Enrolled Actuary Exam Prep - Question List

26. Data for a plan in 2012: Location A B C D Number of employees 41 19 15 XThe plan covers all employees of locations B and D only. Location C is collectively bargained.No employees terminated during 2012 and none are statutorily excludable from the plan. The plan covers at least one HCE. What is the minimum number of employees that must be in Location D so that the plan will pass the participation requirement of IRC section 401(a)(26)?

27. A defined benefit plan terminates with excess assets and is amended within the 60 day period prior to the plan termination date to provide a 5% pro-rata increase of participant benefits as of the termination date. The plan sponsor establishes a defined contribution plan as a qualified replacement plan and transfers into this plan the minimum amount necessary to lower the excise tax rate on any reversion to less than 50%. Selected data as of the asset distribution date: Market value of assets $2,100,000 Termination liability prior to 5% pro-rata increase $1,600,000X= the amount of the actual excise tax due from the employer. Y = the amount of the excise tax that would have been due had the qualified replacement plan not been established. In what range is X - Y ?

28. Type of plan: Statutory hybrid planAccount balance: The sum of pay credits and interest creditsPay credits: 3% of annual pay, credited at the end of the yearInterest credits: Equal to the actual annual rate of return on plan assets multiplied by the beginning of year account balance Vesting: The minimum vesting schedule allowedData for participant Smith: Date of hire 1/1/2008 Date of termination 12/31/2011 Compensation (each year) $50,000 Historical returns on plan assets: 2008 8% 2009 6% 2010 2% 2011 −22% The plan provides for a lump sum in the amount of the vested account balance.In what range is Smith’s lump sum payable at 1/1/2012?

29. An employer sponsors two plans: Plan A for Division A and Plan B for Division BPlan A eligibility: 12 months of service Plan B eligibility: 6 months of service All employees are eligible to participate on the 1/1 or 7/1 coincident with or following the completion of eligibility requirements. Plans A and B require 1,000 hours of service to benefit in the plan (however, eligibility is determined on an elapsed time basis). Otherwise excludable employees are not tested separately.No employee is in more than one plan and none are collectively bargained. The plan sponsor does not aggregate Plans A and B for purposes of the coverage requirement of IRC section 410(b). Data for all employees during 2011:Number of Date of Hours End ofemployees hire worked Division year status 20 1/1/2010 2,000 A active HCE40 1/1/2010 2,000 A active NHCE 5 1/1/2010 250 A terminated NHCE10 1/1/2010 2,000 B active HCE25 1/1/2010 2,000 B active NHCE15 9/1/2010 2,000 B active NHCE10 1/1/2010 250 B terminated NHCEIn what range is the ratio percentage for Plan A for the 2011 plan year?

30. Type of plan: MultiemployerMethod for determining withdrawal liability: Rolling-5 with maximum permissible deductible under the optional de minimis ruleEmployer A completely withdraws from the plan on 12/31/2011. No other employers have ever withdrawn from the plan. Total 12/31Total base Total Total unfundedunits all contributions Total base units contributions vested benefitsYear employers all employers Employer A Employer A (all employers)2004 2,025,000 $13,162,000 37,000 $240,000 $0 2005 2,150,000 13,975,000 41,000 266,000 0 2006 2,300,000 16,100,000 45,000 315,000 0 2007 2,225,000 16,687,000 48,000 360,000 12,850,000 2008 2,150,000 17,200,000 47,000 376,000 16,200,000 2009 2,300,000 19,550,000 45,000 382,000 24,500,000 2010 2,350,000 21,150,000 41,000 369,000 10,750,000 2011 2,425,000 21,825,000 34,000 306,000 9,650,000 In what range is the withdrawal liability for Employer A?