywhere there was a sign. How could that be a typo? I would agree on typo if this were just one sign in one place, but it needed to be done 5-10 times in that formula.

[Traci]

I didn't think it was a typo - I just figured they were not giving the entire formula.

The ? in the other tables made me wonder though.

Okay - if I got it wrong - throw it out - if I got it right, I want the points!! :-)

[PensionAggie]

For the HCE problem, I applied $85k to the prior year pay and included all of the 5% owers this year and last and got 9.

As for the minimum contribution to avoid a VRP, I got $125. You calculate the FFL like you would for 412, and then you subtract the CB from that to get your contribution.

Lastly, did the permitted disparity problem tell you specifically to use, or NOT to use the simplified table...I thought I remeber it saying to NOT use the simplifed table.

[slam]

On the really wordy question, I got D - aggregate and pass ABT. If you aggregate you were still below 70% for coverage but above the safe harbor %.

I think they did not mention the specified table and said something (which I can't remember) that implied you COULD use the simplified table, so I thought it was necessary to check it.

As far as the ?'s go, I'm sure it was a typo. I just looked at the SOA website, and there were no ?'s.

[PensionAggie]

Another one...

How long does a company have to fund the replacement plan after a prior plan termination? The number 7 popped into my head, so I divided the $25,000 by 7 and then allocated that by pay. Kinda a shot in the dark.

[StoneGroove]

Another one...

How long does a company have to fund the replacement plan after a prior plan termination? The number 7 popped into my head, so I divided the $25,000 by 7 and then allocated that by pay. Kinda a shot in the dark.

I didn't really know what to do for that one either, but i did exactly the same thing.

[slam]

I agree with the divide by 7 methodology. My only source is a T-F question within the last year or 2 which tried to trick people by saying that the allocation had to be done ratably over at least 7 years. The real answer is at most 7 years. That stuck in my head, so I divided by 7.

[Traci]

"""I divided the $25,000 by 7 and then allocated that by pay. Kinda a shot in the dark."""

I did the same - but was also guessing.

I also think I kicked out the 5% owner who didn't make the pay - so I got 8 - but I think you're right. And I'm pretty sure I ended up with 300k instead of 125.

So that's 2 down :-(

"""aggregate and pass ABT. If you aggregate you were still below 70% for coverage but above the safe harbor %. """

I tinkered around so much with this one - I don't remember what I finally put down! I changed from C to D and then I think I might have changed it back again.

[me2]

I got $185,000 for the TH problem

I got 6 HCEs. The top 20% is an optional election, but I used $90,000 instead of $85,000 (got my years mixed up, I'm sure), so the top 20% didn't come into play for me, which I thought was odd at the time. 7 would've been right for me if I'd used the $85,000

I got $125 for the variable premium.

I think I got that you aggregate & pass the ratio test (think that's C).

Did any of you get the lump sum for the plan with the 401(k) & the profit sharing offset? I thought I needed an annuity factor at 7.5% to convert the balance for the offset, but it wasn't given in the problem or in the tables in the back. I estimated it by ratioing, but I figured that was probably a waste of time (either I approached it wrong or it was defective).

[slam]

The problem that's really bugging me right now, especially because it's a 5 pointer, is the really wordy one. I can't remember all the numbers, but when you aggregate the plans I think there was a group of 100 employees for Plan B who didn't benefit but still had to be included in the ABP. They were then excluded in the numerator, and I think they threw coverage below 70%. Does this sound familiar to anyone?

[PensionAggie]

Slam, the group you mentioned is what threw me off, also. I wanted to exclude them since they were not 21/1, but I am thinking now that they needed to be included, given the statement at the end of the problem "excludable employees are not tested seperately."

Oh well...

[slam]

I didn't exclude them, but treated them as not benefiting.

I just found out that I got the maximum permitted disparity problem wrong. I prorated for service. I used the simplified table. I remembered to apply a fraction to limit the annual permitted disparity. I just used the fraction based on a permitted disparity of 5.7% for the DC plan. Wrong! It was 4% (lesser of twice the base rate and 5.7%). 5 points down the drain.

[bevowolf]

:swear:
In total I thought it was a hard exam and given the amount of time I spent studying I thought I would of done a lot better.

I think the "?"s were on purpose to see if you knew how to use the formula. I did read Farber's comment on 414(l) and went to his seminar, but I think the allocation of assets was fair game for the exam since it was part of the syllabus (a Ruling/Notice).

There was one 415 questions that I thought was defective. It gave you the 3-year average compensation as $195,000. How is this possible? The most you could have in a qualified plan is $180,000 ($200+$170+$170). The questions said nothing about retro pay caps and Farber said that since it would take a plan amendment to change you should assume that the general conditions assume the retro increase. Did anyone else cap the pays for the qualified benefit?

[bevowolf]

:-?

Sorry. I meant to say that the general conditions DO NOT assume that the retro pay caps are increased.

[slam]

I thought about the $195,000, too. There were 2 general conditions listed that said don't limit the pays unless you are given sufficient information in the problem to do so. Since you don't know how the $195K was determined (190, 195, 200 or 100, 100, 385), you can't limit it.

[Buru Buru]

I am basing the fact that the ? appeared before other factors in the appendix beside the pbgc vrp one as it being a typo. It probably was some kind of computer glich in which any operations printed incorrectly.

[bevowolf]

I this reply posts twice I apologize.

I see your point. You don't know which years may have been over the limit. However, how can the average ever exceed $180,000 from a qualified plan unless it uses some pay over the cap? I thought it was the "trick" to an otherwise easy question.

[PosterNutBag]

I hope no offense is taken here, but I think you are overanalyzing things with this $195,000 number. There is no reason to even question given information in a problem. I never thought twice about.

On the other hand, it is very easy to overanalyze on these exams since sometimes when you don't you'll miss something.

[Snagley Gootee]

The ?'s in the VRP problem were not supposed to be there. This happens if the printer can not handle the font used in a file. The Board probably emailed a file to someone to print the sheets and they never proofed it. Pretty poor on their part not to catch it. That question should be thrown out.