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  #1  
Old 01-06-2005, 05:36 PM
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Default EA2b Partial Study Guide - Available for Download

I'm just curious -- did anyone use this last year?

Was it helpful? Should I keep it available?

Note that it has NOT been updated since last year -- if anyone studying this time around wants to update it - or add to it - please let me know. David Farber was kind enough to review my material before I released it - and if asked, he would likely review any additions or edits.
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Old 01-06-2005, 06:07 PM
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Yes, I found it very helpful.
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Old 01-07-2005, 03:47 PM
benjamce benjamce is offline
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Can someone remind me how to get to the download section?
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Old 01-07-2005, 10:09 PM
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Download section is here:

http://www.actuarialoutpost.com/exams
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  #5  
Old 01-07-2005, 11:58 PM
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I found your notes to be very good and very helpful; I only wish is that you had done all of the material, which I will willingly pay for.
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Old 01-12-2005, 02:09 PM
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Quote:
Originally Posted by firetruck
I found your notes to be very good and very helpful; I only wish is that you had done all of the material, which I will willingly pay for.
It's not a matter of paying -- I never did complete the study guide. The plan to publish the guide was scrapped - and so I just finished my own studying without putting any more chapters together.

I can tell you however - that putting those chapters together did more for me in terms of passing the exam than anything else. By concentrating on each topic area - trying to make sure I was being thorough - and well understood - it REALLY cemented the stuff in my head for the exam.

So again -- if anyone is interested in taking this approach and adding to or updating the study guide -- I recommend it as a great way to study. Just let me know if you are interested. There's no money involved -- just your name added to the credits. But you never know when that could come in handy!
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Old 03-08-2005, 09:07 AM
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I have been using this guide some and have found it very useful. I only wish it covered all the topics!

Anyway, I think I have 2 errata to share and then I have a question.

In the practice exercises following Chapter 4, I believe the answer for #1 should be $111,788 - the 415 limit should be reduced for 8 years of participation rather then 7.

In example 7-1, I think the unfunded vested benefit amount is 748,006, making the PBGC premium $10,066.


My question is about Example 8-5:

In determing the PC5 benefits for Jay and Finch, we have to find their vested benefit. I agree with the calculation of the accrued benefits ($875 for Jay, and $525 for Finch). Then the solution shows those amounts multiplied by their vesting percentages (60% for Jay, 20% for Finch).

But isn't some of their benefit due to employee contributions, which are always 100% vested? So shouldn't we project their EEcontrib account balance to 65 at the 30-year Treasury rate and then take the PV?

For example, if the 30-yr Treas is 5.00%, then Jay's account balance at 65 would be 850*(1+.05)^30=3,674. Then divide by a65 to get 3,674/11.794=312. So they Jay's vested benefit would be 312 + 60%*(875-312)=650.

Am I missing something?
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Old 03-08-2005, 12:02 PM
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Thanks Mr. Boh -- I appreciate your letting me know about the errata.

And as to example 8-5, I agree with you. In this example, I wanted to have the mandatory contributions to show the way the assets are allocated -- but I forgot about the vesting issue.

I really don't want to put the vesting calculation into this example -- because it's complicated enough already -- and the vesting calculation isn't part of what I was trying to show here.

So I'll have to think about how to restructure the example. In the meantime -- just ignore that issue -- as the example is really supposed to focus on the asset allocation.
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Old 03-18-2005, 11:38 AM
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in examplel 8.5 when we calculate Brown's PC 3 liability why don't we multiply the 892.5 by 80% as he only has 6mths of service at age 62 and is not 100% vested? Is it because PC3 liability does not care bout vesting? Is it because he has a full 9 yrs at DOPT?

I also do not understand what it means in Rev Ruling 86-48 that a participants accrued benefit includes: early retirement subsidies, optional forms of benefit, and qualified pre-retirement survivor annuities. This comes into play in determining the PC 6 liability. Please someone explain this to me.

Lastly in Example 8.7 what if the assets for green were 40k? Would the amount the PBGC is liable for be 52530 - 40000 or would it be (52530 - 3000 (PC1) - 2000 (PC2)) - 40000? Please help.

Thanks.

Last edited by drctypea; 03-18-2005 at 05:49 PM..
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  #10  
Old 03-19-2005, 11:21 PM
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Quote:
Originally Posted by drctypea
in examplel 8.5 when we calculate Brown's PC 3 liability why don't we multiply the 892.5 by 80% as he only has 6mths of service at age 62 and is not 100% vested? Is it because PC3 liability does not care bout vesting? Is it because he has a full 9 yrs at DOPT?
I don't believe the 80% vesting would come into play here -- because we are looking for the portion of the accrued benefit. But I could be wrong about that. Someone please correct me if that's not right.

I will clarify my example to allow for 100% vesting upon eligibility for ER - as I didn't intend for that to be an issue.


Quote:
Originally Posted by drctypea
I also do not understand what it means in Rev Ruling 86-48 that a participants accrued benefit includes: early retirement subsidies, optional forms of benefit, and qualified pre-retirement survivor annuities. This comes into play in determining the PC 6 liability. Please someone explain this to me.
An example -- a person aged 60 with an accrued benefit of $1,000 per month. This accrued benefit is supposed to be payable at age 65. But if the Plan offers Early Retirement subsidies -- such as 3% per year prior to NR.

Then when you calculate the present value of that benefit -- you don't use $1,000 times a deferred to 65 annuity factor -- you would use $1000 * .85 * an immediate annuity factor -- as this is a more valuable benefit.

The same is true if the plan offers to pay the accrued benefit as a joint and survivor benefit with no reduction in the amount -- this is a subsidy -- and must be accounted for in the present value calculations.

Does that help?

Quote:
Originally Posted by drctypea
Lastly in Example 8.7 what if the assets for green were 40k? Would the amount the PBGC is liable for be 52530 - 40000 or would it be (52530 - 3000 (PC1) - 2000 (PC2)) - 40000?
It would be 52530 - 40000. Assets ran out in category 4 -- so PC1 and PC2 have already been accounted for.
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