Proposed Pension Funding Stabilization

[Pills]

While the fact that there's no 417(e) relief in sight will mean a lot more consulting for the small plans on my part, the new rates may save my largest plan (~350 lives). They had been considering freezing, catching up and terminating by 2015 or so. Their MRC went from $360k in 2008 to about $1m in 2012 for a variety of reasons. Quarterlies are $177k this year under the old rates. They were underfunded by $1.39m as of 1/1/12.

I just re-ran the plan with the new rates... underfunded by $100k. Contribution down by over $300k. I'm still recommending that they make the 9/15 quarterly as if nothing happened, but that will take care of all but ~$50k of the MRC.

[Zakk Wylde]

Originally Posted by Hojo

Quote:
Originally Posted by Arthur Kade
I am DISGUSTED to be an actuary.

Me too, but it's not a recent development.

[BadBeatMe]

Originally Posted by Zakk Wylde

How are various firms proceeding on this issue? Is anyone completing valuations for lump sum plans yet? Or is everyone just waiting to see what the IRS says?

We're waiting. Who knows how this will shake out.

[Rick_G]

Originally Posted by Zakk Wylde

But they haven't definitively said it's not permissible. The ABC is lobbying hard for annuity substitution, arguing that Congress intended broad relief, not just relief for non-lump sum plans.

How are various firms proceeding on this issue? Is anyone completing valuations for lump sum plans yet? Or is everyone just waiting to see what the IRS says?

The IRS issued guidance today regarding the "annuity substitution" rule. It is in IRS Notice 2012-61, Q&A G4(b):
"MAP-21 does not change the annuity substitution rule."

Better late than never ...