2 pages

English

Comment letter to IRS (Jan. 16, 2003)

Nasor - American Academy Of Actuaries Multi-Employer Task Force

Le téléchargement nécessite un accès à la bibliothèque YouScribe
Tout savoir sur nos offres

2 pages

English

Le téléchargement nécessite un accès à la bibliothèque YouScribe
Tout savoir sur nos offres

A propos
Informations
Extrait

Description

January 15, 2003 Mr. Paul Shultz Director, EP Rulings and Agreements Department of the Treasury 1111 Constitution Ave, NW Washington, DC 20224-0002 Dear Mr. Shultz: 1 The American Academy of Actuaries’ Pension Practice Council recently created a task force, composed of consulting actuaries throughout the country who specialize in working with multiemployer plans, to examine issues related to these plans. As chair of this task force, I appreciate this opportunity to present our thoughts regarding the emerging crisis among these types of programs. Defined benefit multiemployer plans have specific challenges in the volatile market we’ve been facing for the past three years. This is the worst bear market since ERISA. Consequently, there is an unprecedented interest in relief from the usual minimum funding requirements. Unlike single-employer plans, multiemployer plans are independent entities governed by joint boards of trustees who also have responsibilities to the employers or unions that collectively participate in and sponsor these programs. In addition, contributions and/or benefits are defined through collective bargaining with contractual commitments that typically extend from 3 to more than 5 years. As a result, with the investment losses that have occurred over the past 3 years, many of these funds have seen dramatic increases in their contribution requirements, to potentially well above the amounts stipulated by the collective ...

Informations

Publié par	Nasor
Nombre de lectures	103
Langue	English

Extrait

January 15, 2003

Mr. Paul Shultz

Director, EP Rulings and Agreements

Department of the Treasury

1111 Constitution Ave, NW

Washington, DC 20224-0002

Dear Mr. Shultz:

The American Academy of Actuaries’

Pension Practice Council recently created a task force,

composed of consulting actuaries throughout the country who specialize in working with

multiemployer plans, to examine issues related to these plans. As chair of this task force, I appreciate

this opportunity to present our thoughts regarding the emerging crisis among these types of programs.

Defined benefit multiemployer plans have specific challenges in the volatile market we’ve been

facing for the past three years. This is the worst bear market since ERISA. Consequently, there is an

unprecedented interest in relief from the usual minimum funding requirements. Unlike single-

employer plans, multiemployer plans are independent entities governed by joint boards of trustees

who also have responsibilities to the employers or unions that collectively participate in and sponsor

these programs. In addition, contributions and/or benefits are defined through collective bargaining

with contractual commitments that typically extend from 3 to more than 5 years. As a result, with the

investment losses that have occurred over the past 3 years, many of these funds have seen dramatic

increases in their contribution requirements, to potentially well above the amounts stipulated by the

collective bargaining agreements.

As consulting actuaries, we advise multiemployer plan joint boards on the law and regulations that

are available to help them address the funding issues they face. There are a number of tools available

in the law and regulations to provide additional time for funding past investment losses. Specifically,

these tools extend the minimum funding requirements, and hence allow time so the needed changes

in benefit and/or contribution levels can be addressed in the regular collective bargaining process.

We are asking you to promulgate guidance on the alternative funding relief provisions in the Internal

Revenue Code and regulations. Specifically, many of these provisions require individual plans to

apply for approval of funding method changes or offer few regulations providing guidance on their

application. In addition, when we have attempted to apply for relief, our efforts have sometimes been

met with a high degree of resistance or complexity relative to the multiemployer programs. This

situation leaves us ill advised to suggest to our clients that there is some relief.

The American Academy of Actuaries is the public policy organization for actuaries of all specialties within the United States.

In addition to setting qualification standards and standards of actuarial practice, a major purpose of the Academy is to act as the

public information organization for the profession. The Academy is nonpartisan and assists the public policy process through

the presentation of clear actuarial analysis. The Academy regularly prepares testimony for Congress, provides information to

federal and state elected officials, regulators and congressional staff, comments on proposed federal and state regulations and

legislation, and works closely with state officials on issues related to insurance. The Academy also develops and upholds

actuarial standards of conduct, qualifications and practice, and the Code of Professional Conduct for all actuaries practicing in

the United States.

It’s critical and time sensitive to better define what potential relief exists to extend the minimum

funding requirements, so that funding issues facing these plans can be addressed through the regular

collective bargaining process.

While our task force has reviewed areas of the law that might be appropriate for recommending

change, the timing of the situation leads us to focus more on the regulations and relief within the

Treasury Department’s purview. We have identified four areas where immediate relief could be

provided. To assist the multiemployer plan community in the current environment, we request that

you provide guidance on the qualifying criteria and procedures for plans to use based on the

following approaches for extending the minimum funding obligation. The areas for your

consideration are:

1. Promulgating an automatic approval of the shortfall method, and preferably one that would not

restrict the ability of the plan to adopt any other change in funding method within the next 5

years.

2. Establishing specific criteria necessary to get an approval for an extension of an amortization

period under Section 412(e) of the Internal Revenue Code.

3. Providing special guidance for minimum funding waivers for multiemployer plans that require

substantially less disclosure of individual employer financial conditions and business plans.

4. Extending the automatic approval of asset valuation methods to (a) spread adjustments over a

period greater than 5 years, potentially up to 10 years and, (b) specifically for multiemployer

plans, allow use of the 85%/115% corridor around IRS average value as currently permitted

under the regulations for these plans.

We would be delighted to meet with you and other IRS representatives to discuss how each of these

four alternative approaches can be used by multiemployer plans to address their financial issues.

Our next meeting is scheduled for January 21, 2003, and we would appreciate the opportunity to

meet with you at that time. The timing for relief is critical. Our hope and anticipation is that we can

work together to identify means by which the current regulations and laws can be used to provide

funding relief for multiemployer plans, and in a manner that would limit the amount of work for the

agency in reviewing a substantial increase in the number of applications for funding relief.

Thank you in advance for your consideration of these issues.

Sincerely,

James J. McKeogh

Chair, Multi-Employer Task Force

American Academy of Actuaries

Cc: James Holland

Diane Bloom

Martin Pippins

Bill Kerr

Univers
Ebooks
Livres audio
Presse
Podcasts
BD
Documents

Comment letter to IRS (Jan. 16, 2003)

YouScribe

Le catalogue

Le service

Les conditions